In addition, different regulators may have different regulatory responsibilities for the various types of financial institutions. And, some types of banking institutions may be regulated by federal and state regulators. At the state level, each state has an agency or agencies that are charged with supervising and regulating state-chartered banks and thrifts. For example, in California, financial institutions are regulated by:. These federal and state banking regulators have oversight over a wide array of banking institutions and activities.
This publication allows you to view a list of banking institutions and see their primary regulator s for several types of regulatory activities:.
Ask Dr. Econ October Federal Reserve Bank of New York Banking Institutions and Their Regulators. The federal government serves as a backstop to the insurance fund. Oversight of individual financial institutions by banking regulators is called micro-prudential supervision. While the insurance fund protects depositors, it does not protect shareholders of banks.
When inappropriate risks are taken and prove unsuccessful, banks will fail and be liquidated. Since the creation of the Federal Trade Commission in , the federal government has had a formal obligation to protect consumers across industries.
Since that time, numerous laws and regulations have been crafted by various agencies to protect bank customers and promote fair and equal access to credit. Banks conduct financial transactions with consumers either directly lending to consumers and taking consumer deposits or indirectly through financial technology on the front end, for example.
Banking regulators enforce consumer protection regulations by conducting comprehensive reviews of bank lending and deposit operations and investigating consumer complaints.
A competitive banking system is a healthy banking system. Banking regulators actively monitor U. The second legislation was the Emergency Economic Stabilization Act of EESA , which authorized the federal government to bail out and purchase several banks and financial institutions that were in danger of complete bankruptcy as a consequence of their investments in tainted mortgage-backed securities.
This legislation serves to regulate the cash flow of these institutions and places them under direct government scrutiny until they are able to declare solvency. This requires banks to increase capital and maintain a lower debt ratio. This act also required banks and lenders to collect information about their customers in order to aid the loss-mitigation process through loan modification programs and work toward restoring the creditworthiness of borrowers whose credit was damaged by faulty loan products.
The fourth major bill, the Dodd-Frank Wall Street Reform and Consumer Protection Act of , emphasizes the regulations governing the collection, management, and review of customer data. The act calls for banks and financial institutions to improve their "know-your-customer" KYC procedures and comply with the new regulatory powers of the FDIC.
It also instituted the Consumer Financial Protection Bureau CFPB to regulate the capital requirements and financial practices of banks, credit unions, lenders, servicers, and collection agencies concerning their executive-level compensation, governance, risk management, derivatives portfolio, and credit ratings. Banks are required to disclose this data to the FDIC and other federal bodies under the oversight of the U. Unofficially known as the Financial Reform Law, Dodd-Frank also requires banks to comply with federal regulations that aid transparency in lending practices, mitigate institutional risk, improve corporate accountability and prevent a repeat of the global financial crisis.
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