What Is a Commissioner Of Banking?

A commissioner of banking is a regulatory director that oversees all of the banks in a state. In addition to enforcing regulations and leading investigations into wrongdoing, the commissioner of banking supervises the liquidation of insolvent banks and performs other administrative functions.

Key Takeaways

  • In the United States, the commissioner of banking is appointed by a governor or state assembly to oversee the state's banks.
  • The commissioner of banking is responsible for administering and enforcing the banking and financial policies and regulations of a state.
  • In addition, the commissioner will aid in liquidation of failed banks, issuing charters to new banks, and establish licensing criteria for individuals in the sector.

Understanding Commissioners Of Banking

A banking commissioner serves a similar role as the insurance commissioner, and those who hold this office may have political aspirations. They are typically regarded as the chief executive and administrative officer of a state's banking or finance department. They are responsible for the administration of state financial policies and are usually the final state authority in the banking industry.

In most states, the commissioner is not an elected position but is appointed, usually by the governor.

Responsibilities for a Commissioner of Banks

A banking commissioner may be responsible for chartering, licensing and regulating financial institutions and companies operating within a state. Those institutions and companies may include state-chartered banks, savings banks, savings and loan associations, credit unions, trust companies, mortgage lenders, mortgage servicers, mortgage brokers, mortgage loan originators, mortgage loan processors, mortgage loan underwriters, consumer finance companies, check cashiers, money transmitters and tax refund anticipation loan facilitators.

A banking commissioner may also be tasked with monitoring the strength and fairness of a state's financial services marketplace through the supervision and regulation of financial service providers in that marketplace. They may also be responsible for administering a complaint resolution process that facilitates communication between consumers and the various regulated financial entities. 

A commissioner of banking may also mandate examinations of each financial institution and licensed lender and broker to ensure compliance with state and federal laws and regulations. They might also have the authority to investigate consumer complaints, hold public hearings and assess administrative fines and order restitution if state laws are violated by institutions under the commissioner's jurisdiction.

A banking commissioner's office may also be responsible for making sure that financial service providers operate in a safe and sound manner, industries function as a coordinated system considering the broad scope of the financial services arena under its jurisdiction, and consumers that seek services from licensed financial service providers are protected from unfair or damaging practices.

Other responsibilities that a banking commissioner would have might include processing and reviewing applications by depository institutions for new charters, branches, relocations, plans of acquisition, mergers, bulk sales, stock conversions and auxiliary offices. In addition, they might be responsible for the examination of state-chartered commercial banks, savings banks and savings and loan institutions and for enforcement actions involving these depositories.