banking (2024)

Overview:

Banks and bank accounts are regulated by both state and federal statutes. Bank accounts may be established by national and state chartered banks and savings associations. All are regulated by the law under which it was established.

Until the early 1980s the federal government regulated and controlled interest rates on bank accounts. Federal law set a ceiling on interest rates for savings accounts and generally prohibited interest payments on checking and other demand deposit accounts. Federal law also prohibited banks from offering money market accounts. Subsequently, the federal government lifted these restrictions on banks. TheDepository Institutions Deregulation Act of 1980 (DIDRA)eliminated the interest rate controls on savings accounts. Additionally, DIDRA (by authorizing of NOW and Super NOW checking accounts) and theGarn-St Germain Depository Institutions Act of 1982lifted restrictions on checking and money market accounts nationwide.

State law, supplemented by some federal law, governs the operation of checking accounts.Article 4 of the Uniform Commercial Code(UCC), which has been adopted at least in part in every state, "defines rights between parties with respect to bank deposits and collections." The Article governs the actions of the first bank to accept the check (depository bank) and other banks that handle the check but are not responsible for its final payment (collecting banks); the actions of the bank that is responsible for the payment of the check (payor bank); the relationship between a payor bank and its customers; and documentary drafts (checks or other types of drafts that will only be honored if certain documents are first presented to the payor of the draft).

Federal Reserve regulations also play a role in banking regulation, in particular with regards to rules governing checks. The majority of checks pass through the federal reserve system. Federal Reserve Regulation J applies when the checks pass through the system. Further,Regulation CCgoverns extensively the availability of funds in a depositor's account and the process required for dealing with checks dishonored due to non-payment. Additionally, theExpedited Funds Availability Act, elaborated bySubpart Bof Federal Reserve Regulation CC, limits the time that a depository bank can delay before making the amount of a deposited check available for withdrawal.

The UCC also bears on checks and othernegotiable instruments. UCCArticle 3governs the relationship between parties who receive and transfer checks. Certificates of deposit (CDs) may also be negotiable instruments and subject to Article 3. The UCC contains further provisions related to banking. For example, UCC Articles4A,5, and8respectively govern funds transfers, letters of credit, and securities.

The 1930s banking crisis led to the development of federal insurance for deposits, administered by theFederal Deposit Insurance Corporation(FDIC). The FDIC guarantees astandard insurance amountof $250,000 per depositor, per insured bank. Funding for the FDIC comes from premiums paid by member institutions.

Federal agency regulations that concern banks and banking are codified inTitle 12of theCode of Federal Regulations.

Federal Material

Federal Statutes

Laws regulating Federal Savings and Loan Associations -12 U.S.C. §§ 1461 - 1470
The Expedited Funds Availability Act -12 U.S.C. §§ 4001 - 4010
Garn-St. Germain Depository Institutions Act -12 U.S.C. § 371a
Federal Deposit insurance Corporation -12 U.S.C. §§ 1811 - 1832

Other Portions of the U.S. Code:

12 U.S.C.- Banks and Banking
Chapter 2- National Banks
Chapter 3- Federal Reserve System
Chapter 5- Crimes and Offenses
Chapter 16- FDIC
18 U.S.C. §§ 212 - 215- Criminal Offenses
28 U.S.C. § 1348- Banking Associations as Parties to Civil Litigation

Federal Agency Regulations

Title 12 of the Code of Federal Regulations contains federal agency regulations that concern banks and banking.
Chapter I of that titlecontains regulations promulgated by the Comptroller of the Currency, Department of the Treasury.
Chapter II, regulations governing the Federal Reserve System.
Chapter III, the regulations of the Federal Deposit Insurance Corporation.
Other chapters contain the regulations of the Export-Import Bank, Farm Credit Administration, Natural Credit Union Administration, Federal Financing Bank, Federal Finance Institutions Examination Council, Farm Credit System Insurance Corporation, Thrift Depositor Protection Oversight Board, and the Resolution Trust Corporation.

Federal Judicial Decisions

Supreme Court:

Recent Decisions on Banking

State Material

State Statutes

Article 3 of the Uniform Commercial Code
Article 4 of the Uniform Commercial Code
Article 4A of the Uniform Commercial Code
Article 5 of the Uniform Commercial Code
Article 8 of the Uniform Commercial Code
Uniform Commercial Code as Adopted in Various States
State Statutes Dealing with Financial Institutions

Key Internet Sources

Federal Agencies:

Federal Reserve Banks:

Additional Sources:

[Last updated in June of 2022 by the Wex Definitions Team]