Banking Law

Banking Law Description: Banking law covers several types of financial institutions, including banks, savings unions, credit unions, and savings and loans. Banking law generally applies to domestic and international providers and consumers of debt financing including, on the lending side, domestic and foreign banks, bank holding companies, leasing companies, finance companies and other financial institutions and, on the borrowing side, corporate, government, institutional, individual and financial intermediary borrowers.

Banking law covers topics such as incorporation of banks, corporate and private lending, financing and refinancing, cross-border and international banking transactions, financial leasing, loans, electronic banking and regulatory and corporate governance.Perhaps the single most significant theme of bank regulation has been the coexistence of state and federal regulators with sometimes overlapping jurisdictions. Under the federal government, the comptroller of currency charters national banks. The Federal Reserve Board and the Federal Deposit Insurance Corporation regulate. Federal banking law requires than any deposit-taking institutions be chartered as banks.

Each state has its own state official that regulates banks. The official is usually called the Director, Superintendent, or Director of Banks.Banks are controlled by the lawsthat create them. Checking accounts are governed by state law supplemented by some federal law.

Banking lawyers provide legal assistance during financial transactions. This assistance includes tax consequences, government regulations, and issues with an individualsbank.

Banking Law Topics (alphabetical):

Banking Act: Passed in 1933, the Banking Act eparated commercial banking from investment activities by restricting commercial banks from underwriting or distributing any securities other than federal government bonds; authorized the Federal Reserve Board to regulate the amount of interest that banks could pay on time deposits and toprohibit payment of interest on demand deposits; and created the Federal Deposit Insurance Corporation, designed to insure bank deposits up to some maximum amount with membership mandatory for Federal Reserve members and voluntary for nonmembers.

Bank Holding Company Act: prohibits companies that own banks both from engaging in activities that are not closely related to banking and from acquiring banks across state lines.

Federal Deposit Insurance Corporation (FDIC): Created in 1933, the FDIC was designed to assure depositors that their savings were safe, and thus eliminate bank panics. The FDIC insures bank accounts up to $100,000.

The Gramm-Leach Bliley Act (GLBA): The Gramm-Leach Bliley Act, passed under President Clinton, requires financial institutions, including colleges and universities, to develop, implement, and maintain a comprehensive written information security program that contains administrative, technical, and physical safeguards appropriate to the size and complexity of the institution, the nature and scope of its activities, and the sensitivity of any customer information issue. The Gramm-Leach-Bliley Act establishes, for the first time, a minimum federal standard of financial privacy. It empowers consumers to prohibit their financial institutions from sharing information with most outside parties.

National Bank Act: passed in the 1860s, this act extended the issuance of banking charters to federal law as well as state law, and also established limitations on national banks, such as a limit on the ability to own real estate, minimum limits on capital requirements, and limits on loan amounts to a single borrower.

The National Bank Act established a uniform system of currency and created the position of Comptroller of the Currency as the regulatory agent of federally-chartered banks.