Banking Regulation in the United States Research Paper

Banking Regulation in the United States - Research Paper ExampleThere are three federal banking regulators in US which allow in Federal Reserve System, Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of Currency all having separate although overlying authority over commercial-grade banks. Additionally, there exist various groups of depository institutions having similar functions to those of banks although they prolong unique category of regulatory institutions, laws and regulations (Shanmuganathan, Merlin and Bryan 389). Banking regulations can be classified into varying groups to cut down ambiguity and to link the regulation to the causalitys behind their introduction. According to Shanmuganathan, Merlin and Bryan (392), the regulations could either fall under economic regulations, randomness regulations and health-safety-environment (HSE) regulations. Economic regulations comprise restrictions and requirements introduced by the political sympathie s to control profits, prices and conditions for entry and exit into the industry. In the banking industry, economic regulations complicate those limits on interest rates paid on deposits and those charged on credit. They also include limits on fees charge for financial services, requirements for establishment of new branch or entry into the banking industry, limitations on areas and activities where banks can engage in (Shanmuganathan, Merlin and Bryan 394). In the banking industry, information regulations require banks to offer standardized information on deposits and loan rates to customers. Moreover, information regulations require that banks to ensure safe custody of customers information. Health-safety-environment (HSE) regulations in the banking industry are implemented to prevent banks from becoming insolvent. Safety and soundness regulations are based on various tools such as minimum heavy(p) requirements, restrictions on banking activities and supervising the banks manage ment to ensure the banks operations are run competently and honestly. All the regulations in-turn protects the consumers interests (Shanmuganathan, Merlin and Bryan 395). Banking regulations in US have a long history and have undergone various changes to conform to emerging economic concerns. This paper will explore the evolution of banking regulations in US from nearly 1900 to the present. The emphasis of the paper will be on the way economic factors have influenced changes in these regulations. In addition, the paper will discuss how the regulations have modify the economy and banking. Major Banking Regulations in the US Previously, most banks in US were state based and issued varying notes. Consequently, the federal government had limited control of banks until the discipline Banking Act was passed in 1864 establishing a national banking system and allowed for chartering of national banks (Williams, Julie and Gillspie 1279). This act set the stage for the development of a comm on and stable national property which was to be backed by the US Government bonds issued within the national banks system. Although this law could be linked to the demand for a national currency, its main motive was to create a reliable market where the government bonds could be sold in new network of national banks to acquire resources to finance Civil contend (Williams, Julie