National bank regulation of commercial bank Term Paper

National bank regulation of commercial bank - Term Paper Example Nevertheless, every banking institution come under the regulatory fold either under a state government of federal body. The regulations are enforced in many respects and cover many aspects. The Federal Reserve The Federal Reserve, the Fed, can be called as banker's bank and a regulator of majority of commercial banks and financial institutions and also country's money manager. The Federal Reserve is the United States central bank. This is the biggest regulatory body of the nation. All national and commercial banks take cue from the Fed in their day to day activities. The Fed's mandates aims at promoting sustainable growth, stability of prices, high levels of employment, and maintain the purchasing power of the dollar keeping moderate long-term interest rates. In the U.S, the term ‘National bank’ has a clear definition: those who come under the purview of the National Bank Act. They are supervised by the Office of Comptroller of the currency (OCC), under US Treasury Depar tment. Banks forms under this act are required to follow the designation â€Å"National Association† or in short â€Å"N.A.† in their title so as to indicate their affiliation with the governing body. Many banks however are regulated by the state governments under respective state laws. Deposits of National and State banks are insured by the FDIC, known as Federal Deposit Insurance Corporation. It should be noted that banking regulations in US are not governed by a single body unlike UK or Japan. The U.S banking sector works under the highly-regulated environments in the world. Some of them can be listed as anti-money laundering, anti-usury lending, fraud prevention, promotion of lending to lower-income population, disclosures and many more. It will be worthwhile to have a look at some of the regulations that are in force to regulate the various aspects of national or commercial banks. Anti-Money Laundering and Anti-terrorism Certain acts are promulgated to control mon ey laundering activities which are stated as per the following. (Regulations) The Bank Secrecy Act This act has been formulated keeping in mind money laundering aspects where in all national or commercial establishments are required to assist government agencies. Banks under this act keep necessary records that are necessary to detect the suspicious activities of the transactions exceeding $10,000 on aggregate daily basis. (Regulations) USA Patriot Act This act necessitates banks to place limits on new accounts until the identity of account holder is verified. (Regulations) Deposit Account Insurance Regulation It was Glass–Steagall Act who paved the way for Federal Deposit Insurance Corporation (FDIC) for insuring deposits at commercial banks. In 1933, U.S was the first country to implement insurance for deposit holders to protect the depositors from bankruptcy of the banks. (Regulations) Regulation D or Withdrawal Limits Federal Reserve has put a limit on number of withdrawa ls and transfers from any saving or money market account. This regulation is applicable to all U.S banking institutions who offer such accounts. The limit is placed at six for all outgoing transactions through any method. Lending Regulations Regulation Z or the Truth in Lending Act (TILA) of 1968 is meant for consumer credits that informs the standard interest rate