Banking Law

In United States of America, unlike other countries, the banking industry is regulated both by federal as well as state regulatory authorities. The regulations applicable to a bank depend on its charter and organization structure.

Legal Framework Governing Banking Business in United States of America:

United States of America has several regulations and regulatory body governing the banking business. Few of them are explained below:

Deposit Insurance:

United States requires its bank to insure the deposits to protect the deposits in case of bank failure or insolvency. In fact, US was the first country to introduce deposit insurance. There are agencies for deposit insurance like FDIC and NCUA.

Consumer Protection:

There are certain acts which provides for consumer protection in US. The Truth in Savings Act requires disclosure of interests and information when opening savings account. Similar act for borrowing is Truth in Lending Act. The Expedited Funds Availability Act regulates the hold on check deposited into checking accounts and maximum time of hold. The Electronic Funds Transfer Act provides for rights and liabilities of all participants in electronic funds transfer. The Home Mortgage Disclosure Act requires financial institutions to annually disclose the records about home purchases, loans disbursed etc. Equal Credit Opportunity Act requires the financial institutions to grant loans to customers based on credit worthiness only and without any discrimination on race, religion etc.

Banking Secrecy Act, 1970:

This act requires the banking and financial institutions to help the federal agencies in detection and prevention of money laundering. This law required the financial institutions to keep records of cash transactions exceeding USD 10000 and to report any transaction of suspicious nature. .

Fair Credit Reporting Act of 1970 lays down regulations for collection, sharing and use of credit data of customers. This law makes it possible for the customers to have his credit rating from the credit bureau.

Federal Reserve System lays down a detailed rules and regulations governing the financial system in the United States and is overall responsible for managing the financial atmosphere in the US.


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