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Banks And The Economy

Banks and the Economy
Banks and bank-like financial institutions operating within the United States and within most other countries must deal with extensive regulation in the form of rules and laws enforced by federal and state agencies. These regulations cover and monitor all areas of their operations, service offerings, credit quality and quantity, and the manner in which they grow and expand their facilities. This is primarily designed to protect the public interest, to encourage savings and investment by establishing an environment of economic soundness and stability, and to provide the public adequate financial information and credit without discrimination.
In the United States, banks are regulated through a dual banking system; they are governed at both the state and federal level. This was designed to give the states significant control over banks, and also to ensure that banks would be treated fairly as they expanded their operations across state lines. Regulatory agencies are responsible for gathering and evaluating the information necessary to assess the true financial condition of banks to protect the public against loss due to mismanagement, embezzlement or fraud through periodic examinations and/or audits. The main regulatory agencies at the federal level are the Comptroller of the Currency, the Federal Reserve System and the Federal Deposit Insurance Corporation. The Federal Reserve Board is responsible for regulating the activities of state banks that are members of the Federal Reserve System, bank holding companies, the U.S. operations of foreign banks, and Edge Act and Agreement corporations. The Board approves or denies applications for merger, acquisitions and changes in control by state member banks and bank holding companies and approves or denies applications for foreign operation of member banks. In addition, Congress selected the Federal Reserve to write regulations implementing a number of consumer protection laws such as...

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