Banking Regulations, Financial Laws and Statutes that Govern Banks

Banking Regulations, Financial Laws and Statutes that Govern Banks

What are Banking Regulations?

Banking regulations are a form of government regulation which subjects banks to certain requirements, restrictions and guidelines. Banking regulations aim to uphold the soundness and integrity of the financial system.  Following is a list of banking regulations: The most common objectives are:

  • Prudential – to reduce the level of risk bank creditors are exposed to (i.e. to protect depositors)
  • Systemic risk reduction – to reduce the risk of disruption resulting from adverse trading conditions for banks causing multiple or major bank failures
  • Avoid the misuse of banks – to reduce the risk of banks being used for criminal purposes (e.g. laundering the proceeds of crime)
  • To protect banking confidentiality
  • Credit allocation – to direct credit to favored sectors

List of Banking Regulations

Regulation A – Relates to extensions of credit by Federal Reserve Banks to depository institutions and others. It establishes rules under which Federal Reserve Banks may extend credit to depository institutions and others.

Regulation B  – Prohibits creditor practices that discriminate on the basis of race, color, religion, national origin, sex, marital status, or age (provided the applicant has the capacity to contract); to the fact that all or part of the applicant’s income derives from a public assistance program; or to the fact that the applicant has in good faith exercised any right under the Consumer Credit Protection Act. Also requires creditors to notify applicants of action taken on their applications; to report credit history in the names of both spouses on an account; to retain records of credit applications; to collect information about the applicant’s race and other personal characteristics in applications for certain dwelling-related loans; and to provide applicants with copies of appraisal reports used in connection with credit transactions.

Regulation C – Implements the Home Mortgage Disclosure Act, which is intended to provide the public with loan data that can be used to help determine whether financial institutions are serving the housing needs of their communities; to assist public officials in distributing public-sector investments so as to attract private investment to areas where it is needed; and to assist in identifying possible discriminatory lending patterns and enforcing anti-discrimination statutes. Requires certain lenders to complete Loan Application Registers to track home purchase loans, home improvement loans and refinancing. Regulation D This regulation relates to reserves that depository institutions are required to maintain. It also provides guidance on NOW account eligibility, MMDA and savings account transfer restrictions, and early withdrawal penalties. Regulation E This regulation protects individual consumers engaging in electronic fund transfers and carries out the purposes of the Electronic Fund Transfer Act, which establishes the basic rights, liabilities, and responsibilities of EFT consumers of financial institutions that offer these services.

Regulation F – Designed to limit the risks that the failure of a depository institution would pose to other insured depository institutions. Provides requirements relating to interbank liabilities.

Regulation G – Disclosure and Reporting of CRA-Related Agreements

Regulation H – Provides guidance on a variety of matters relating to state-chartered member banks, from real estate lending standards to standards for safety and soundness.

Regulation I – Implements the provisions of the Federal Reserve Act relating to the issuance and cancellation of Federal Reserve Bank stock upon becoming or ceasing to be a member bank, or upon changes in the capital and surplus of a member bank, of the Federal Reserve System.

Regulation J – Governs the collection of checks and other cash and non-cash items and the handling of returned checks by Federal Reserve Banks and provides rules for collecting and returning items and settling balances.

Regulation K – Sets out rules governing the international and foreign activities of U.S. banking organizations, including procedures for establishing foreign branches and Edge corporations to engage in international banking and for investments in foreign organizations.

Regulation L  – Implements the Depository Institution Management Interlocks Act to foster competition by generally prohibiting a management official from serving two non-affiliated depository organizations in situations where the management interlock likely would have an anti-competitive effect.

Regulation M – Implements the consumer leasing provisions of the Truth in Lending Act.

Regulation N – Governs relationships and transactions between Federal Reserve Banks and foreign banks or bankers or groups of foreign banks, or bankers, or a foreign State.

Regulation O – This regulation governs extensions of credit to insiders, which includes directors, executive officers, and principal shareholders of a bank and its affiliates. It includes special restrictions on loans to executive officers.

Regulation P –  Requires a financial institution to provide notice to customers about its privacy policies and practices; describes the conditions under which a financial institution may disclose nonpublic personal information about consumers to non-affiliated third parties; and provides a method for consumers to prevent a financial institution from disclosing that information to most non-affiliated third parties by “opting out” of that disclosure.

Regulation Q – provides guidelines and restrictions relating to interest on deposits and advertising.

Regulation R was repealed effective December 6, 1996. It dealt with interlocking relationships between securities dealers and banks.

Regulation S establishes the rates and conditions for reimbursement of reasonably necessary costs directly incurred by financial institutions in assembling or providing customer financial records to a government authority pursuant to the Right to Financial Privacy Act.

Regulation T regulates extensions of credit by brokers and dealers. It imposes, among other obligations, initial margin requirements and payment rules on certain securities transactions.

Regulation U This regulation imposes credit restrictions upon persons other than brokers or dealers that extend credit for the purpose of buying or carrying margin stock if the credit is secured directly or indirectly by margin stock. Regulation V This regulation implements portions of the Fair Credit Reporting Act (FCRA). Includes model notices that can be used to notify customers either before or immediately following the delivery of negative information. Regulation W This regulation implements Sections 23A and 23B of the Federal Reserve Act which govern most transactions between banks and their affiliates. The term “banks” includes all national banks, as well as insured state member and nonmember banks and, for certain purposes, US branches and agencies of foreign banks.

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Regulation Y – Regulates the acquisition of control of banks by companies and individuals; defines and regulates the non-banking activities in which bank holding companies and foreign banking organizations with United States operations may engage; and sets forth the procedures for securing approval for these transactions and activities. Regulation Z This regulation designed to help consumers “comparison shop” for credit by requiring disclosures about its terms and cost. The regulation gives consumers the right to cancel certain credit transactions that involve a lien on a consumer’s principal dwelling, regulates certain credit card practices, and provides a means for fair and timely resolution of credit billing disputes. The regulation requires a maximum interest rate to be stated in variable-rate contracts secured by the consumer’s dwelling. It also imposes limitations on certain home equity and mortgages. Regulation AA This regulation establishes consumer complaint procedures; defines unfair or deceptive acts or practices of banks in connection with extensions of credit to consumers. Prohibits certain practices, such as taking a non-purchase money security interest in household goods. Regulation BB This regulation implements the Community Reinvestment Act. Regulation CC This regulation contains rules regarding the duty of banks to make funds deposited into accounts available for withdrawal, including availability schedules plus rules regarding exceptions to the schedules, disclosure of funds availability policies, payment of interest, and liability. Also contains rules to expedite the collection and return of checks by banks, including the direct return of checks, the manner in which the paying bank and returning banks must return checks to the depositary bank, notification of nonpayment by the paying bank, endorsement and presentment of checks, same-day settlement for certain checks, and other matters. Regulation DD This regulation implements the Truth in Savings Act to enable consumers to make informed decisions about deposit accounts at depository institutions. Requires depository institutions to provide disclosures so that consumers can make meaningful comparisons among depository institutions. Regulation EE This regulation expands the FDIC Improvement Act of 1991 definition of a “financial institution” for financial market participants who avail themselves of the netting provisions of the Act regarding contracts in which the parties agree to pay or receive the net, rather than the gross, payment due. Regulation FF This regulation extends the rules on obtaining and using medical information in connection with credit to creditors other than those regulated by the OCC, FRB, FDIC, OTS and NCUA. HUD’s Reg X This regulation implements the provisions of the Real Estate Settlement Procedures Act (RESPA).


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