Bank regulation in the United States

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Banking rules in the United States are heavily fragmented compared to other G10 countries, where most countries have only one bank manager. In the US, banks are organized at the federal and state levels. Depending on the type of charter held by a banking organization and on its organizational structure, it may be subject to federal and state banking laws. Regardless of the US bank regulatory agencies maintain separate securities, commodities, and regulatory bodies at federal and state levels, unlike Japan and the UK (where regulatory authorities over banks, securities and the insurance industry are combined into a single financial-service agent). Bank inspectors are generally employed to supervise banks and ensure regulatory compliance.

US banking regulations address privacy, disclosure, fraud prevention, anti-money laundering, anti-terrorism, usury loans, and loan promotion to low-income residents. Some individual cities also enact their own financial regulatory rules (for example, defining what is a usury loan).

Video Bank regulation in the United States

Regulatory authority

The main federal bank regulator can be the Federal Deposit Insurance Corporation, the Federal Reserve Board, or the Office of the Financial Currency Supervisor. Within the Federal Reserve System there are 12 districts centered around 12 regional Federal Reserve Banks, each of which carries out the Federal Reserve Board's regulatory responsibilities in their respective districts. Credit unions are subject to most bank regulations and are overseen by the National Credit Union Administration. The Federal Financial Institution Inspection Agency (FFIEC) establishes uniform principles, standards and report forms for other institutions.

The state regulations of the leased banks of state and certain non-bank affiliations of the federal charter banks apply in addition to federal regulations. State-chartered banks are subject to the regulations of the state regulatory bodies of the countries in which they are charters. For example, a California state bank that is not a member of the Federal Reserve System will be governed by California Institute of Finance and FDIC. Likewise, Nevada state banks that are members of the Federal Reserve System will be jointly regulated by the Nevada Division of Financial Institutions and the Federal Reserve.

By law, and in accordance with the interpretation of US law and constitutional law, federal banking laws (and other regulations and guidelines issued by federal banking governing bodies) often precede state laws governing certain activities of national banking institutions and its subsidiaries. Specific exceptions to general federal preemption rules exist such as some contract law, escheat law, and insurance law.

One example is the Office of Thrift Supervision which precedes federal saving associations of specific state laws. 12 U.S.C. Ã,§ 1464 (n) authorizes fiduciary activities for federal savings associations, and establishes certain state legal requirements applicable to federal savings associations. 12 C.F.R. Ã,§550.136 (c) a list of six types of state laws which, in certain circumstances, do not take precedence in relation to federal saving associations.

Maps Bank regulation in the United States

Privacy

Rule P governs the use of customer's personal data. Banks and other financial institutions should inform consumers about their policies regarding personal information, and must provide "absence" before disclosing data to unaffiliated third parties. The regulation was enacted in 1999.

Regarding knowing your customer's rules and Bank Secrets Act rules, financial institutions are encouraged to track customer's employment status and other business transactions, including whether the customer's financial activities are consistent with their business activity, and report the suspect's activities to the government.

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Anti-money laundering and anti-terrorism

In essence, financial transparency requires financial institutions to implement certain basic controls:

• they should know who their customers are (so called know your customer rules);
• they must understand the normal transactions and expectations of their customers;
• and they should keep the necessary records and create the necessary reports to their customers.

The Bank Secrecy Act (BSA) requires financial institutions to assist government agencies to detect and prevent money laundering. In particular, the law requires financial institutions to keep records of cash purchases of negotiable instruments, report cash transactions exceeding $ 10,000 (daily aggregate amount), and report suspicious activity that may indicate money laundering, tax evasion or other criminal activity.

Section 326 of the US PATRIOT Act allows financial institutions to place restrictions on new accounts until the account holder's identity has been verified.

The Foreign Assets Control Office (OFAC) sanction applies to all U.S. entities including banks. FFIEC provides guidance to financial regulators to verify compliance with sanctions.

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Reinvest community

The Community Reinvestment Act of 1977 requires an insured storage institution to reinvest in the communities they serve. There should be an emphasis on census tracts and low and middle income individuals (LMI). Insured storage institutions must display CRA notices, and each branch must have the current public CRA file or access it through the company intranet, and must provide information directly or by mail.

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Deposit account settings

Insurance deposit

The United States is the second country (after Czechoslovakia) which formally imposes deposit insurance to protect depositors from losses by bankrupt banks. In 1933, the Glass-Steagall Act established the Federal Deposit Insurance Corporation (FDIC) to insure deposits in commercial banks.

In 1970, the Congress established a separate fund for credit unions, the National Credit Union Distribution Insurance Fund. The NCUSIF guarantees all federal credit union charters and many state-charter credit unions (98% in 2009). Others are insured by the American Share Insurance private insurance company (156 per 2009). In 1978 foreign banks operating in the United States were required to have the same level of reserves under the specifications of the International Banking Act.

In 1934, Congress created the Federal Savings and Credit Insurance Companies to ensure savings and loan deposits. In the 1980s, during the savings and loan crisis, FSLIC became bankrupt and abolished; his responsibilities were transferred to the FDIC.

Some financial institutions offer insurance that exceeds the FDIC or NCUA limit. For example, the Deposit Insurance Fund insures excess deposits in savings banks in Massachusetts. American Share Insurance provides excess stock insurance on participating credit unions.

Consumer protection

The Truth in Savings Act (TISA), implemented by DD Rules , establishes uniformity in disclosing terms and conditions concerning interest and fees when providing information and when opening new savings accounts. When passing legislation in 1991, Congress said it would help foster economic stability, competition between storage agencies, and allow consumers to make decisions.

The 1987 Accelerated Fund Acquisition Act (EFAA), implemented by CC Regulations , defines when a standard hold and an applicable exception can be placed on a check that is deposited into a checking account, and maximum The length of time money can be held. Bank ownership policies can be less stringent than the guidelines provided, but can not exceed guidelines.

The Electronic Funds Transfer Act of 1978, implemented by Rule E , establishes the rights and obligations of consumers and the liability of all participants in electronic funds transfer activities.

Withdrawal limits and backup requirements

• Setting backup requirements guidelines
• Organize certain initial withdrawals from deposit account certificates
• Defines what qualifies as DDA/NOW account. See Rule Q for the eligibility rules for the flowering account
• Set limits on certain withdrawals on savings and money market accounts
  • Unlimited transfer or withdrawal if done directly, via ATM, by mail, or by courier
  • In all other instances, there is a limit of six transfers or withdrawals. No more than three of these transactions can be paid to a third party (by check, draft, point-of-sale, etc.)
  • Some banks will charge you with any transactions excess
  • The bank must close the account where this transaction limit is always exceeded

Interest on giro

Until 2011, the Rule Q of banks prohibited from paying interest on current accounts. A "giro" account includes many, but not all checking accounts, and excludes Nego Takeover Accounts (NOW accounts).

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Rules of borrowing

Consumer protection

The Mortgage Disclosure Act (HMDA) of 1975, implemented by Rule C , requires that financial institutions maintain and annually disclose data on home purchases, pre-purchase of houses - approval, home improvement, and refinancing applications involving one to four units and multifamily homes. It also requires branches and loan centers to display HMDA posters.

The 1974 Equal Credit Opportunity Act (ECOA), implemented by Rule B , requires creditors who regularly provide credit to customers - including banks, retailers, finance companies, and banks - credit card companies - to evaluate candidates only on creditworthiness, rather than other factors such as race, color, religion, national origin, or gender. Discrimination on the basis of marital status, acceptance of public assistance, and age is generally prohibited (with the exception of), such as discrimination based on the goodwill practice of consumers about their rights of credit protection.

The 1968 Truth in Lending Act (TILA), implemented by Rule Z , promotes the use of consumer credit based on information by standardizing interest rate disclosures and other costs associated with borrowing.. TILA also gives consumers the right to cancel certain credit transactions involving liens on the consumer's primary dwelling, regulate certain credit card practices, and provide means to resolve billing disputes.

Debt collection

The FCRA (1970) Fair Credit Reporting Act (FCRA) governs the collection, sharing and use of customer credit information. This law allows consumers to get a copy of their credit report from a credit bureau that stores information about them, providing for consumers to refute negative information and set a deadline, after which negative information is suppressed. This requires consumers to be notified when negative information is added to their credit record, and when an adverse action is taken on a credit report.

Credit card

Terms of handling credit card practices aim to improve protection for consumers who use credit cards and increase credit card disclosure based on Truth in Lending Act:

• Banks will be banned from raising rates on pre-existing credit card balances (except in limited circumstances) and should allow consumers to pay off the balance for a reasonable period of time
• The bank will be banned from applying payments above the minimum threshold in a way that maximizes interest costs
• The Bank will be required to provide the consumer with the full benefit of the discounted promotional price on the credit card by applying a payment that exceeds the minimum to the higher interest rate balance first, and by granting a grace period for purchases where the consumer is eligible
• The bank will be banned from charging interest using the "two-cycle" method, which calculates interest on the balance on days in the billing cycle prior to the latest billing cycle
• The bank will be required to provide consumers with reasonable time to make payments

Borrowing limits

Loan-restricting rules limit the total amount of loans and credits that a bank can provide to a borrower. This restriction is usually expressed as a percentage of the capital or bank assets. For example, a national bank in general should limit its total loans and credits to a sole borrower to no more than 15% of the total capital and surplus of the bank. Some state banking regulations also contain the same borrowing limits applicable to state-leased banks. Both federal and state laws generally allow for higher borrowing limits (up to 25% of capital and surplus for national banks) when part of the credit that exceeds the original loan limit is fully guaranteed.

Insider Loans (Rule O) establishes various quantitative and qualitative restrictions and reporting requirements on credit extensions made by banks to "insiders" or insiders from bank affiliates. The term "insider" includes executive officers, directors, major shareholders and related interests of such parties.

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Central banking regulations

Credit Extension by Federal Reserve Banks (Rule A) establishes rules on discount window lending, credit extension by the Federal Reserve Bank to banks and other institutions. The Federal Reserve Board made significant amendments to Regulation A in 2003, including certain discount-window-discounted price amendments above market rates and to restrict lending to banks in generally healthy conditions. In changing the regulation, the Federal Reserve Board noted that many banks have expressed their reluctance to use window-discount loans because the use of such funding sources is interpreted as a sign of bank financial weakness or distress. The Federal Reserve Board indicated its hope that the 2003 amendment would make discount windows provide more attractive funding options for banks.

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Affiliate bank rules and parent company

Transactions Between Member Bank and its Affiliates (Rule W) governs transactions, such as loans and asset purchases between banks and affiliates. The term "affiliation" is broadly defined and includes the parent company, the company that shares the parent company with the bank, the company under other types of general controls with the bank (eg by trust), the company with the interlocking director (majority of directors, guardians, with the majority of banks), subsidiaries, and certain other types of companies. When it was ratified on September 18, 1950, Regulation W included a ban on the purchase of installments over 21 months, shortened to 15 months on October 16 of the same year.

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announcement of deregulation 2018

In January 2018, a spokesman for the head of the Federal Reserve Board of supervision said that the existing banking sector rules are too tight and standard, and can be relaxed and adjusted to promote commercial bank lending, investment and stock market trading. Randal Quarles, Vice Chairman for Bank Supervision, said he planned some of the closer changes that Wall Street wanted to involve capital rules, proprietary trading and a process known as "life will" aimed at preventing bailout taxpayers.

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See also

• Bank rules

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Note

• The Board of Governors of the Federal Reserve System.

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References

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External links

• FRB Rules
• Kaufman, George G. (2002). "Deposit Insurance". In David R. Henderson (ed.). Economic Concise Encyclopedia (1st ed.). Library of Economy and Freedom. OCLCÃ, 317650570. CS1: Additional text: editor list (link)
• Bank laws and laws originating from the first United States Bank

Source of the article : Wikipedia