Congressional Research Service: 'Who Regulates Whom? An Overview of U.S. Financial Regulatory Framework' (Part 1 of 2)
Here are excerpts:
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SUMMARY
Who Regulates Whom? An Overview of the
The financial regulatory system has been described as fragmented, with multiple overlapping regulators and a dual state-federal regulatory system. The system evolved piecemeal, punctuated by major changes in response to various historical financial crises. The most recent financial crisis also resulted in changes to the regulatory system through the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010 (P.L. 111-203) and the Housing and Economic Recovery Act of 2008 (HERA; P.L. 110-289). To address the fragmented nature of the system, the Dodd-Frank Act created the
At the federal level, regulators can be clustered in the following areas:
* Depository regulators -
* Securities markets regulators -
* Government-sponsored enterprise (GSE) regulators -
* Consumer protection regulator -
Other entities involved in financial regulation are interagency bodies, state regulators, and international regulatory fora. Notably, federal regulators generally play a secondary role in the regulation of insurers and money transmitters.
Regulators regulate financial institutions, markets, and products (or activities) using licensing, registration, rulemaking, supervisory enforcement, and resolution powers. In practice, regulatory jurisdiction is typically based on charter type, not function. In other words, how and by whom a firm is regulated depends more on the firm's legal status than the types of activities it is engaged in. This means that a similar activity being conducted by two different types of firms can be regulated differently by different regulators. Financial firms - notably large firms - may be subject to more than one regulator because they engage in multiple financial activities. For example, a firm may be overseen by an institution regulator, by an activity regulator when it engages in a regulated activity, and by a market regulator when it participates in a regulated market.
Financial regulation aims to achieve diverse goals, which vary from regulator to regulator: market efficiency and integrity, consumer and investor protections, capital formation or access to credit, taxpayer protection, illicit activity prevention, and financial stability. Policy debate revolves around the tradeoffs among these various goals. Different types of regulation- prudential (safety and soundness), disclosure, standard setting, competition, and price and rate regulations - are used to achieve these goals.
Many observers believe that the structure of the regulatory system influences regulatory outcomes. For that reason, there is ongoing congressional debate about the best way to structure the regulatory system. Recently, the rapid growth in the cryptocurrency industry has led to questions about which, if any, existing state or federal regulator is best suited to regulate the industry and whether new or existing authority is appropriate to do so.
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Contents
Introduction ... 1
The Financial System ... 1
The Role of Financial Regulators ... 2
Regulatory Powers ... 2
Goals of Regulation ... 3
Types of Regulation ... 5
Regulated Entities ... 6
The Federal Financial Regulators ... 8
Depository Institution Regulators ... 12
Securities Regulation ... 17
Standard-Setting Bodies and Self-Regulatory Organizations ... 21
Regulation of
Regulatory Umbrella Groups ... 24
Nonfederal Financial Regulation ... 26
Insurance ... 26
Money Transmitters ... 26
Other State Regulation ... 28
International Standards and Regulation ... 28
Figures
Figure 1. Regulatory Jurisdiction by Agency and Type of Regulation ... 11
Figure 2. Stylized Example of a
Figure 3. Jurisdiction Among Depository Regulators ... 14
Figure 4. International Financial Architecture ... 30
Figure A-1. Changes to
Figure A-2. Changes to the Oversight of Thrifts in the Dodd-Frank Act ... 32
Figure A-3. Changes to the Oversight of Housing Finance in HERA ... 32
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Tables
Table 1. Federal Financial Regulators and Whom They Supervise ... 9
Table B-1. CRS Contact Information ... 33
Appendixes
Appendix A. Changes to Regulatory Structure Since 2008 ... 31
Appendix B. Experts List ... 33
Contacts
Author Information ... 33
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Introduction
Federal financial regulation encompasses varied and diverse markets, participants, and regulators. As a result, regulators' goals, powers, and methods differ among regulators and sometimes within each regulator's jurisdiction. This report provides background on the financial regulatory structure in order to help
Historically, financial regulation in
This report attempts to set out the basic frameworks and principles underlying
The Financial System
The financial system matches the available funds of savers and investors with borrowers and others seeking to raise funds in exchange for future payouts. Financial firms link individual savers and borrowers together. Financial firms can operate as intermediaries that issue obligations to savers and use those funds to make loans or investments for the firm's profits. Financial firms can also operate as agents playing a custodial role, investing the funds of savers on their behalf in segregated accounts. The products, instruments, and markets used to facilitate this matching are myriad, and they are controlled and overseen by a complex system of regulators.
To help understand how the financial regulators have been organized, financial activities can be separated into distinct markets:/2
* Banking - accepting deposits and making loans to businesses and households.
* Insurance - collecting premiums from and making payouts to policyholders triggered by predetermined events.
* Securities or capital markets - issuing financial instruments that represent financial claims on companies or assets. Securities, which are often traded in financial markets, take the form of debt (a borrower and creditor relationship) and equity (an ownership relationship). One special class of securities is derivatives, which are financial instruments whose value is based on an underlying commodity, financial indicator, or financial instrument.
* Financial market infrastructure - the "plumbing" of the financial system - such as trade data dissemination, payment, clearing, and settlement systems - that underlies transactions.
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1 For more information, see CRS Report R41350, The Dodd-Frank Wall Street Reform and Consumer Protection Act: Background and Summary, coordinated by
2 A multitude of diverse financial services are either directly provided or supported through guarantees by state or federal government. Examples include flood insurance (through the
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A distinction can be made between formal and functional definitions of these activities. Formal activities are those, as defined by regulation, exclusively permissible for entities based on their charters or licenses. By contrast, functional definitions acknowledge that from an economic perspective, activities performed by types of different entities can be quite similar. This tension between formal and functional activities is one reason why the Government Accountability Office and others have called the
For example, "shadow banking" refers to activities (such as lending and deposit taking) that are economically similar to those performed by formal banks but occur in securities markets. The activities described above are functional definitions. However, because this report focuses on regulators, it mostly concentrates on formal definitions.
The Role of Financial Regulators
Financial regulation has evolved over time, with new authority usually added in response to failures or breakdowns in financial markets and authority trimmed back during financial booms. Because of this piecemeal evolution, powers, goals, tools, and approaches vary from market to market. Nevertheless, there are some common overarching themes across markets and regulators that are highlighted in this section.
The following provides a brief overview of what financial regulators do, specifically answering four questions:
1. What powers do regulators have?
2. What policy goals are regulators trying to accomplish?
3. Through what means are those goals accomplished?
4. Who or what is being regulated?
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3
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Regulatory Powers
Regulators implement policy using their powers, which vary by agency. Powers, which can also be thought of as tools, can be grouped into a few broad categories:
* Licensing, chartering, or registration. A starting point for understanding the regulatory system is that most activities cannot be undertaken unless a firm, individual, or market has received the proper credentials from the appropriate state or federal regulator. Each type of charter, license, or registration granted by the respective regulator governs the sets of financial activities that the holder is permitted to engage in. For example, a firm cannot accept federally insured deposits unless it is chartered as a bank, thrift, or credit union by a depository institution regulator. Likewise, an individual generally cannot buy and sell securities to others unless licensed as a broker-dealer./4 To be granted a license, charter, or registration, the recipient must accept the terms and conditions that accompany it. Depending on the type, those conditions could include regulatory oversight, training requirements, and a requirement to act according to a set of standards or code of ethics. Failure to meet the terms and conditions could result in fines, penalties, remedial actions, license or charter revocation, or criminal charges.
* Rulemaking. Regulators issue rules (regulations) through the rulemaking process to implement statutory mandates./5 Typically, statutory mandates provide regulators with a policy goal in general terms, and regulations fill in the specifics. Rules lay out the guidelines for how market participants may or may not act to comply with the mandate.
* Oversight and supervision. Regulators ensure that their rules are adhered to through oversight and supervision. This allows regulators to observe market participants' behavior and instruct them to modify or cease improper behavior. Supervision may entail active, ongoing monitoring (as for banks) or investigating complaints and allegations ex post (as is common in securities markets). In some cases, such as banking, supervision includes periodic examinations and inspections, whereas in other cases, regulators rely more heavily on self-reporting. Regulators explain supervisory priorities and points of emphasis by issuing supervisory letters and guidance.
* Enforcement. Regulators can compel firms to modify their behavior through enforcement powers. Enforcement powers include the ability to issue fines, penalties, and cease-and-desist orders; to undertake criminal or civil actions in court or administrative proceedings or arbitrations; and to revoke licenses and charters. In some cases, regulators initiate legal action at their own prompting or in response to consumer or investor complaints. In other cases, regulators explicitly allow consumers and investors to sue for damages when firms do not comply with regulations, or they provide legal protection to firms that do comply.
* Resolution. Some regulators have the power to resolve a failing firm by taking control of the firm and initiating conservatorship (i.e., the regulator runs the firm on an ongoing basis) or receivership (i.e., the regulator winds the firm down). Other types of failing financial firms are resolved through bankruptcy, a judicial process separate from the regulators.
Goals of Regulation
Financial regulation is primarily intended to achieve the following underlying policy outcomes:/6
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4 One may obtain separate licenses to be a broker or a dealer, but in practice, many obtain both.
5 For more information, see CRS Report R41546, A Brief Overview of Rulemaking and Judicial Review, by
6 Regulators are also tasked with promoting certain social goals, such as community reinvestment or affordable housing. Because this report focuses on regulation, it will not discuss social goals.
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* Market efficiency and integrity. Regulators seek to ensure that markets operate efficiently and that market participants have confidence in the market's integrity. Liquidity, low costs, the presence of many buyers and sellers, the availability of information, and a lack of excessive volatility are examples of the characteristics of an efficient market. Regulation can also improve market efficiency by addressing market failures, such as principal-agent problems,/7 asymmetric information,/8 and moral hazard./9 Regulators contribute to market integrity by ensuring that activities are transparent, contracts can be enforced, and the "rules of the game" they set are enforced. Integrity generally leads to greater efficiency.
* Consumer and investor protection. Regulators seek to ensure that consumers or investors do not suffer from fraud, discrimination, manipulation, and theft. Regulators try to prevent exploitative or abusive practices intended to take advantage of unwitting consumers or investors. In some cases, protection is limited to enabling consumers and investors to understand the inherent risks when they enter into a transaction. In other cases, protection is based on the principle of suitability - efforts to ensure that more risky products or product features are accessible only to financially sophisticated or secure consumers or investors.
* Capital formation and access to credit. Regulators seek to ensure that firms and consumers are able to access credit and capital to meet their needs such that credit and economic activity can grow at a healthy rate. Regulators try to ensure that capital and credit are available to all worthy borrowers, regardless of personal characteristics, such as race, gender, and location. Examples are fair lending laws and fair housing goals.
* Illicit activity prevention. Regulators seek to ensure that the financial system cannot be used to support criminal and terrorist activity. Examples are policies to prevent money laundering, tax evasion, terrorism financing, and the contravention of financial sanctions.
* Taxpayer protection. Regulators seek to ensure that losses or failures in financial markets do not result in federal government payouts or the assumption of liabilities that are ultimately borne by taxpayers. Only certain types of financial activity are explicitly backed by the federal government or by regulator-run insurance schemes that are backed by the federal government, such as the
* Financial stability. Financial regulation seeks to maintain financial stability through preventive and palliative measures that mitigate systemic risk. At times, financial markets stop functioning well - markets freeze, participants panic, credit becomes unavailable, and multiple firms fail. Financial instability can be localized (to a specific market or activity) or more general. Sometimes instability can be contained and quelled through market actions or policy intervention; at other times, instability metastasizes and does broader damage to the real economy. The most recent example of the latter was the financial crisis of 20072009. Traditionally, financial stability concerns have centered on banking, but the recent crisis illustrates the potential for systemic risk to arise in other parts of the financial system as well.
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7 For example, financial agents may have incentives to make decisions that are not in the best interests of their clients, and clients may not be able to adequately monitor their behavior.
8 For example, firms issuing securities know more about their financial prospects than do investors purchasing those securities, which can result in a "lemons" problem in which low-quality firms drive high-quality firms out of the marketplace.
9 For example, individuals may act more imprudently if they are insured against a risk.
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These regulatory goals are sometimes complementary but at other times conflict with each other. For example, without an adequate level of consumer and investor protections, fewer individuals may be willing to participate in financial markets, and efficiency and capital formation could suffer. But, at some point, too many consumer and investor safeguards and protections could make credit and capital prohibitively expensive, reducing market efficiency and capital formation. Regulation generally aims to seek a middle ground between these two extremes in which regulatory burden is as small as possible and regulatory benefits are as large as possible. Because some firms can cope with regulatory burden better than others can, sometimes regulation is tailored so that smaller firms, for example, are exempted from a regulation or face a streamlined version of a regulation. As a result, when taking any action, regulators balance the tradeoffs between their various goals.
Types of Regulation
The types of regulation applied to market participants are diverse and vary by regulator but can be clustered in a few categories:
* Prudential. The purpose of prudential regulation is to ensure an institution's safety and soundness. It focuses on risk management and risk mitigation. Examples are capital requirements for banks. Prudential regulation may be pursued to achieve the goals of taxpayer protection (e.g., to ensure that bank failures do not drain the DIF), consumer protection (e.g., to ensure that insurance firms are able to honor policyholders' claims), or financial stability (e.g., to ensure that firm failures do not lead to bank runs).
* Disclosure and reporting. Disclosure and reporting requirements are meant to ensure that all relevant financial information is accurate and available to the public and regulators so that the former can make well-informed financial decisions and the latter can effectively monitor activities. For example, publicly held companies must file disclosure reports, such as 10-Ks. Disclosure is used to achieve the goals of consumer and investor protection, market efficiency, and integrity.
* Standard setting. Regulators prescribe standards for products, markets, and professional conduct. Regulators set permissible activities and behavior for market participants. Standard setting is used to achieve a number of policy goals. For example, (1) for market integrity, policies governing conflicts of interest, such as insider trading; (2) for taxpayer protection, limits on risky activities; (3) for consumer protection, fair lending requirements to prevent discrimination; and (4) for suitability, limits on the sale of certain sophisticated financial products to accredited investors and verification that borrowers have the ability to repay mortgages.
* Competition. Regulators ensure that firms do not exercise undue monopoly power, engage in collusion or price fixing, or corner specific markets (i.e., take a dominant position to manipulate prices). Examples include antitrust policy (which is not unique to finance), anti-manipulation policies, concentration limits, and the approval of takeovers and mergers. Regulators promote competitive markets to support the goals of market efficiency and integrity and consumer and investor protections. Within this area, a special policy concern related to financial stability is ensuring that no firm is "too big to fail."
* Price and rate regulations. Regulators set maximum or minimum prices, fees, premiums, or interest rates. Although price and rate regulation is relatively rare in federal regulation, it is more common in state regulation. An example at the federal level is the Durbin Amendment, which caps debit interchange fees for large banks./10 State-level examples are state usury laws, which cap interest rates, and state insurance rate regulation. Policymakers justify price and rate regulations on grounds of consumer and investor protections.
Prudential and disclosure and reporting regulations can be contrasted to highlight a basic philosophical difference in the regulation of securities versus banking. For example, prudential regulation is central to banking regulation, whereas securities regulation generally focuses on disclosure. This difference in approaches can be attributed to differences in the relative importance of regulatory goals. Financial stability and taxpayer protection are central to banking regulation because of taxpayer exposure and the potential for contagion when firms fail, whereas they are not primary goals of securities regulation because the federal government has made few explicit promises to make payouts in the event of losses and failures./11
Prudential regulation relies heavily on confidential information - in contrast to disclosure - that supervisors gather and evaluate through examinations. Federal securities regulation is not intended to prevent failures or losses; instead, it is meant to ensure that investors are properly informed about the risks that investments pose./12 Ensuring proper disclosure is the main way regulators ensure that all relevant information is available to any potential investor.
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10 Section 1075 of the Dodd-Frank Act. For more information, see CRS Report R41913, Regulation of Debit Interchange Fees, by
11 The
12 By contrast, some states have also conducted qualification-based securities regulation, in which securities are vetted based on whether they are perceived to offer investors a minimum level of quality.
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Regulated Entities
How financial regulation is applied varies, partly because of the different characteristics of various financial markets and partly because of the historical evolution of regulation. The scope of regulators' purview falls into several different categories:
* Regulate certain types of financial institutions. Some firms become subject to federal regulation when they obtain particular business charters or licenses, and several federal agencies regulate only a single class of institution. Depository institutions are a good example: A new banking firm chooses its regulator when it decides which charter to obtain - national bank, state bank, credit union, etc. - and the choice of which type of depository charter may not greatly affect the institution's business mix. The
* Regulate a particular market. In some markets, all activities that take place within that market (for example, on a stock exchange) are subject to regulation. Often, the market itself, with the regulator's approval, issues codes of conduct and other internal rules that bind its members. In some cases, regulators may then require that specific activities can be conducted only within a regulated market. In other cases, similar activities take place both on and off a regulated market (e.g., stocks can also be traded off-exchange in "dark pools"). In some cases, regulators have different authority or jurisdiction in primary markets (where financial products are initially issued) than secondary markets (where products are resold).
* Regulate a particular financial activity or product. If activities are conducted in multiple markets or across multiple types of firms, another approach is to regulate a particular type or set of them, regardless of where the business occurs or which entities are engaged in it. For example, on the view that consumer financial protections should apply uniformly to all products, the Dodd-Frank Act created the
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13
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Because it is difficult to ensure that functionally similar financial activities are legally uniform, all three approaches are needed and sometimes overlap in any given area. Stated differently, risks can emanate from firms, markets, or products, and if regulation does not align, risks may not be effectively mitigated. For example, an activity could migrate to less regulated firms or markets. Market innovation also creates financial instruments and markets that fall between industry divisions. When regulatory jurisdiction is unclear,
The Federal Financial Regulators
Table 1 sets out the current federal financial regulatory structure. Regulators can be categorized into the three main areas of finance - banking (depository), securities, and insurance (where state rather than federal regulators play a dominant role). There are also targeted regulators for specific financial activities (consumer protection) and markets (agricultural finance and housing finance). The table does not include interagency-coordinating bodies, standard-setting bodies, international organizations, or state regulators, which are described later in the report. Appendix A describes changes to this table since the 2008 financial crisis.
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14 See CRS In Focus IF12320, Crypto and Banking: Policy Issues, by
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Crypto as a Case Study
The rapid growth in the cryptocurrency industry in recent years has led to a high-profile and contentious policy debate over how it should be regulated. Crypto - or more broadly, digital assets - typically rely on cryptography and blockchains, which allow them to be created and exchanged without any central intermediary. At the root of this debate are many of the fundamental questions about regulation discussed in this report.
Any regulatory authority specific to crypto at the federal level would need to be granted through an act of
In the absence of new statutory authority, regulators have considered whether crypto fits within their existing regulatory powers. Although it might seem counterintuitive to assert that existing authority can be applied to an industry that did not exist when that authority was promulgated, many regulators have broad authority, and so the question mainly revolves around whether crypto is novel and unique or akin to an existing financial instrument in a new technological package.
One might argue that crypto represents a type of commodity, security, or payment tool, and given the diversity of crypto products, the answer may vary from one type of digital asset to another. Notably, a different regulator has jurisdiction over each of those types of instruments - the CFTC regulates commodities, the
If a regulator believes that it has jurisdiction over some types of crypto products, it can establish jurisdiction using its regulatory powers. It can issue regulations describing the rules that market participants must follow and use its supervisory and enforcement powers to ensure that those regulations are enforced. New rules can be helpful to tailor regulation if a new industry does not fit well within existing rules. Alternatively, a regulator can apply existing rules created for other types of products to the new industry and use enforcement powers to compel industry participants to comply with those rules. Generally, the latter has been the approach that federal regulators have taken with crypto. Industry participants may dispute the agency's interpretation that its rules apply to crypto, and disputes have been taken to court to resolve.
When a new industry emerges and grows rapidly, as was the case for crypto, some industry actors may effectively operate without adherence to existing rules for some initial period of time. Establishing jurisdiction is resource intensive, which is easier to finance for agencies that set their own budgets than for those that must convince
If a firm or individual needs a license or charter to participate in a market, once a regulator establishes jurisdiction over a market, it can then establish authority over market participants by requiring them to seek the proper credentials, which will be granted only through regulatory compliance with existing rules. This means that even though a crypto product may be decentralized - leaving it in effect without an issuer that can be regulated - individuals who trade or offer services for that product can nevertheless be regulated. Ensuring regulatory compliance can become more difficult when firms are domiciled abroad, however - as is the case for several prominent crypto firms. Regulators can also regulate the use of crypto (through rulemaking, guidance, supervision, or enforcement actions) for financial institutions under their jurisdiction even if that regulator does not have jurisdiction over crypto. For example, bank regulators can use their safety and soundness authority to regulate banks' use of crypto./14
For more information, see CRS Report R47425, Cryptocurrency: Selected Policy Issues, by
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Table 1. Federal Financial Regulators and Whom They Supervise
Source: CRS.
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A financial firm may be subject to more than one regulator because it may engage in multiple financial activities, as illustrated in Figure 1. For example, a firm may be overseen by an institution regulator and by an activity regulator when it engages in a regulated activity and a market regulator when it participates in a regulated market. The complexity of the figure illustrates the diverse roles and responsibilities assigned to various regulators.
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Figure 1. Regulatory Jurisdiction by Agency and Type of Regulation
Source: Government Accountability Office, Financial Regulation, GAO-16-175,
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Furthermore, financial firms may form holding companies with separate legal subsidiaries that allow subsidiaries within the same holding company to engage in more activities than is permissible within any one subsidiary. Because of charter-based regulation, certain financial activities must be segregated in separate legal subsidiaries. However, as a result of the Gramm-Leach-Bliley Act of 1999 (GLBA; P.L. 106-102) and other regulatory and policy changes that preceded it, these different legal subsidiaries may be contained within the same financial holding companies (i.e., conglomerates that contain bank subsidiaries and are permitted to engage in a broad array of financially related activities). For example, a banking subsidiary is limited to permissible activities related to the "business of banking" but is allowed to affiliate with another subsidiary that engages in activities that are "financial in nature."/15
As a result, each subsidiary is assigned a primary regulator, and firms with multiple subsidiaries may have multiple institution regulators. If the holding company is a bank holding company, financial holding company, or thrift holding company (with at least one banking or thrift subsidiary, respectively), then the holding company is regulated by the Fed./16
To illustrate how a firm could have multiple primary regulators, Figure 2 shows a stylized example of a special type of bank holding company, known as a financial holding company. This financial holding company would be regulated by the Fed at the holding company level. Its national bank would be regulated by the
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Figure 2. Stylized Example of a
Source: CRS.
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Depository Institution Regulators
Regulation of depository institutions (i.e., banks and credit unions) in
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15 However, banks are not allowed to affiliate with commercial firms, although exceptions are made for industrial loan companies and unitary thrift holding companies.
16 Bank holding companies with nonbank subsidiaries are also referred to as financial holding companies.
17 For more information, see CRS In Focus IF10035, Introduction to Financial Services: Banking, by
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There is a dual banking system, in which each depository institution is subject to regulation by its chartering authority: state or federal./18
Even if state chartered, any state or federally chartered institution that accepts insured deposits is subject to at least one federal primary regulator (i.e., the federal authority responsible for examining the institution for safety and soundness and for ensuring its compliance with federal banking laws). Depository institutions have three broad types of charter - commercial banks, thrifts/19 (also known as savings banks or savings associations and previously known as savings and loans), and credit unions./20
For any given institution, the primary regulator depends on its type of charter. The primary federal regulator for
* national banks and thrifts is the OCC, their chartering authority;
* state-chartered banks that are members of the
* state-chartered thrifts and banks that are not members of the
* foreign banks operating in
* credit unions - if federally chartered or federally insured - is the
National banks, state-chartered banks, and thrifts are also subject to
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18 For more information, see CRS Report R47014, An Analysis of
19 The
20 The charter dictates the activities the institution can participate in and the regulations it must adhere to. Any institution that accepts deposits must be chartered as one of these institutions. However, not all institutions chartered with these regulators accept deposits.
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Figure 3. Jurisdiction Among Depository Regulators
Source:
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Whereas bank and thrift regulators strive for consistency among themselves in how institutions are regulated and supervised, credit unions are regulated under a separate regulatory framework from banks.
Because banks receive deposit insurance from the
Banks are required to keep capital in reserve against the possibility of a drop in value of loan portfolios or other risky assets. Banks are also required to be liquid enough to meet unexpected funding outflows. Federal financial regulators take into account compensating assets, risk-based capital requirements, the quality of assets, internal controls, and other prudential standards when examining the balance sheets of covered lenders.
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21 Losses to the
22 Exceptions are the housing-related institutions regulated by the FHFA and the
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When regulators determine that a bank is taking excessive risks or engaging in unsafe and unsound practices, they have a number of powerful tools at their disposal to reduce risk. Regulators can require banks to reduce specified lending or financing practices, dispose of certain assets, and order banks to take steps to restore sound balance sheets. Banks must comply because regulators have "life-or-death" options, such as withdrawing their charters or deposit insurance or seizing the banks outright.
The federal banking agencies are briefly discussed below. Although these agencies are the banks' institution-based regulators, banks are also subject to
The OCC was created in 1863 as part of the
Following bank panics during the Great Depression, the
Backing deposit insurance is the DIF, which is managed by the
The NCUA, originally part of the
Before the financial crisis, jurisdiction over consumer financial protection was divided among a number of agencies (see Figure A-1). Title X of the Dodd-Frank Act created the
The
* merchants, retailers, or sellers of nonfinancial goods or services to the extent that they extend credit directly to consumers exclusively for the purpose of enabling consumers to purchase such nonfinancial goods or services,
* automobile dealers,
* real estate brokers and agents,
* financial intermediaries registered with the
* insurance companies.
In some areas where the
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23 For more information, see CRS In Focus IF10054, Introduction to Financial Services: The
24 For more information, see CRS In Focus IF11751, Introduction to
25 For more information, see CRS Report R43167, Policy Issues Related to Credit Union Lending, by
26 See CRS In Focus IF10031, Introduction to Financial Services:
27 See the "Other State Regulation" section below.
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Continues with Part 2 of 2
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The report is posted at: https://crsreports.congress.gov/product/pdf/R/R44918
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