Mission federal credit union

An alphabet soup of organizations -- the FFIEC, FRS, SEC, OCC, OTS, FDIC, NCUA, FTC and HUD -- all have a hand in helping to keep financial institutions and financial services providers on the straight and narrow path to safety and soundness. Each set of initials represents a sector of the federal government or an independent agency charged with prudential supervision over a group of financial entities. But figuring out who regulates whom can be confusing, and a scorecard may be helpful in keeping up with the regulatory players.

Keeping it consistent

Because of the wide range of regulatory groups, there is an ongoing effort to coordinate regulation. The Federal Financial Institutions Examination Council (FFIEC) was formed to promote consistency among many of these organizations and to provide overarching principles, standards and forms for the federal examination of financial institutions. The council also makes recommendations to enhance uniformity in the supervision of financial institutions.

Who answers to whom?

The Federal Reserve regulates bank and financial holding companies, state-chartered banks that are members of the Federal Reserve System, the foreign activities of all U.S. banks and the U.S. activities of foreign banks. Bank and financial holding companies and certain banks that wish to acquire or merge with other banks must get prior Federal Reserve approval. In addition, Reserve Banks monitor compliance with consumer protection laws relating to credit at the banks they supervise. Along with other federal bank regulators, the Federal Reserve also conducts a range of examinations, including Community Reinvestment Act reviews.

The Federal Reserve relies on the supervisory findings of the functional regulators, such as the Securities and Exchange Commission and state insurance commissions, to help fulfill its regulatory role.

The Office of the Comptroller of the Currency (OCC) is an agency of the U.S. Treasury that charters, regulates and supervises more than 2,500 national banks. A "national" bank uses the word national in its title or the letters NA (National Association) or NT & SA (National Trust & Savings Association) following its title. National banks represent about 28 percent of insured commercial banks in the United States with approximately 57 percent of the total assets of the banking system.

While federal savings and loans and federal savings bank charters have contracted dramatically since the 1980s, there are still approximately 875 such institutions with about $90.3 billion in assets. Thrifts are regulated by the Office of Thrift Supervision (OTS). The primary regulator of all federal and many state-chartered thrift institutions, the OTS was established as an office of the Treasury Department in 1989.

The FDIC, or Federal Deposit Insurance Corp., insures deposits at depository institutions and regulates federally insured state-chartered banks that are not members of the Federal Reserve System. As part of its regulatory responsibility, the FDIC issues regulations governing banks' and savings associations' procedures and performance and conducts several kinds of banking examinations including Community Reinvestment Act reviews. The FDIC relies on both its own supervisory efforts and those of the Federal Reserve, OCC and OTS, in providing deposit insurance.

Federal credit unions are under the supervision of the National Credit Union Administration (NCUA). An independent federal agency, the NCUA supervises over 6,500 federal credit unions and insures their deposits. The NCUA also insures more than 4,000 state-chartered credit unions' deposits.

The Federal Trade Commission (FTC) plays an important role as another watchdog for the financial services industry. One of its primary missions is consumer protection. The FTC also enforces the Electronic Funds Transfer Act, which establishes the rights, liabilities and responsibilities of participants in electronic funds transfer systems. The act sets liability limits for losses caused by unauthorized transfers and requires financial institutions to adopt certain practices for transaction accounting, preauthorized transfers and error resolution.

While the Department of Housing and Urban Development (HUD) is not, strictly speaking, a bank regulator, the agency does enforce the Fair Housing Act. The primary regulators -- the Federal Reserve, OCC and FDIC -- check for Fair Housing Act compliance and make referrals to HUD when violations are suspected.

Finally, it is important to note that the individual states' own banking authorities are instrumental in the regulation of state-chartered banks, credit unions and trust companies. Their mission, like that of the other regulatory agencies, is to promote a safe and sound financial services sytem.

In cyber space

On-line banks, recent players in the financial services industry, require special oversight because of the unique nature of the electronic environment. However, each online bank is formed through traditional bank chartering methods and regulated by the agency governing its charter.