Banking Law

Banking law is the broad term for laws that govern how banks and other financial institutions conduct business. Banks must comply with a myriad of federal, state and even local regulations. Lawyers perform a wide variety of functions that relate to creating, following and enforcing regulations.

multiple federal agencies oversee banking regulations. A bank or other financial institution might fall under regulations of the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve System or the Office of the Comptroller of the Currency (OCC). Banks must know what federal and state regulations they must comply with. Many federal banking regulations are found in chapter 12 of the U.S. Code.

Why do banking laws exist?

As the American economy expanded in the 20th century, lawmakers became concerned about the influence that banks have on the economy. When banks struggle, the effects spread to consumers and the public as a whole, they reason. Lawmakers create banking regulations in order to ensure that banks conduct regulations in a fair and transparent way. Banking regulations change frequently, and they remain controversial.

What do banking laws regulate?

Banking laws may exist in order to achieve many objectives. Some of these objectives include:

  • Provide transparency for consumers
  • Reduce risk for banking customers
  • Avoid misuse of banks for purposes like money laundering
  • Allow consumers to bank with confidentiality
  • Prevent other crimes
  • Prioritize bank lending according to economic and social priorities
  • Provide fair banking and equal opportunities for banking
  • Prevent terrorism
  • Create fair debt collection practices
  • Make credit card agreements fair to consumers
  • Prevent banks from making unfair loans to insiders like officers and principal shareholders
  • Allow customers to reasonably raise disputes
  • Other goals

Major banking laws

There are several major laws in the United States that regulate banking on a federal level. Federal banking regulations often supersede state and local regulations. In total, there are thousands of regulations, large and small, that banks need to understand and follow. Here are just a few of the major banking regulations in the United States: