The U.S. regulatory structure for banking is immensely complex.
- The structure is largely a product of U.S. political and economic history.
- It is frequently the subject of detailed and unsuccessful efforts to rationalize and harmonize the agencies.
- Under the structure, regulators oversee institutions based on what they are (their legal charter), not what they do. This means that similar activities can be regulated differently depending on which type of organization is performing it.
The overall framework is one in which multiple regulatory agencies often have similar or overlapping authority for the same banking organization.
Here’s a look at the key players in U.S. financial regulation:
Federal Reserve
Primary federal regulator for bank holding companies and savings and loan holding companies. Also serves as a regulator of any foreign bank operating in the United States and for state member banks.
Federal Deposit Insurance Corporation (FDIC)
Insures the deposits of all federal and state banks and thrifts pursuant to federal law. Maintains the Deposit Insurance Fund. Primary federal regulator for state non-member banks and state thrifts.
Office of the Comptroller of the Currency (OCC)
Primary federal regulator for national banks and federal savings associations. Authority also extends to subsidiaries of national banks/federal savings associations.
State Regulators (e.g., NYDFS)
States have independent regulatory bodies responsible for chartering state banks, regulating insurance companies and licensing money transmission services business.
Consumer Financial Protection Bureau (CFPB)
Responsible for enforcing federal consumer financial protection laws.
Commodity Futures Trading Commission (CFTC)
Authority to regulate the U.S. derivatives markets, including futures and swaps.
Securities and Exchange Commission (SEC)
Regulates publicly traded companies and companies engaged in investment activities.
Financial Crimes Enforcement Network (FinCEN)
Responsible for helping to identify and prevent money laundering and other illicit financial crime. A Bureau of the U.S. Department of the Treasury.
Among these U.S. financial regulatory agencies, there are three primary federal bank regulators: the OCC, Federal Reserve and FDIC.
Key functions of the bank regulatory agencies:
- Regulation: The rules under which banks are required to operate.
- Supervision: The review of a bank’s books and records to determine its financial soundness and compliance with the law.
- Enforcement: The use of legal tools to compel compliance and penalize those responsible for imprudent and improper conduct.
View our desk guide to the key bank regulators and the people who lead them: Desk Guide to Federal Banking Regulators
Fed Functions: Supervising and Regulating Financial Institutions
For a quick explainer on how the Federal Reserve supervises and regulates financial institutions, watch this video from the Fed.
