Financial regulators: who they are and what they do

The federal and state governments have established countless agencies to supervise and supervise financial markets and companies. Each of these agencies has specific responsibilities and responsibilities that enable them to act independently of each other while striving to achieve similar goals.

Although opinions on the efficiency, effectiveness, and even needs of some of these institutions vary, each of them has specific goals, and they are likely to exist for some time. With this in mind, the following article is a review of many regulatory agencies active in the US financial sector.

Key points

  • Regulatory agencies are established by governments or other organizations to supervise the operation and fairness of financial markets and companies engaged in financial activities.
  • The goal of supervision is to prevent and investigate fraud, keep the market efficient and transparent, and ensure that customers and customers are treated fairly and honestly.
  • There are several different regulatory agencies, from the Federal Reserve, which oversees the commercial banking industry, to the FINRA and SEC, which oversee brokers and stock exchanges.

Federal Reserve Board

The Federal Reserve Board (FRB) is one of the most recognized agencies of all regulatory agencies. Therefore, the “Fed” is often blamed for economic downturn or for stimulating the economy. It is responsible for affecting currency, liquidity and overall credit conditions. Its main tool for implementing monetary policy is open market operations to control the buying and selling of U.S. Treasury bonds and federal agency securities. Buying and selling can change the amount of reserves or affect the federal funds rate-the interest rate at which depository institutions lend out balances to other depository institutions overnight. The board of directors also supervises and regulates the banking system to ensure the overall stability of the financial system. The Federal Open Market Committee (FOMC) determines the actions of the Federal Reserve.

One of FRB’s main supervisory roles is to supervise the commercial banking industry in the United States. Most national banks must be members of the Federal Reserve System; however, they are regulated by the Office of the Comptroller of the Currency (OCC). The Federal Reserve regulates many large banking institutions because it is the federal regulator of the Bank Holding Company (BHC).

Office of the Comptroller of the Currency

As one of the oldest federal agencies, the Office of the Comptroller of the Currency (OCC) was established in 1863 under the National Currency Act.Its main purpose is to supervise, regulate and provide franchise to banks operating in the United States to ensure the integrity of the entire banking system.​​​ This regulation enables banks to compete and provide effective banking and financial services.

OCC is an independent agency within the Ministry of Finance. Its mission statement confirms that it is “to ensure that the National Bank and the Federal Reserve Association operate in a safe and sound manner, provide fair financial service opportunities, treat customers fairly, and comply with applicable laws and regulations.”

Federal Deposit Insurance Corporation

The Federal Deposit Insurance Corporation (FDIC) was created under the Glass-Steagall Act of 1933 to provide insurance for deposits to ensure the safety of depositors’ funds in banks.Its mission is to provide protection of up to $250,000 for each depositor. The catalyst for the creation of the FDIC was a bank run during the Great Depression of the 1920s.

Checking accounts, savings accounts, CDs and money market accounts are usually 100% underwritten by the FDIC. Coverage is extended to individual retirement accounts (IRA), but only to those suitable for the account types listed above. Including joint accounts, revocable and irrevocable trust accounts and employee benefit plans, as well as company, partnership and unincorporated association accounts.

FDIC insurance does not cover products such as mutual funds, annuities, life insurance policies, stocks or bonds. The contents of the safe are not covered by the FDIC insurance. Cashier’s checks and money orders issued by the bankrupt bank are still fully insured by the FDIC.

Thrift Supervision Office

The Office of Savings Supervision (OTS) was established by the Ministry of Finance in 1989 under the Financial Institution Reform, Restoration and Enforcement Act of 1989.It is fully funded by the agency it supervises. OTS is similar to OCC, except that it oversees the Federal Reserve Association, also known as savings or savings and loans.

In 2011, OTS merged with other agencies, including the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board of Governors, and the Consumer Financial Protection Bureau (CFPB).

Commodity Futures Trading Commission

The Commodity Futures Trading Commission (CFTC) was established in 1974 and is an independent agency responsible for overseeing commodity futures and options and other related derivatives markets, and providing competitive and efficient market transactions.It also seeks to protect participants from market manipulation, investigate abusive transactions and fraud, and maintain a smooth liquidation process.

The CFTC has been developing since 1974 and passed the Commodity Futures Modernization Act of 2000 in 2000.The establishment of a joint procedure with the U.S. Securities and Exchange Commission (SEC) to regulate single stock futures has changed the structure of the agency.

Financial Industry Regulatory Authority

The Financial Industry Regulatory Authority (FINRA) was established in 2007 and its predecessor was the National Association of Securities Dealers (NASD).FINRA is considered a self-regulatory organization (SRO), originally created under the Securities Exchange Act of 1934.

FINRA supervises all companies that conduct securities business with the public. It is also responsible for training financial services professionals, licensing and testing agents, and overseeing the mediation and arbitration procedures for disputes between clients and brokers.

National Banking Regulatory Agency

The operation of the state bank supervisory agency is similar to that of the OCC, but it is at the state level for state chartered banks. Their oversight work is carried out in conjunction with the Federal Reserve and the FDIC.

For example, in New York State, the Department of Financial Services (DFS) supervises and supervises the activities of approximately 1,500 New York-registered banks and other financial institutions with total assets of more than US$2.6 trillion and more than 1,800 assets of more than US$4.7 trillion. They include more than 130 family life insurance companies, 1,168 property/accident insurance companies, about 100 health insurance companies and managed medical institutions, more than 375,000 individual insurance licensees, 122 national chartered banks, and 80 foreign branches Institutions, 10 foreign institutions, 17 credit cooperatives, 13 credit rating agencies, nearly 400 licensed financial service companies, and more than 9,455 mortgage originators and service providers.

National Insurance Regulatory Agency

State regulatory agencies supervise, review, and supervise the way the insurance industry conducts business in their states. Their duties include protecting consumers, conducting criminal investigations and enforcing legal actions. They also provide permits and authorization certificates and require applicants to submit details of their operations. (For a catalog of country-specific institutions, please visit

In New York, the DFS regulates financial companies and insurance companies, while in other states, independent regulators regulate each industry separately.

National Securities Regulatory Agency

These agencies have strengthened FINRA and SEC on matters related to state securities business supervision. They provide registration for investment advisers who do not need to register with the SEC, and execute legal actions with these advisers.

Securities and Exchange Commission (SEC)

The SEC acts independently of the US government and was established under the Securities Exchange Act of 1934.As one of the most comprehensive and powerful institutions, the US Securities and Exchange Commission enforces federal securities laws and regulates most securities industries. Its regulatory scope includes the American Stock Exchange, the options market and the options exchange, as well as all other electronic exchanges and other electronic securities markets. It also supervises investment advisors that are not covered by national regulatory agencies.

The SEC is composed of 6 departments and 24 offices.Their goal is to interpret securities laws and take enforcement actions, issue new rules, supervise securities institutions, and coordinate supervision between governments at all levels. The six departments and their respective roles are:

  • Corporate Finance Department: To ensure that important information (that is, information related to the company’s financial prospects or stock prices) is provided to investors in order to make wise investment decisions.
  • Law Enforcement Department: Responsible for implementing the regulations of the US Securities and Exchange Commission by investigating cases and filing civil and administrative litigation.
  • Investment Management Division: Supervises investment companies, variable insurance products and federally registered investment consultants.
  • Economics and Risk Analysis Department: Integrate economics and data analysis into the core mission of the SEC.
  • Trading and Market Department: establish and maintain fair, orderly and efficient market standards.
  • Examination department: Implement the national examination plan of the US Securities and Exchange Commission.

The SEC can only file a civil lawsuit before a federal court or administrative judge. Criminal cases are under the jurisdiction of the law enforcement agencies of the Department of Justice; however, the SEC often works closely with such agencies to provide evidence and assist in court proceedings.

Bottom line

All these government agencies strive to supervise and protect people involved in the various industries they manage. Their coverage often overlaps; although their policies may vary, federal agencies often replace state agencies. However, this does not mean that state institutions have less power, because their responsibilities and powers are far-reaching.

Understanding the regulation of the banking, securities, and insurance industries can be confusing. Although most people will never deal directly with these institutions, they will affect their lives at some point. This is especially true of the Federal Reserve, which plays a powerful role in influencing liquidity, interest rates and credit markets.


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