A:

There are a number of agencies assigned to regulate and oversee financial institutions and financial markets, including the Federal Reserve Board (FRB), the Federal Deposit Insurance Corporation (FDIC), and the Securities and Exchange Commission (SEC). Each agency has specific responsibilities, allowing them to function independently. Though the effectiveness and efficiency with which these regulatory entities manage financial institutions is sometimes questioned, each was formed to help achieve the overall goal of providing sensible regulation of markets and protection for investors and consumers.

The Federal Reserve Board

Probably the most well-known of all the regulatory agencies is the FRB. This agency is responsible for exacting influence on liquidity and overall credit conditions. Its primary monetary policy tool is open market operations that control the buying and selling of U.S. Treasury and federal agency securities. Such purchases and sales determine the federal funds rates and alter the level of reserves available. The FRB is also responsible for primary regulation and supervision of the U.S. banking system, which in turn provides overall economic financial stability in the United States.

The Federal Deposit Insurance Corporation

The FDIC is a U.S. government corporation created by the Banking Act of 1933 in the wake of the Great Depression. This agency provides deposit insurance, which guarantees depositor accounts' safety, up to $250,000, in any of its member banks. As of 2014, the FDIC insured deposits at over 6,500 institutions.

This agency is also responsible for analyzing and supervising the safety and stability of financial institutions, performing consumer protection functions and managing failed banks. The FDIC is funded by the premiums paid by banks and thrift institutions for deposit insurance coverage and by the earnings generated from investments in U.S. Treasury debt securities.

The Office of the Comptroller of the Currency

The Office of the Comptroller of the Currency (OCC) is among the oldest of all the federal regulatory agencies, established in 1863 by the Currency Act. The OCC primarily functions to regulate, supervise and offer charters to banks that operate in the U.S. These functions help to ensure the overall stability and safety of the U.S. banking system.

The Commodity Futures Trading Commission

In 1974, the Commodity Futures Trading Commission (CFTC) was created as an independent regulator of commodity futures and options markets. This agency provides efficient and competitive futures markets, and protects traders from market manipulation and other fraudulent trading practices. In 2000, the agency combined with the SEC, the overall supervisory agency of stock exchange trading, to help regulate single stock futures.

The Securities and Exchange Commission

The SEC was established in 1934 by the Securities Exchange Act and is among the most powerful and comprehensive financial regulatory agencies. The SEC enforces federal securities laws and regulates a large portion of the securities industry, including the U.S. stock exchanges and options markets.

The Consumer Financial Protection Bureau

The Consumer Financial Protection Bureau (CFPB) is a regulatory agency that oversees all finance-related products and services provided to consumers. This agency is segmented into a variety of different units, including the Office of Fair Lending, consumer complaints, research and community affairs. The CFPB's ultimate goal is to educate consumers about financial products and services that are available to them, and to provide another level of consumer protection through its oversight of financial services.

RELATED FAQS
  1. How are asset management firms regulated?

    Find out how the asset management industry is regulated and how those regulations fit within the broader scope of financial ... Read Answer >>
  2. Why some insurance policies are more expensive than others?

    There are several reasons that an insurance policy can cost more or less at different agencies. Some of the more common reasons ... Read Answer >>
  3. Who regulates a credit rating agency?

    Find out how American and international regulators interact with Credit Rating Agencies, and learn about the rules adopted ... Read Answer >>
  4. What are the Federal Reserve's guidelines on demand deposit accounts?

    Read about some of the Federal Reserve's requirements and guidelines regarding the treatment, safeguarding and processing ... Read Answer >>
  5. Why is my 401(k) not FDIC-Insured?

    Learn about the Federal Deposit Insurance Corporation (FDIC) and whether its protection extends to 401(k) accounts or just ... Read Answer >>
Related Articles
  1. Financial Advisor

    Who's Looking Out For Investors?

    If your account has been mishandled, FINRA and the SEC are among several organizations that can help.
  2. Personal Finance

    Get To Know Your Consumer Financial Protection Bureau

    The CFPB is there to protect you and hear your voice. You can help with the economic recovery by getting to know the bureau.
  3. Insights

    A Brief History of U.S. Banking Regulation

    From the establishment of the First Bank of the United States to Dodd-Frank, American banking regulation has followed the path of a swinging pendulum.
  4. Personal Finance

    How the Consumer Financial Protection Bureau Works

    By cracking down on unfair or deceptive financial service practices, CFPB aims to give consumers more control over their economic lives.
  5. Insights

    Understanding the SEC

    The SEC's triple mandate of investor protection, maintenance of orderly markets and facilitation of capital formation makes it a vital player in capital markets.
  6. Small Business

    A New Plan To Prevent Future Bailouts

    This new and innovative plan by the FDIC could help the government avoid the next bailout.
  7. Insurance

    From Booms To Bailouts: The Banking Crisis Of The 1980s

    The economic environment of the late 1970s and early 1980s created the perfect storm for a banking crisis.
  8. Investing

    What's the Primary Market?

    The primary markets are where investors can get first crack at a new security issuance.
RELATED TERMS
  1. Primary Regulator

    The state or federal regulatory agency that is the primary supervising ...
  2. FDIC Insured Account

    A bank account that meets the requirements to be covered or insured ...
  3. Regulatory Capture

    Regulatory capture is a theory associated with George Stigler, ...
  4. Administrative Law

    The body of law that governs the administration and regulation ...
  5. Commodity Futures Trading Commission - CFTC

    An independent U.S. federal agency established by the Commodity ...
  6. Financial Services Agency - FSA

    The Japanese government entity responsible for overseeing banking, ...
Hot Definitions
  1. Promissory Note

    A financial instrument that contains a written promise by one party to pay another party a definite sum of money either on ...
  2. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
  3. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  4. Absolute Advantage

    The ability of a country, individual, company or region to produce a good or service at a lower cost per unit than the cost ...
  5. Nonce

    Nonce is a number added to a hashed block, that, when rehashed, meets the difficulty level restrictions.
  6. Coupon

    The annual interest rate paid on a bond, expressed as a percentage of the face value. It is also referred to as the "coupon ...
Trading Center