Financial Regulators: Overview

Federal and state governments have a myriad of agencies in place that regulate and oversee the financial markets and the companies that do business in the U.S. Although opinions vary on the efficiency, effectiveness, and even the nee💯d for some of these agencies, each was designed with specific goals and most are 🦩likely to be around for the foreseeable future.

Broadly, the goal of all of these agencies is to ensure that consumers and busi🃏nesses🔯 are free to operate in a transparent and efficient environment with safeguards to detect and stop fraud.

The Federal Reserve Board

The Federal Reserve Board (FRB), or "the Fed," often gets the credit for a healthy economy and the blame for economicꦓ downturns. This is not without reason: the Federal Reserve controls the supply of money flowing through the system and the cost of obtaining credit, giving it a high degree of influence over economic conditions.

Its main tool for implementing 澳洲幸运5开奖号码历史查询:monetary policy is its 澳洲幸运5开奖号码历史查询:open market operations, which control the purchase and sale of U.S. Treasury securities and federal agency securities. Purchases and sales of these securities can change the number of reserves or influence the 澳洲幸运5开奖号码历史查询:federal funds rate—the interest rate at which ✤banks lend their balances overnight to other banks.

The Board also supervises and regulates the banking system to maintain the overall stability of the financial system. The 澳洲幸运5开奖号码历史查询:Federal Open Market Committee (FOMC) determines the Fed's actions.

Regulatory Role

One of ✤the key regulatory roles of the FRB is to oversee the commerci🔯al banking sector in the United States.

Most national banks must be members of th♚e 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 澳洲幸运5开奖号码历史查询:bank holding companies (BHCs).

Office of the Comptroller of the Currency

One of the oldest federal agencies, the 澳洲幸运5开⛎奖号码历史查询:Office of the Comptroller of the Currency (O🃏CC) was established in 1863 by the National Currency Act. Its main purpose is to supervise, regulate, a𒊎nd issue charters to banks operating in the U.S.

The OCC is an independent bureau within the 澳洲幸运5开奖号码历史查询:Department of the Treasury. Its mission statement is to "ensure that national banks and federal savings associations operate in a safe and sound manner, provide fair access to financial services, treat customers fairly, and comply with applicable laws and regulations."

Federal Deposit Insurance Corporation

The 澳洲幸运5开奖号码历史查询:Federa🐟l Deposit Insurance Corp♌oration (FDIC) was created by the 澳洲幸运5开奖号码历史查询:Glass-Steagall Act of 1933 to provide insurance on deposits to guarantee the safety of funds kept by depositors at banks. Its mandate is to insure up to $250,000 per depositor at each bank.

The catalyst for the creation of the FDIC was the run on banks during the 澳洲幸运5开奖号码历史查询:Great Depression. The reasoning was simple: Peopl🐻e would have🌌 no reason to panic if they knew their money was safe even if the bank shut down.

What FDIC Insurance Covers

FDIC coverage is extended to cash, or what is defined as cash in the financial world. This is "liquid" money, meaning its owner can quickly and easily retrieve it with little or no loss or penalty.

Checking accounts, savings accounts, certificates of deposit (CDs), and 澳洲幸运5开奖号码历史查询:money market accounts are generally 100% covered by the FDIC. The coverage extends to 澳洲幸运5开奖号码历史查询:individual retirement accounts (IRAs), but only to the moneꦡy that is held in cash accounts like CDs.

Joint accounts, revocable and 🧔irrevocable trust accounts, and employee benefit plans are covered, as are corpor𓆉ate, partnership, and unincorporated association accounts.

FDIC insurance does not cover losses from mutual funds, ꦯannuities, life insurance policies, stocks, or bonds. The contents of safe deposit boxes are not included in FDIC coverage.

Cashier's checks and money orders issued by a failed bank are fully covered by the FDIC.

Office of Thrift Supervision

The 澳洲幸运5开奖号码历史查询:Office of Thrift Supervision (OTS) regulates federal savings associations, also known as thrifts or savings and loans. 澳洲幸运5开奖号码历史查询:Savings and loan institutions offer banking services but, unlike commercial banks, they are owned and operated by their customers.

The OTS was established in 1989 by the Department of the Treasury through the Financial Institutions Reform, Recovery and Enforcement Act of 1989. It is f♊unded solel♏y by the institutions it regulates.

In 2011, the OTS was merged into the Office of the Comptroller of the Currency.

Commodity Futures Trading Commission

The 澳洲幸运5开奖号码历史查询:Co🌺mmodity Futures Trading Commission (CFTC) was created in 1974 as an independent authority to regulate commodity futures and options and other related derivatives markets.

It also seeks to protect participants from market manipulation, investigates abusive trading practices and fraud, and maintaꦗins♒ fluid processes for clearing transactions.

The CFTC has evolved since 1974. In 2000, the Commodity Futures Modernization Act of 2000 was passed. This changed the landscape of the agency by creating a joint process with the 澳洲幸运5开奖号码历史查询:Securities and Exchange Commission (SEC) to regulate single-stock futures.

Financial Industry Regulatory Authority

The 澳洲幸运5开奖号码历史查询:Financial Industr🃏y Regulato⛎ry Authority (FINRA) was created in 2007 from its predecessor, the 澳洲幸运5开奖号码历史查询:National🌼 Association of Secur൩ities Dealers (NASD). FINRA is considered a self-regulatory organization (SRO). Its predecessor was created through the 澳洲幸运5开奖号码历史查询:Securities Exchange Act of 1934.

FINRA oversees all firms that are in the securities business with the public. It is also responsible for trai🎃ning financial services professionals, licensing and testing agents, and overseeing the mediation and arbitration processes for disputes between custom🌟ers and brokers.

State Bank Regulators

State bank regulators operate similarly to the OCC, but at the state level 澳洲幸运5开奖号码历史查询:for state-chartered banks. Their 🥃oversight compl♛ements the work of the Federal Reserve and the FDIC.

For example, in New York State, the Department of Financial Services (DFS) supervises and regulates the activities of about 1,300 N.Y.-domiciled banking and other financial institutions with assets totaling more than $3.3 trillion, and more than 1,900 insurance companies with assets of more than $6.4 trillion. The department has over 1,300 employees and a budget of over $344,750,000 as of December 2024.

State Insurance Regulators

State regulators monitor, review, and oversee insurance businesses in their states. Their duties include protecting con💝sumers, conducting criminal investigations, an🦂d enforcing legal actions.

They also provide licensiওng and authority certificates, which require appli❀cants to submit details of their operations.

State Securities Regulators

These agencies augment FINRA and the SEC for matters associated with the regulation of securities businesses in their state.

These state agencies are responsible for registering 澳洲幸运5开奖号码历史查询:investment advisors, whoꦛ are not required to register with th🎃e Securities and Exchange Commission (SEC).

Securities and Exchange Commission (SEC)

The SEC was established by the 澳洲幸运5开奖号码历史查询:Securities Exchange Act of 1934. One of the most compreh🃏ensive and powerful agencies in the U.S.🍬 government, the SEC enforces federal securities laws and regulates the securities industry.

SEC has regulatory responsibilities over the U.S. 澳洲幸运5开奖号码历史查询:stock exchanges, options markets, and options exchanges as well as all 💛other electronic exchanges and other electronic securities markets. It also regulates investment advisors who are not covered by state regulatory agencies.

The SEC consists of six divisions and 24 offices. Their goals are to interpret and take enforcement actions on securities laws, issue new rules, provide oversight of securities institutions, and coordinate regulation amo🌜ng different levels of governme𒁃nt.

🃏 The six divisi𓆉ons and their respective roles are:

• Division of Corporate Finance: Ensures investors are provided with enough information to make informed decisions about investments they may purchase.
• Division of Enforcement: Enforces SEC regulations by investigating cases and prosecuting civil suits and administrative proceedings.
• Division of Investment Management: 澳洲幸运5开奖号码历史查询:Regulates investment companies, variable insurance products, and federally registered investment advisors.
• Division of Economic and Risk Analysis: Integrates economics and data analytics into the core mission of the SEC.
• Division of Trading and Markets: Establishes and maintains standards for fair, orderly, and efficient markets.
• Division of Examinations: Conducts the SEC’s National Exam Program.

The SEC is allowed to bring only civil actions, either in federal court or before an administrative judg🍒e. Criminal cases fall under the jurisdiction of law enforcement agencies within the Department of Justice. However, the SEC often works closely with these agencies to provide evidence and assi♔st with court proceedings.

The Bottom Line

All of these gove🌳rnment agencies seek to regulate and protect those who participate in the respective industries they govern. Their areas of coverage often overlap, but while their policies may vary, federal agencies usually supersede state agencies. However, this does not mean that state agencies wield less power, as their responsibilities and authorities are far-reaching.

While most people will never deal directly with these agencies, they will affect their lives at some point. This is especially true of the Federal Reserv🐻e, which has a strong hand in influencing liquidity, interest rates, and the cost of loans.