Taylor Scott
Banks in the United States are regulated by both federal and state governments, with agencies at both levels overseeing financial markets and companies. The federal government has established regulatory bodies to supervise the functioning and fairness of financial markets and firms engaging in financial activity. The Federal Reserve System is one of several banking regulatory authorities, regulating state-chartered member banks, bank holding companies, and foreign branches of US national banks. National banks are regulated by the Office of the Comptroller of the Currency (OCC), an independent branch of the US Department of the Treasury, which also regulates federal savings associations and federal branches of foreign banks. The Federal Deposit Insurance Corporation (FDIC) insures deposits in banks and federal savings associations, while the National Credit Union Administration (NCUA) supervises and insures federal and state-chartered credit unions. State-chartered banks are subject to the regulation of the state regulatory agency of the state in which they were chartered, with each state having its own agency to supervise and regulate state-chartered banks and thrifts.
| Characteristics | Values |
|---|---|
| Regulatory bodies | Federal and state governments have agencies that regulate and oversee financial markets and companies |
| Objective | Prevent and investigate fraud, keep markets efficient and transparent, and make sure customers and clients are treated fairly and honestly |
| Federal regulatory authorities | Federal Deposit Insurance Corporation (FDIC), Federal Reserve Board, Office of the Comptroller of the Currency (OCC), Financial Crimes Enforcement Network (FinCEN), National Credit Union Administration (NCUA), Commodity Futures Trading Commission (CFTC), Federal Financial Institutions Examination Council (FFIEC) |
| State regulatory authorities | Each state has an agency or agencies that supervise and regulate state-chartered banks and thrifts, e.g. California Department of Financial Institutions, Nevada Division of Financial Institutions |
| Bank charter | All banks engaging in banking activities must obtain a bank charter before conducting business in the US. There are many different charters available, each with different financial powers as prescribed by state and federal laws |
| Primary federal regulator | Could be the FDIC, the Federal Reserve Board, or the OCC |
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What You'll Learn
The Federal Reserve System
The second layer of the Federal Reserve System consists of twelve regional Federal Reserve Banks located in cities throughout the nation. These banks regulate and oversee privately-owned commercial banks, with nationally chartered commercial banks being required to hold stock in and able to elect some board members of their regional Federal Reserve Bank.
The Federal Open Market Committee (FOMC) is another important component of the Federal Reserve System. It sets monetary policy by influencing market interest rates and consists of all seven members of the Board of Governors and the twelve regional Federal Reserve Bank presidents, with only five bank presidents voting at a time.
In addition to stabilizing the financial system, the Federal Reserve System has other responsibilities, including providing financial services to depository institutions, the U.S. government, and foreign official institutions, as well as conducting research into the economy and publishing various reports and databases. The system also plays a role in operating the nation's payments system and strengthening the U.S. standing in the world economy.
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Federal Deposit Insurance Corporation (FDIC)
Banks in the United States are subject to a complex regulatory structure, with federal and state regulators and institutions overseeing their functioning. The Federal Reserve System is one of several banking regulatory authorities, regulating state-chartered member banks, bank holding companies, and foreign branches of US national banks, among other financial institutions.
The Federal Deposit Insurance Corporation (FDIC) is a key part of this regulatory framework. The FDIC is a US government corporation that provides deposit insurance to depositors in American commercial and savings banks. The FDIC was established by the Banking Act of 1933, during the Great Depression, to restore trust in the American banking system, as a significant proportion of banks had failed, and bank runs were common. The FDIC insures deposits in member banks up to $250,000 per ownership category, and this limit has been increased over time to accommodate inflation. The FDIC also has the authority to regulate and supervise state non-member banks.
The FDIC acts as a receiver for failed banks, protecting depositors and maximising recoveries for creditors. It also holds broad enforcement powers, including the ability to appoint itself as a conservator or receiver of an insured depository institution. The FDIC provides resources for bankers, including guidance on regulations, information on examinations, and training programs.
The FDIC only directly supervises and examines state-chartered banks that are not members of the Federal Reserve System, to prevent regulatory duplication. State banking agencies also play a role, with each state having its own regulatory agency responsible for chartering and supervising state banks and foreign banks within the state.
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Office of the Comptroller of the Currency (OCC)
Banks in the United States are subject to a complex regulatory structure involving federal and state regulators and institutions. These regulatory bodies are established by governments to oversee the functioning and fairness of financial markets and the firms that engage in financial activity.
One of the key federal regulators in the US banking system is the Office of the Comptroller of the Currency (OCC). The OCC is an independent bureau within the United States Department of the Treasury. It was established by the National Currency Act of 1863, which was drafted by leaders of the federal government during the American Civil War to create a national banking system. The OCC's role has evolved over time, shifting to bank examination and regulation after the establishment of the Federal Reserve in 1913.
The OCC is responsible for chartering, regulating, and supervising all national banks, federal savings associations, and federal branches and agencies of foreign banks in the United States. It ensures that the banks it supervises operate in a safe and sound manner, comply with applicable laws and regulations, and provide fair access to financial services for all Americans. The OCC also takes enforcement actions against banks that do not comply with its rules and regulations.
The head of the OCC is the Comptroller of the Currency, who is appointed to a five-year term by the President with the consent of the Senate. The current Comptroller is Jonathan V. Gould, who assumed office on July 15, 2025. The OCC has its headquarters in Washington, D.C., with four district offices in New York City, Chicago, Dallas, and Denver.
The OCC plays a crucial role in maintaining the integrity of the federal banking system and ensuring fair and equal access to financial services for all Americans. It also participates in interagency activities and works with other regulatory bodies to achieve its objectives.
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State-chartered banks
Banks in the United States are subject to a complex regulatory structure, with both federal and state regulators and institutions overseeing their operations. State-chartered banks are an important component of this system, operating within individual states and serving as a key link between state and federal financial regulation.
The specific duties and responsibilities of state-chartered banks can vary from state to state, but they generally include accepting deposits, providing loans, and offering other financial products and services to their customers. These banks are often closely linked to the local community and may have a better understanding of the unique economic and financial needs of the state's residents.
The Federal Deposit Insurance Corporation (FDIC) is a key federal regulator that plays a significant role in overseeing state-chartered banks. The FDIC is responsible for supervising and examining state-chartered banks that are not members of the Federal Reserve System. It also provides deposit insurance for banks, protecting customers' funds in the event of bank failure. Additionally, the Conference of State Bank Supervisors (CSBS) supports state regulators by promoting safety, soundness, and consumer protection in the state financial supervision system.
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National Credit Union Administration (NCUA)
Banks in the United States are regulated by both federal and state regulatory authorities. There are five financial industry regulators at the federal level, and each state also has its own regulatory agency. Banks are subject to the regulatory authority of more than one bank regulatory agency.
The National Credit Union Administration (NCUA) is an independent federal agency that regulates, charters, and supervises federal credit unions. It was created by the United States Congress in 1970 to insure members' deposits in federally insured credit unions. The NCUA operates and manages the National Credit Union Share Insurance Fund (NCUSIF), which insures the deposits of more than 124 million account holders in federal credit unions and most state-chartered credit unions. The NCUSIF was established to make credit available and promote thrift through a national system of nonprofit, cooperative credit. The NCUA also operates three other funds: the NCUA Operating Fund, the Central Liquidity Facility (CLF), and the Community Development Revolving Loan Fund (CDRLF).
The NCUA has a consumer protection website, MyCreditUnion.gov, which offers educational information, resources, and articles to help individuals make smarter financial decisions. The website also features a Share Insurance Estimator, which helps consumers understand how the NCUA's share insurance rules apply to their accounts.
The NCUA has taken steps to protect against the failure of credit unions, including implementing a 12-month examination cycle for federally insured credit unions to detect problems early on. By the end of 2009, more than 96% of credit unions were considered "well capitalized". The NCUA also has the power to issue formal enforcement orders and take administrative actions to ensure compliance with regulations.
Looking ahead, the NCUA's goals include advancing economic equity and justice within the credit union movement. The agency plans to enhance support for minority depository institutions, ensure compliance with fair lending laws, and address future challenges such as climate change.
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Frequently asked questions
A bank's primary federal regulator could be the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board, or the Office of the Comptroller of the Currency (OCC).
The OCC, an independent branch of the US Department of the Treasury, charters, regulates, and supervises all national banks and federal savings associations, as well as federal branches and agencies of foreign banks.
Yes, there are several federal and state regulators and institutions that may have either a federal or state charter. For example, the National Credit Union Administration (NCUA) supervises and insures federal credit unions and state-chartered credit unions.
