Overview
The term national bank in the U.S. context originally referred to the Revolutionary War–era Bank of North America, its successor, the First Bank of the United States, or that institution's successor, the Second Bank of the United States. The first survives as an acquisition of Wells Fargo, while the others are defunct.
In the modern usage since the 1860s, the term national bank has taken a precise meaning: a banking institution chartered and supervised by the Office of the Comptroller of the Currency ("OCC"), an agency in the U.S. Treasury Department, pursuant to the National Bank Act. Inclusion in the bank's name of the word National, [4] [5] the designation National Association, or its abbreviation N.A. is a required part of the distinguishing legal title of a national bank, as in "Farmers National Bank" or "Citibank, N.A." Many state banks , by contrast, are chartered by the applicable state government agencies (usually the state's department of banking). The Federal Deposit Insurance Corporation (FDIC) insures deposits at both national and state banks.
The advantage of holding a National Bank Act charter is that a national bank is not subject to state usury laws intended to prevent predatory lending. [6] However, in Cuomo v. Clearing House Association, L. L. C. , the Supreme Court ruled that federal banking regulations do not preempt the ability of states to enforce their own fair-lending laws. [7] There is currently no federal cap on rates. The federal government only requires that whatever rates, fees, or terms are set by issuers be disclosed to the consumer in accordance with the Truth in Lending Act. Additionally, from the 1860s until the program was retired in 1935, national banks could issue National Bank Notes, currency backed by bonds deposited with the Treasury.
Notwithstanding the name, many national banks do not have nationwide operations. Many have operations in only one city, county, or state. This is because of the McFadden Act of 1927, which prohibited interstate branching by national banks. [8] That restriction was not lifted until Congress enacted the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. In August 2021, Chase Bank became the first national bank to establish a retail presence in all 48 states of the contiguous United States. [9]
National banks are distinguished from federal savings associations, including federal savings and loans and federal savings banks, which are financial institutions chartered by the Office of Thrift Supervision, an agency of the U.S. Treasury Department that was merged with the Office of the Comptroller of the Currency on July 21, 2012. Likewise, a credit union licensed under the Federal Credit Union Act is legally not a bank, although it performs many or most of the same functions.
The National Banking Acts of 1863 and 1864 were two United States federal banking acts that established a system of national banks chartered at the federal level, and created the United States National Banking System. They encouraged development of a national currency backed by bank holdings of U.S. Treasury securities and established the Office of the Comptroller of the Currency as part of the United States Department of the Treasury. The Act shaped today's national banking system and its support of a uniform U.S. banking policy.
The Federal Deposit Insurance Corporation (FDIC) is a United States government corporation supplying deposit insurance to depositors in American commercial banks and savings banks. The FDIC was created by the Banking Act of 1933, enacted during the Great Depression to restore trust in the American banking system. More than one-third of banks failed in the years before the FDIC's creation, and bank runs were common. The insurance limit was initially US$2,500 per ownership category, and this has been increased several times over the years. Since the enactment of the Dodd–Frank Wall Street Reform and Consumer Protection Act in 2010, the FDIC insures deposits in member banks up to $250,000 per ownership category. FDIC insurance is backed by the full faith and credit of the government of the United States, and according to the FDIC, "since its start in 1933 no depositor has ever lost a penny of FDIC-insured funds".
In the United States, banking had begun by the 1780s, along with the country's founding. It has developed into a highly influential and complex system of banking and financial services. Anchored by New York City and Wall Street, it is centered on various financial services, such as private banking, asset management, and deposit security.
A savings and loan association (S&L), or thrift institution, is a financial institution that specializes in accepting savings deposits and making mortgage and other loans. While the terms "S&L" and "thrift" are mainly used in the United States, similar institutions in the United Kingdom, Ireland and some Commonwealth countries include building societies and trustee savings banks. They are often mutually held, meaning that the depositors and borrowers are members with voting rights, and have the ability to direct the financial and managerial goals of the organization like the members of a credit union or the policyholders of a mutual insurance company. While it is possible for an S&L to be a joint-stock company, and even publicly traded, in such instances it is no longer truly a mutual association, and depositors and borrowers no longer have membership rights and managerial control. By law, thrifts can have no more than 20 percent of their lending in commercial loans—their focus on mortgage and consumer loans makes them particularly vulnerable to housing downturns such as the deep one the U.S. experienced in 2007.
The Community Reinvestment Act is a United States federal law designed to encourage commercial banks and savings associations to help meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods. Congress passed the Act in 1977 to reduce discriminatory credit practices against low-income neighborhoods, a practice known as redlining.
The Office of the Comptroller of the Currency (OCC) is an independent bureau within the United States Department of the Treasury that was established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all national banks and federal thrift institutions and the federally licensed branches and agencies of foreign banks in the United States. The acting Comptroller of the Currency is Michael J. Hsu, who took office on May 10, 2021.
The Federal Home Loan Banks are 11 U.S. government-sponsored banks that provide liquidity to financial institutions to support housing finance and community investment.
The Office of Thrift Supervision (OTS) was a United States federal agency under the Department of the Treasury that chartered, supervised, and regulated all federally chartered and state-chartered savings banks and savings and loans associations. It was created in 1989 as a renamed version of the Federal Home Loan Bank Board, another federal agency. Like other U.S. federal bank regulators, it was paid by the banks it regulated. The OTS was initially seen as an aggressive regulator, but was later lax. Declining revenues and staff led the OTS to market itself to companies as a lax regulator in order to get revenue.
Federal savings associations, in the United States, are institutions chartered by the Office of Thrift Supervision which is now administered by Office of the Comptroller of the Currency after the agencies merged. Institutions chartered by the OTS are still regulated according to the rules and regulations of Federal Savings Banks. Mortgages issued by Federal Savings Banks are pursuant to the provisions of the Home Owners' Loan Act, a U.S. federal statute. Although the activities of federal thrifts were once confined primarily to taking deposits from consumers and making residential mortgage loans, federal thrifts are now authorized to offer a wide range of financial products and services.
The Senate Banking Subcommittee on Financial Institutions and Consumer Protection is one of five subcommittees within the Senate Committee on Banking, Housing, and Urban Affairs.
Bank regulation in the United States is highly fragmented compared with other G10 countries, where most countries have only one bank regulator. In the U.S., banking is regulated at both the federal and state level. Depending on the type of charter a banking organization has and on its organizational structure, it may be subject to numerous federal and state banking regulations. Apart from the bank regulatory agencies the U.S. maintains separate securities, commodities, and insurance regulatory agencies at the federal and state level, unlike Japan and the United Kingdom. Bank examiners are generally employed to supervise banks and to ensure compliance with regulations.
The New York State Banking Department was created by the New York Legislature on April 15, 1851, with a chief officer to be known as the Superintendent. The New York State Banking Department was the oldest bank regulatory agency in the United States.
Cuomo v. Clearing House Association, L.L.C., 557 U.S. 519 (2009), was a case decided by the United States Supreme Court. In a 5–4 decision, the court determined that a federal banking regulation did not pre-empt the ability of states to enforce their own fair-lending laws. The Court determined that the Office of the Comptroller of the Currency is the sole regulator of national banks but it does not have the authority under the National Bank Act to pre-empt state law enforcement against national banks.
Guaranty Bank was a major bank based in Austin, which collapsed in 2009. It was formed in 1988 as part of Temple-Inland and in 2007 became a standalone company. At the time of its collapse, Guaranty was the second largest bank in Texas, with 162 branches across Texas and California, and had $13 billion in assets and held $12 billion in deposits. Major shareholders included billionaire investor Carl Icahn and hotel tycoon Robert Rowling, who jointly invested $600 million in the bank in 2008.
This article details the history of banking in the United States. Banking in the United States is regulated by both the federal and state governments.
A bank examiner is a financial professional who has the task of making sure that banks and savings and loan associations are operating legally and safely, in accordance with the bank regulations imposed on these institutions by the chartering level of government. In the United States, they may conduct supervision on behalf of a U.S. government agency, the Federal Reserve System, a state banking authority, or for the financial institutions themselves as internal auditors. The main duties of a bank examiner are to ensure that a bank's operations are legal and can provide financial stability. A bank examiner will also review financial statements, evaluate the level of risk associated with loans, and assess the management of a bank.
Joseph M. Otting is an American businessman and government official. He served as the 31st Comptroller of the Currency from November 27, 2017 to May 29, 2020.
Barnett Bank of Marion County, N.A. v. Nelson, 517 U.S. 25 (1996), is a Supreme court case that ruled that states could moderate national banks if doing so does not prevent or largely interfere with the national bank's ability to exercise its powers. Later, in 2004, the OCC authorized its preemption rule which declared that a national bank's ability to exert its incidental powers which include lending and deposit taking inhibited state laws that obstruct, impair or condition” the business of banking."
Keith A. Noreika is an American lawyer who specializes in the regulation of financial institutions. He served as Acting Comptroller of the Currency from May 5, 2017, to November 27, 2017, following the 30th Comptroller of the Currency, Thomas J. Curry, and preceding the 31st Comptroller of the Currency, Joseph Otting. Noreika rejoined the law firm of Simpson Thacher on January 8, 2018. He joined Patomak Global Partners as Executive Vice President and Chairman of its Banking Supervision and Regulation Group on July 5, 2022.
Brian P. Brooks is an American lawyer, banker, entrepreneur, technologist, and former government official. He served as Acting Comptroller of the Currency from May 29, 2020, succeeding the 31st Comptroller of the Currency Joseph Otting, until January 14, 2021. Brooks was nominated twice by President Donald Trump for a five-year term as Comptroller of the Currency, once during the 116th Congress, and once in the 117th Congress.
