DEFINITION of 'Banking Department'

The banking department is a state-specific regulatory body that oversees the operations of financial institutions within its jurisdiction. The primary responsibility of the banking department is to ensure that the financial system is accessible, stable and safe for all consumers. Types of financial institutions that fall under the supervision of the banking department include commercial banks, credit unions, money transmitters and nonbank mortgage lenders.

BREAKING DOWN 'Banking Department'

Not all banks operating in a state fall within that state's jurisdiction. State-chartered banks and some non-bank affiliates of federally-chartered banks may fall within the jurisdiction of that state’s banking regulatory authority, while some federally-chartered banks may fall within the jurisdiction of the Federal Reserve System or the Federal Deposit Insurance Corporation (FDIC).

Many banks may fall within the jurisdictions of both state and federal banking regulatory authorities. A state-chartered bank that is a member of the Federal Reserve system will fall under the oversight of both that state’s banking department and the Federal Reserve, while state-chartered banks that are not a part of the Federal Reserve System will fall under the oversight of both that state’s banking department and the FDIC. In this manner, most banks are regulated by both state and federal regulatory agencies. Depending on a bank’s organizational structure and the type of charter it has, it can be subject to a number of federal and state regulations, many of them somewhat redundant. The combination of federal and state oversight of banks is known as the dual banking system.

Purpose of State Banking Departments

State banking departments evolved out of a need for bank chartering agencies in the early days of the United States, at a time when there was no strong federal banking system or national bank. State banking departments were the first entities authorized to charter banks, and they continue to charter banks today. The dual banking system as it is known today formed in the late 19th century, after the passage of the National Bank Act of 1863, which formed the Office of the Comptroller of the Currency (OCC) and authorized the OCC to charter national banks.

Contacting the State Banking Department

The state banking department is where many consumers go to file a complaint against a financial institution that is within the banking department's jurisdiction. The Consumer Financial Protection Bureau (CFPB) maintains a database of state banking department contact information. The Office of the Comptroller of the Currency also helps to direct consumer complaints to the appropriate banking regulatory agency, whether that be a state banking department or a federal agency.

  1. State Bank

    A state bank is a financial institution that a state has chartered ...
  2. Consolidated Reports of Condition ...

    Consolidated Reports of Condition and Income are used by U.S. ...
  3. Federal Reserve Bank Of New York

    The Federal Reserve bank that is responsible for the second district ...
  4. Commissioner Of Banking

    A commissioner of banking is a commissioner that oversees all ...
  5. Business Banking

    Business banking is a company's financial dealings with an institution ...
  6. Bankers' Bank

    A bankers' bank is a specific type of bank that a group of larger, ...
Related Articles
  1. Insights

    What Do the Federal Reserve Banks Do?

    These 12 regional banks are involved with four general tasks: formulate monetary policy, supervise financial institutions, facilitate government policy and provide payment services.
  2. Insights

    Financial Regulators: Who They Are and What They Do

    Find out how these financial regulators govern the financial markets.
  3. Tech

    The Pros And Cons Of Internet Banks

    Learn how internet banking services stack up against their brick-and-mortar peers. Find out what internet banks have to offer and where they fall short.
  4. Financial Advisor

    Why Banks Don't Need Your Money to Make Loans

    Contrary to the story told in most economics textbooks, banks don't need your money to make loans, but they do want it to make those loans more profitable.
  5. Tech

    What Are the Biggest Risks Associated With Banks Today?

    Evolving mechanisms and techniques of cybercrime have become the most severe risk associated with banks today.
  6. Investing

    How Bank of America Holds 1/8 of All U.S. Deposits

    Bank of America isn't America's central bank, but given its size and spread, you could be forgiven this misapprehension.
  7. Insights

    The 3 Biggest Canadian Banks (RY, TD)

    Examine some of the largest banks in Canada, which also rank among the largest and most important banks in the industry worldwide.
  1. What factors are the primary drivers of banks' share prices?

    Find out which factors are most important when determining the share price of banks and other lending institutions in the ... Read Answer >>
  2. How do leverage ratios help to regulate how much banks lend or invest?

    Learn what leverage ratios mean for banks, how regulators restrict leverage, and what impact ratios have on a bank's ability ... Read Answer >>
  3. How are investment banks regulated in the United States?

    Read about the extensive regulations placed on investment banks in the United States, beginning with the Glass-Steagall Act ... Read Answer >>
  4. How do interest rate changes affect the profitability of the banking sector?

    Learn how interest rates affect the banking sector. When interest rates rise, the profitability of the banking sector increases. Read Answer >>
  5. Why is the capital adequacy ratio important to shareholders?

    Understand what the capital adequacy ratio is and why it is a very important metric of financial soundness for evaluating ... Read Answer >>
Hot Definitions
  1. Portfolio

    A portfolio is a grouping of financial assets such as stocks, bonds and cash equivalents, also their mutual, exchange-traded ...
  2. Gross Profit

    Gross profit is the profit a company makes after deducting the costs of making and selling its products, or the costs of ...
  3. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
  4. Intrinsic Value

    Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
  5. Current Assets

    Current assets is a balance sheet item that represents the value of all assets that can reasonably expected to be converted ...
  6. Volatility

    Volatility measures how much the price of a security, derivative, or index fluctuates.
Trading Center