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Important Banking Legislation
The most important laws that have affected the banking industry in the United
States are listed below.
The Main Library of the FDIC, located at the FDIC offices in Washington, D.C., has legislative
histories of these laws. These legislative histories help to provide a better understanding of
lawmakers' intent for the purpose and scope of the laws. The public can make an appointment
to use these materials by contacting the FDIC Library.
- National Bank Act of 1864 (Chapter 106, 13 STAT. 99).
Established a national banking system and the chartering of national banks.
- Federal Reserve Act of 1913 (P.L. 63-43, 38 STAT. 251, 12 USC 221).
Established the Federal Reserve System as the central banking system of the U.S.
- To Amend the National Banking Laws and the Federal Reserve Act (P.L. 69-639,
44 STAT. 1224).
Also known as The McFadden Act of 1927. Prohibited interstate banking.
- Banking Act of 1933 (P.L. 73-66, 48 STAT. 162).
Also known as the Glass-Steagall Act. Established the FDIC as a temporary agency. Separated
commercial banking from investment banking, establishing them as separate lines of commerce.
- Banking Act of 1935 (P.L. 74-305, 49 STAT. 684).
Established the FDIC as a permanent agency of the government.
- Federal Deposit Insurance Act of 1950 (P.L. 81-797, 64 STAT. 873).
Revised and consolidated earlier FDIC legislation into one Act. Embodied the basic authority
for the operation of the FDIC.
- Bank Holding Company Act of 1956 (P.L. 84-511, 70 STAT. 133).
Required Federal Reserve Board approval for the establishment of a bank holding company.
Prohibited bank holding companies headquartered in one state from acquiring a bank in another
state.
- International Banking Act of 1978 (P.L. 95-369, 92 STAT. 607).
Available from Library of Congress Thomas
Website. Under Legislation, select Public Laws, then select the number of the Congress
and find the Law by the P.L. number.
Brought foreign banks within the federal regulatory framework. Required deposit insurance
for branches of foreign banks engaged in retail deposit taking in the U.S.
- Financial Institutions Regulatory and Interest Rate Control Act of 1978
(P.L. 95-630, 92 STAT. 3641).
Available from Library of Congress Thomas
Website. Under Legislation, select Public Laws, then select the number of the Congress
and find the Law by the P.L. number.
Also known as FIRIRCA. Created the Federal Financial Institutions Examination Council.
Established limits and reporting requirements for bank insider transactions. Created major
statutory provisions regarding electronic fund transfers.
- Depository Institutions Deregulation and Monetary Control Act of 1980
(P.L. 96-221, 94 STAT. 132).
Available from Library of Congress Thomas
Website. Under Legislation, select Public Laws, then select the number of the Congress
and find the Law by the P.L. number.
Also known as DIDMCA. Established "NOW Accounts." Began the phase-out of interest rate
ceilings on deposits. Established the Depository Institutions Deregulation Committee.
Granted new powers to thrift institutions. Raised the deposit insurance ceiling to $100,000.
- Depository Institutions Act of 1982 (P.L. 97-320, 96 STAT. 1469).
Available from Library of Congress Thomas
Website. Under Legislation, select Public Laws, then select the number of the Congress
and find the Law by the P.L. number.
Also known as Garn-St Germain. Expanded FDIC powers to assist troubled banks. Established
the Net Worth Certificate program. Expanded the powers of thrift institutions.
- Competitive Equality Banking Act of 1987 (P.L. 100-86, 101 STAT. 552).
Available from Library of Congress Thomas
Website. Under Legislation, select Public Laws, then select the number of the Congress
and find the Law by the P.L. number.
Also known as CEBA. Established new standards for expedited funds availability.
Recapitalized the Federal Savings & Loan Insurance Company (FSLIC). Expanded FDIC authority
for open bank assistance transactions, including bridge banks.
- Financial Institutions Reform, Recovery, and Enforcement Act of 1989
(P.L. 101-73, 103 STAT. 183).
Available from Library of Congress Thomas
Website. Under Legislation, select Public Laws, then select the number of the Congress
and find the Law by the P.L. number.
Also known as FIRREA. FIRREA's purpose was to restore the public's confidence in the savings
and loan industry. FIRREA abolished the Federal Savings & Loan Insurance Corporation (FSLIC),
and the FDIC was given the responsibility of insuring the deposits of thrift institutions in
its place.
The FDIC insurance fund created to cover thrifts was named the Savings Association Insurance
Fund (SAIF), while the fund covering banks was called the Bank Insurance Fund (BIF).
FIRREA also abolished the Federal Home Loan Bank Board. Two new agencies, the Federal Housing
Finance Board (FHFB) and the Office of Thrift Supervision (OTS), were created to replace it.
Finally, FIRREA created the Resolution Trust Corporation (RTC) as a temporary agency of the
government. The RTC was given the responsibility of managing and disposing of the assets of
failed institutions. An Oversight Board was created to provide supervisory authority over the
policies of the RTC, and the Resolution Funding Corporation (RFC) was created to provide
funding for RTC operations.
- Crime Control Act of 1990 (P.L. 101-647, 104 STAT. 4789).
Available from Library of Congress Thomas
Website. Under Legislation, select Public Laws, then select the number of the Congress
and find the Law by the P.L. number.
Title XXV of the Crime Control Act, known as the Comprehensive Thrift and Bank Fraud
Prosecution and Taxpayer Recovery Act of 1990, greatly expanded the authority of Federal
regulators to combat financial fraud.
This act prohibited undercapitalized banks from making golden parachute and other
indemnification payments to institution-affiliated parties. It also increased penalties and
prison time for those convicted of bank crimes, increased the powers and authority of the FDIC
to take enforcement actions against institutions operating in an unsafe or unsound manner, and
gave regulators new procedural powers to recover assets improperly diverted from financial
institutions.
- Federal Deposit Insurance Corporation Improvement Act of 1991
(P.L. 102-242, 105 STAT. 2236).
Available from Library of Congress Thomas
Website. Under Legislation, select Public Laws, then select the number of the Congress
and find the Law by the P.L. number.
Also known as FDICIA. FDICIA greatly increased the powers and authority of the FDIC. Major
provisions recapitalized the Bank Insurance Fund and allowed the FDIC to strengthen the fund
by borrowing from the Treasury.
The act mandated a least-cost resolution method and prompt resolution approach to problem and
failing banks and ordered the creation of a risk-based deposit insurance assessment scheme.
Brokered deposits and the solicitation of deposits were restricted, as were the non-bank
activities of insured state banks. FDICIA created new supervisory and regulatory examination
standards and put forth new capital requirements for banks. It also expanded prohibitions
against insider activities and created new Truth in Savings provisions.
- Housing and Community Development Act of 1992 (P.L. 102-550, 106 STAT. 3672).
Available from Library of Congress Thomas
Website. Under Legislation, select Public Laws, then select the number of the Congress
and find the Law by the P.L. number.
Established regulatory structure for government-sponsored enterprises (GSEs), combated money
laundering, and provided regulatory relief to financial institutions.
- RTC Completion Act (P.L. 103-204, 107 STAT. 2369).
Available from Library of Congress Thomas
Website. Under Legislation, select Public Laws, then select the number of the Congress
and find the Law by the P.L. number.
Requires the RTC to adopt a series of management reforms and to implement provisions designed
to improve the agency's record in providing business opportunities to minorities and women
when issuing RTC contracts or selling assets. Expands the existing affordable housing programs
of the RTC and the FDIC by broadening the potential affordable housing stock of the two
agencies.
Increases the statute of limitations on RTC civil lawsuits from three years to five, or to the
period provided in state law, whichever is longer. In cases in which the statute of
limitations has expired, claims can be revived for fraud and intentional misconduct resulting
in unjust enrichment or substantial loss to the thrift. Provides final funding for the RTC
and establishes a transition plan for transfer of RTC resources to the FDIC. The RTC's sunset
date is set at Dec. 31, 1995, at which time the FDIC will assume its conservatorship and
receivership functions.
- Riegle Community Development and Regulatory Improvement Act of 1994
(P.L. 103-325, 108 STAT. 2160).
Available from Library of Congress Thomas
Website. Under Legislation, select Public Laws, then select the number of the Congress
and find the Law by the P.L. number.
Established a Community Development Financial Institutions Fund, a wholly owned government
corporation that would provide financial and technical assistance to CDFIs.
Contains several provisions aimed at curbing the practice of "reverse redlining" in which
non-bank lenders target low and moderate income homeowners, minorities and the elderly for
home equity loans on abusive terms. Relaxes capital requirements and other regulations to
encourage the private sector secondary market for small business loans.
Contains more than 50 provisions to reduce bank regulatory burden and paperwork requirements.
Requires the Treasury Dept. to develop ways to substantially reduce the number of currency
transactions filed by financial institutions. Contains provisions aimed at shoring up the
National Flood Insurance Program.
- Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
(P.L. 103-328, 108 STAT. 2338).
Available from Library of Congress Thomas
Website. Under Legislation, select Public Laws, then select the number of the Congress
and find the Law by the P.L. number.
Permits adequately capitalized and managed bank holding companies to acquire banks in any
state one year after enactment. Concentration limits apply and CRA evaluations by the Federal
Reserve are required before acquisitions are approved. Beginning June 1, 1997, allows
interstate mergers between adequately capitalized and managed banks, subject to concentration
limits, state laws and CRA evaluations. Extends the statute of limitations to permit the FDIC
and RTC to revive lawsuits that had expired under state statutes of limitations.
- Economic Growth and Regulatory Paperwork Reduction Act of 1996
(P.L. 104-208, 110 STAT. 3009).
(pdf version from Government Printing Office.)
Modified financial institution regulations, including regulations impeding the flow of credit
from lending institutions to businesses and consumers. Amended the Truth in Lending Act and
the Real Estate Settlement Procedures Act of 1974 to streamline the mortgage lending
process.
Amended the FDIA to eliminate or revise various application, notice, and recordkeeping
requirements to reduce regulatory burden and the cost of credit. Amended the Fair Credit
Reporting Act to strengthen consumer protections relating to credit reporting agency
practices.
Established consumer protections for potential clients of consumer repair services. Clarified
lender liability and federal agency liability issues under the CERCLA. Directed FDIC to impose
a special assessment on depository institutions to recapitalize the SAIF, aligned SAIF
assessment rates.
- Gramm-Leach-Bliley Act of 1999 (P.L. 106-102, 113 STAT 1338)
(pdf version from Government Printing Office.)
Repeals last vestiges of the Glass Steagall Act of 1933. Modifies portions of the Bank
Holding Company Act to allow affiliations between banks and insurance underwriters. While
preserving authority of states to regulate insurance, the act prohibits state actions that
have the effect of preventing bank-affiliated firms from selling insurance on an equal
basis with other insurance agents. Law creates a new financial holding company under
section 4 of the BHCA, authorized to engage in: underwriting and selling insurance and
securities, conducting both commercial and merchant banking, investing in and developing
real estate and other "complimentary activities." There are limits on the kinds of
non-financial activities these new entities may engage in.
Allows national banks to underwrite municipal bonds.
Restricts the disclosure of nonpublic customer information by financial institutions. All
financial institutions must provide customers the opportunity to "opt-out" of the sharing of
the customers' nonpublic information with unaffiliated third parties. The Act imposes criminal
penalties on anyone who obtains customer information from a financial institution under false
pretenses.
Amends the Community Reinvestment Act to require that financial holding companies can not be
formed before their insured depository institutions receive and maintain a satisfactory CRA
rating. Also requires public disclosure of bank-community CRA-related agreements. Grants
some regulatory relief to small institutions in the shape of reducing the frequency of their
CRA examinations if they have received outstanding or satisfactory ratings. Prohibits
affiliations and acquisitions between commercial firms and unitary thrift institutions.
Makes significant changes in the operation of the Federal Home Loan Bank System, easing
membership requirements and loosening restrictions on the use of FHLB funds.
- International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001*
(P.L. 107-56)
(pdf version from
Government Printing Office.)
Legislation designed to prevent terrorists and others from using the U.S. financial system
anonymously to move funds obtained from or destined for illegal activity. It authorizes and
requires additional record keeping and reporting by financial institutions and greater
scrutiny of accounts held for foreign banks and of private banking conducted for foreign
persons.
The law requires financial institutions to establish anti-money laundering programs and imposes
various standards on money-transmitting businesses. It amends criminal anti-money laundering
statutes and procedures for forfeitures in money laundering cases and requires further
cooperation between financial institutions and government agencies in fighting money
laundering.
- Sarbanes-Oxley Act of 2002 (P.L. 107-204)*
(pdf version from
Government Printing Office.)
Sarbanes-Oxley establishes the Public Company Oversight Board to regulate public accounting
firms that audit publicly traded companies. It prohibits such firms from providing other
services to such companies along with the audit. It requires that CEOs and CFOs certify the
annual and quarterly reports of publicly traded companies. The Act authorizes, and in some
cases requires, that the Securities and Exchange Commission (SEC) issue rules governing
audits.
The law requires that insiders may no longer trade their company's securities during pension
fund blackout periods. It mandates various studies including a study of the involvement of
investment banks and financial advisors in the scandals preceding the legislation. Also
included are whistle blower protections, new federal criminal laws, including a ban on
alteration of documents.
- Fair and Accurate Credit Transactions Act of 2003* (P.L. 108-159)
(pdf version from
Government Printing Office.)
The Fair and Accurate Credit Transactions (FACT) Act contains extensive amendments to the Fair
Credit Reporting Act and is designed to improve the accuracy and transparency of the national
credit reporting system and preventing identity theft and assisting victims. It contains
provisions enhancing consumer rights in situations involving alleged identity theft, credit
scoring, and claims of inaccurate information. It requires use of consumer reports to provide
certain information to consumers who are offered credit on terms that are materially less
favorable than the offers that the creditor makes to a substantial portion of its consumers.
Companies that share consumer information among affilitated companies, must provide consumers
notice and an opt-out for sharing of such information if the information will be used for
marketing purposes.
* - Descriptions taken from "Major Statutes Affecting Financial Institutions and Markets",
Congressional Research Service. July 7, 2004.
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