Banking in the United States
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In the United States,
The beginnings of the banking industry can be traced to 1780 when the Bank of Pennsylvania was founded to fund the American Revolutionary War. After merchants in the Thirteen Colonies needed a currency as a medium of exchange, the Bank of North America was opened to facilitate more advanced financial transactions.
As of 2018, the largest banks in the United States were JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, and Goldman Sachs. It is estimated that banking assets were equal to 56 percent of the U.S. economy.[clarification needed][What particular statistic of the US economy?] As of September 8, 2021, there were 4,951 FDIC insured commercial banks and savings institutions in the U.S.[1]
History
Investment banking began in the 1860s with the establishment of Jay Cooke & Company, one of the first selling agents for government bonds.[2] In 1863, the National Bank Act was passed to create a national currency and a federal banking system, and to make public loans.[2] But at that time not all parts of the country had become states. In Oklahoma Territory, which did not become a state until 1907, Muskogee mayor H.B. Spaulding resigned in 1902 from his position as vice-president of the Territorial Trust and Surety Company, after his Spaulding Mercantile Company was given a charter to found a private bank. Similarly in 1903 several more private banks were founded. One contemporary banker from Oklahoma defending the vitality of these private non-US banks did note that a small number of bank failures had resulted from a "dip in deposits due to partial crop failure".[3]
In 1913 the
Regulatory agencies
While most countries have only one bank regulator, in the U.S., banking is regulated at both the federal and state levels.[4] Depending on its type of charter and organizational structure, a banking organization may be subject to numerous federal and state banking regulations. Unlike Switzerland and the United Kingdom (where regulatory authority over the banking, securities and insurance industries is combined into one single financial service agency), the U.S. maintains separate securities, commodities, and insurance regulatory agencies—separate from the bank regulatory agencies—at the federal and state levels.[5] U.S. banking regulations address privacy, disclosure, fraud prevention, anti-money laundering, anti-terrorism, anti-usury lending, and the promotion of lending to lower-income populations. Some individual cities also enact their own financial regulation laws (for example, defining what constitutes usurious lending).[4]
Federal Reserve system
The
Federal Deposit Insurance Corporation
Office of the Comptroller of the Currency
The Office of the Comptroller of the Currency (OCC) is a U.S. federal agency established by the
Office of Thrift Supervision
The Office of Thrift Supervision is a
Consumer Financial Protection Bureau
Bank classification
There are various classifications and charters that a bank can obtain in the United States. Depending on their classification, they may be overseen by the Federal Reserve and supervised by either the FDIC or OCC.
National bank
A national bank is a bank that is nationally or federally chartered and is allowed to operate throughout the country in any state. An advantage of holding a National Bank Act charter is that a national bank is not subject to state usury laws intended to prevent predatory lending.
State bank
A state bank is a bank that is state chartered, meaning that it has been formed under the laws of a specific state government and not the federal government. Although historically state banks could only operate within the state where it was chartered, this distinction slowly eroded. In 2010, this distinction was eliminated with the passage of the
State non-member bank
These are the similar to state chartered banks but are not members of the federal reserve. They are still overseen by the FDIC.[17]
Federal savings association
Federal savings associations (FSAs), including federal savings banks (FSBs), are chartered under the
State savings association
This is similar to a federal savings association but is registered under state law. They are overseen by the FDIC.
FDIC charter class table
Code | Description of class of bank |
---|---|
N | Commercial bank, national (federal) charter and Fed member, supervised by the Office of the Comptroller of the Currency (OCC) |
SM | Commercial or savings bank, state charter and Fed member, supervised by the Federal Reserve (FRB) |
NM | Commercial bank, state charter and Fed nonmember, supervised by the FDIC or OCC |
SB | Savings banks, state charter, supervised by the FDIC |
SA | As of July 21, 2011, FDIC supervised state chartered thrifts and OCC supervised federally chartered thrifts. Before that date, state or federally chartered savings associations supervised by the Office of Thrift Supervision (OTS). |
OI | Insured U.S. branch of a foreign chartered institution (IBA) |
Bank mergers and closures
Banking privacy
In the United States, banking privacy and information security is not protected through a singular law nor is it an unalienable right.[4] The regulation of banking privacy is typically undertaken by a sector-by-sector basis.[4] The most prominent federal law governing banking privacy in the U.S. is the Gramm-Leach-Bliley Act (GLB).[4] This regulates the disclosure, collection, and use of non-public information by banking institutions.[4] Additionally, the Federal Trade Commission (FTC) serves as the primary protector of banking privacy by fining violators of federal and state banking privacy laws.[4] Unlike banking in Switzerland or other European countries, violations of banking privacy are usually a civil offense not a criminal one.[4] However, the Financial Industry Regulatory Authority (FINRA) offers numerous banking privacy provisions within its statutes.[18][19]
List of banks
According to the FDIC, there were 6,799 FDIC-insured commercial banks in the United States as of February 11, 2014.
See also
- Credit in the Thirteen Colonies
- Financial services in the United States
- 3-6-3 Rule
- Banking in Switzerland
- Banking in Germany
- Banking in the United Kingdom
References
- ^ "FDIC-Insured Institutions Reported Net Income of $70.4 Billion in Second Quarter 2021". www.fdic.gov. September 8, 2021. Retrieved October 4, 2021.
- ^ ISSN 0099-9660. Retrieved May 20, 2018.
- ISBN 9780806150260. Retrieved July 24, 2019.
- ^ a b c d e f g h i j Sotto (2014), p. 191
- ^ Financial Services Agency (PDF). Government of Japan Financial Services Agency. September 1, 2013. Retrieved February 20, 2014.
- ^ "Born of a panic: Forming the Federal Reserve System". Federal Reserve Bank of Minneapolis. August 1, 1988. Archived from the original on May 16, 2008. Retrieved May 18, 2016.
- ISBN 0-945466-33-1. Retrieved February 20, 2014.
Just before the founding of the Federal Reserve, the nation was plagued with financial crises. At times, these crises led to 'panics', in which people raced to their banks to withdraw their deposits. A particularly severe panic in 1907 resulted in bank runs that wreaked havoc on the fragile banking system and ultimately led Congress in 1913 to write the Federal Reserve Act. Initially created to address these banking panics, the Federal Reserve is now charged with a number of broader responsibilities, including fostering a sound banking system and a healthy economy.
- ^ Rothbard, Murray. A History of Money and Banking in the United States: The Colonial Era to World War II.
It was founded by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system. Over the years, its role in banking and the economy has expanded.
- ISBN 978-0-8153-0970-3.
- ^ "Mission". Board of Governors of the Federal Reserve System. November 6, 2009. Retrieved February 20, 2014.
- ^ a b "Institution Directory". FDIC. February 11, 2014. Archived from the original on November 13, 2011. Retrieved February 20, 2014.
- ^ "FDIC: Who is the FDIC?". FDIC. January 18, 2013. Retrieved February 20, 2014.
- ^ "OCC: About the OCC". Department of the Treasury. Retrieved February 20, 2014.
- ^ Beneficial National Bank v. Anderson, 539 U.S. 1 (2003).
- Cuomo v. Clearing House Association, L. L. C., 557 U.S. ___ (Supreme Court of the United States2009).
- ^ "SR 11-3: De Novo Interstate Branching by State Member Banks". Federal Reserve.
- ^ "What Are Non-Member Banks?".
- ^ "Customer Information Protection". www.finra.org. Retrieved July 22, 2018.
Protection of financial and personal customer information is a key responsibility and obligation of FINRA member firms. Under the SEC's Regulation S-P, firms are required to have policies and procedures addressing the protection of customer information and records. This includes protecting against any anticipated threats or hazards to the security or integrity of customer records and information and against unauthorized access to or use of customer records or information. The rule also requires firms to provide initial and annual privacy notices to customers describing information sharing policies and informing customers of their rights.
- ^ "Protecting Personal Confidential Information". www.finra.org. Archived from the original on July 31, 2018. Retrieved July 22, 2018.
Except for arbitration awards, which are publicly available, the documents and information in FINRA Dispute Resolution case files are confidential. FINRA Dispute Resolution limits access to personal confidential information to FINRA staff members who need it to perform their job functions, and to arbitrators, mediators, or other individuals involved directly in the arbitration or mediation process. Examples of personal confidential information include:
- ^ Lynch, David J. (April 19, 2012). "Big Banks: Now Even Too Bigger to Fail". Bloomberg Businessweek. Archived from the original on April 22, 2012. Retrieved February 20, 2014.