The Federal Reserve System is one of several banking regulatory authorities. The Federal Reserve regulates state-chartered member banks, bank holding companies, foreign branches of U.S. national and state member banks, Edge Act Corporations, and state-chartered U.S. branches and agencies of foreign banks. National banks must be members of the Federal Reserve System; however, they are regulated by the Office of the Comptroller of the Currency (OCC).
The Federal Reserve supervises and regulates many large banking institutions because it is the federal regulator for bank holding companies (BHCs). A listing of the Top 50 BHCs is available online through the Federal Reserve System’s National Information Center. In addition, under the Gramm-Leach-Bliley Act of 1999, the Federal Reserve has the authority to regulate financial holding companies.
Complex U.S. Banking and Regulatory System
The banking and regulatory structure in the United States is complicated. There are federal and state regulators and institutions that may have either a federal or a state charter. 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 federal level, there are five financial industry 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:
A listing of state bank supervisors for all states is available at:
These federal and state banking regulators have oversight over a wide array of banking institutions and activities. If you are interested in an overview of the regulatory authority for a specific type of banking institution by key types of regulatory activities, let me recommend the Federal Reserve Bank of New York’s online matrix of Banking Institutions and Their Regulators. This publication allows you to view a list of banking institutions and see their primary regulator(s) for several types of regulatory activities:
Selected Banking Institutions:
- National Banks
- State Member Banks
- FDIC-Insured State Nonmember Banks
- Non-FDIC Insured State Banks
- Insured Federal Savings Associations
- Insured State Savings Associations
- Non-FDIC Insured State Savings Associations
- Federal Credit Unions
- State Credit Unions
- Bank Holding Companies
- Savings Association Holding Companies
- Foreign Branches of U.S. Banks
- Edge Act Corporation
- U.S. Branches and Agencies of Foreign Banks
Selected Regulatory Activities:
- Chartering & Licensing
- Branching
- Mergers, Acquisitions & Consolidations
- Reserve Requirements
- Access to the Discount Window
- Deposit Insurance
- Supervision & Examination
- Prudential Limits, Safety & Soundness
- Consumer Protection
NOTE: For information on regulatory changes arising from the 2010 Financial Regulatory Reforms (Dodd-Frank) please see the following:
Regulatory Reform
Implementing the Dodd-Frank Act: The Federal Reserve Board’s Role – The Federal Reserve Board of Governors
Financial Regulatory Reform
The Implications of Financial Regulatory Reform: A Series of Discussions on the Dodd-Frank Act – Federal Reserve Bank of St. Louis
References
Ask Dr. Econ (October 2003)
Conference of State Bank Supervisors State Banking Department
Federal Reserve Bank of New York (2003). Banking Institutions and Their Regulators.
Furlong, Fred. (2000) “The Gramm-Leach-Bliley Act and Financial Integration.” FRBSF Economic Letter, Federal Reserve Bank of San Francisco, 2000-10, March 31, 2000.
Harshman, Ellen, Fred C. Yeager, and Timothy J. Yeager. (2005) “The Door Is Open, but Banks Are Slow To Enter Insurance and Investment Arenas.” The Regional Economist, Federal Reserve Bank of St. Louis, October 2005.
FAQs
Bank holding companies constitute the largest segment of institutions supervised by the Federal Reserve, but the Federal Reserve also supervises state member banks, savings and loan holding companies, foreign banks operating in the United States, and other entities. international banking and financial business.
Does the Federal Reserve supervise commercial banks? ›
Bank supervision at the federal level is carried out by three agencies: the Federal Reserve, the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC). State banking agencies also supervise certain banks.
Are commercial banks regulated? ›
All banks fall under the supervision and regulation of their chartering authority, at either the state or federal level.
Are all commercial banks members of the Federal Reserve System? ›
Federal Reserve Membership
More than one-third of U.S. commercial banks are members of the Federal Reserve System. National banks must be members; state chartered banks may join by meeting certain requirements.
Who regulates commercial banks? ›
The OCC charters, regulates, and supervises all national banks and federal savings associations as well as federal branches and agencies of foreign banks. The OCC is an independent bureau of the U.S. Department of the Treasury.
Who regulates banks in California? ›
The DFPI protects California consumers and oversees the operations of state-licensed financial institutions, including banks, credit unions, debt collectors, nonbank mortgage lenders, student loan servicers, money transmitters, and others.
Why do commercial banks need to be regulated? ›
Its principal objectives were to improve monetary control and equalize its cost among depository institutions, to remove impediments to competition for funds by depository institutions while allowing the small saver a market rate of return, and to expand the availability of financial services to the public and reduce ...
Who regulates the Federal Reserve? ›
The Board of Governors guides the operation of the Federal Reserve System to promote the goals and fulfill the responsibilities given to the Federal Reserve by the Federal Reserve Act. All of the members of the Board serve on the FOMC, which is the body within the Federal Reserve that sets monetary policy.
Is commercial lending regulated in the US? ›
While the majority of federal consumer protection regulations apply just to consumer loans, some commercial loans are subject to the same requirements. Banks should review these regulations and ensure they have implemented policies and procedures to comply with the regulations that do apply.
What banks are not part of the Federal Reserve System? ›
State-chartered banks may ultimately decide to refrain from membership under the Fed because regulation can be less onerous based on state laws and under the Federal Deposit Insurance Corporation (FDIC), which oversees non-member banks. Other examples of non-member banks include the Bank of the West and GMC Bank.
National banks and federal savings associations are chartered and regulated by the Office of the Comptroller of the Currency.
How many commercial banks are part of the Federal Reserve System? ›
The Board of Governors, an agency of the federal government that reports to and is directly accountable to Congress, provides general guidance for the System and oversees the 12 Reserve Banks.
What banks are not tied to the Federal Reserve? ›
State-chartered banks may ultimately decide to refrain from membership under the Fed because regulation can be less onerous based on state laws and under the Federal Deposit Insurance Corporation (FDIC), which oversees non-member banks. Other examples of non-member banks include the Bank of the West and GMC Bank.
What determines who regulates a bank? ›
National banks and federal savings associations are regulated by the Office of the Comptroller of the Currency (OCC). To find out if your bank is regulated by the OCC, visit the Who Regulates My Bank? page on this website.
How many banks are under the Federal Reserve? ›
Structure and Function. The 12 Federal Reserve Banks and their 24 Branches are the operating arms of the Federal Reserve System. Each Reserve Bank operates within its own particular geographic area, or district, of the United States.
Does the FTC regulate banks? ›
The Federal Trade Commission enforces a variety of antitrust and consumer protection laws affecting virtually every area of commerce, with some exceptions concerning banks, insurance companies, non-profits, transportation and communications common carriers, air carriers, and some other entities.
