Banking Law – Poe Fall 2005
I. Introduction and Overview
A. Banking Industry itself à highly regulated industry
B. 3 federal regulators of banks and bank holding companies à Fed, OCC, FDIC
1. OCC primary regulator of national banks „³ no state charter, federal one
2. FDIC „³ primary federal regulator for state chartered banks
C. Reg Z à implements TILA
D. Commercial law affects Bank Industry à 6 of 10 sections affect banking law
1. article 3 commercial paper affects checks, notes
2. article 4 affects loans
E. Corporate law also affects banks, e.g. Securities laws
F. several types of regulators who regulate several types of institutions
1. OCC à regulates national banks; national in terms of charter-not geography
a. N.A. or “National” denotes national bank (N.A. = National Association)
2. FDIC à regulates state chartered banks; each state has banking commission that charters and regulates state banks (also FDIC)
a. FDIC also regulates national banks in a secondary role
3. FED à primary regulator for bank holding companies (BHCs) and financial holding companies (FHCs)
a. BHC and FHC are simply parent company of a bank à holds the banks stock and often non-banking companies as well
b. FED also has other functions à central bank
i. Board and regional banks under the Board
4. OTS à savings and loan; savings bank (Piedmont Federal) all grouped as thrifts à takes deposits and make loans à originally chartered to gather consumer deposits and make mortgage loans whereas banks were more commercially focused
5. NCUA à credit unions are financial institution that is non-profit membership organization à originally set up by companies, but have grown beyond that now – what do banks do?
a. maintain deposit accounts, checking, savings,
b. make loans à mortgages, commercial loans, auto loans, student loans,
c. sell loans à mortgage backed securities; CMO and other securitizations
d. loans are assets on the banks books; deposits are liabilities
e. securities
g home loans, not cars, not credit cards
Savings and loan industry used to be a lot larger but it went through trouble in the 70’s
We had a huge S&L financial crisis in the late 70’s and early 80’s
Half of them failed
A lot of them converted to banks
Credit Union
For members
Set up to offer employees of a particular company or industry who shared a “common bond”
Took deposits/ made loans
Non-profit institution
What that means in non taxable
Now there is a war b/w commercial banks and CU’s b/c CU’s don’t pay taxes but they do the same things that banks are doing
Commercial Banks
What banks do:
Deposits
Checking accounts
Savings accounts
Certificates of deposits
