Análisis de clasificación Múltiple (ACM)

Until 1863, US banks were regulated at state level. In that same year, a need arose for a means whereby the Federal Government could raise some source of funding. The Civil War had been going on for two years and the Federal Government was in need of cash. The National Banking Act came into existence two years later – with the formation of the OCC. A dual system of banking was introduced whereby some banks were chartered and regulated by the states and some banks were chartered and regulated by the OCC.

The 1913 Federal Reserve Act led to the formation of the Federal Reserve System as a central bank and lender of last resort. Prior to 1933, US securities markets were regulated to a large extent. However events such as the 1929 US stock market crash and a “run” on the banks by depositors (who feared that banks would be unable to repay the money in their accounts) led to the enactment of two important pieces of legislature namely the Securities Act of 1933 and the Securities Exchange Act of 1934. Many banks had collapsed as a result of the stock market crash and as a result, the 1933 Banking Act was enacted. The 1933 Banking Act (also known as the Glass Steagall Act), distinguished between commercial and investment banks and led to the creation of the Federal Deposit Insurance Corporation which was to provide deposit insurance to commercial banks. The 1934 Securities Exchange Act provided the framework for a partnership between the legislature and the judiciary which aimed to achieve the tasks of imposing minimum standards of information disclosed by companies who issue publicly-listed shares or bonds, controlling the quality of that information and policing the market place237. The Act also led to the establishment of the Securities and Exchange Commission (SEC) as the primary regulator for US securities markets.

The distinction made by the Glass Steagall Act of 1933, between commercial and investment banks had been getting blurred over the years – due to global developments which had not been foreseen when the 1933 Act was enacted. The original 1933 Act allowed banks to deal in exempt securities and over the years, authorisation was expanded to allow banks to deal with non-exempt securities (through their subsidiaries). Under the Glass Steagall Act, commercial banks could also participate

237

N Veron, 'Strengthening Europe's Capital Markets' see < http://www.ecif.info/CapitalMark> (last visited 15 Dec 2005)

in overseas securities business. Shortcomings of the Glass Steagall Act included failure to incorporate derivatives such as OTC derivatives markets, such derivatives not having been foreseen when the Act was enacted in 1933. Also currencies were not classed as securities even though they entailed similar market risks. The legal definition of “securities” under the 1933 Act also did not incorporate futures markets. Due to these shortcomings, commercial banks were able to take significant risks and a new legislation had to be introduced. This led to the Financial Services Modernisation Act (also known as the Gramm-Leach-Bliley Act) being passed by Congress in 1999. The Act removed the distinction between commercial banks and securities business.

2000, replacing the 1974 Commodity Exchange Act. OTC derivatives were to be left unregulated.

30 rather than 45 days.240 Firms would also have to explain their reasons for certain accounting treatments.241

There was still a lot of debate and concern as to how OTC derivatives were to be regulated. The Commodities Futures Modernisation Act was passed by Congress in

As a result of the collapse of Enron, Congress passed the Sarbanes Oxley Act (also known as SOX) in 2002. The Sarbanes Oxley Act is an Act which aims ‘to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes.’ On February 13th 2002, the SEC also called for changes to corporate-disclosure rules.238 Businesses would now have to disclose transactions in company shares by executives rather than waiting up to 45 days.239 Annual results now have to be posted within 60 days not 90 days and quarterly results published within

The US bank regulators are as follows: The Federal Reserve Board, the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration, the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS).242 The main focus of this research will be the Federal Reserve Board. Unlike federal regulators such as Britain’s FSA, Germany’s BaFin

and the newly empowered Italian CONSOB, the US Federal Reserve Board is also the central bank and is therefore responsible for setting monetary policy. The Federal Reserve has regulatory and supervisory control over an extensive range of financial institutions and activities. Alongside other

238

'Financial Regulation in America : Pitt the Gamekeeper” The Economist February 14th 2002 <http://www.economist.com/displaystory.cfm?story_id=988338> 239 _ibid 240 ibid 241 ibid 242

See 'The Federal Reserve Board: Enforcement Actions' <http://www.federalreserve.gov/boarddocs/enforcement/>

federal and state supervisory authorities, it works to ensure the safety and soundness of financial institutions, stability within the financial markets and fair treatment of consumers in their business transactions.243

are regulated by the FDIC. National banks, federally chartered branches are regulated by the OCC.

n and the Office of Thrift Supervision regulate credit unions and thrift associations respectively.247

ondition of banks and whether banks are complying with relevant banking laws and regulations.248

apital, managerial and other conditions and must elect to become a “financial holding company”.250

A dual system of banking exists and operates in the US. This dual system of banking refers to the parallel state and federal banking systems. The Federal Reserve Board regulates state member banks.244 State non member banks

Foreign banks are regulated by the FDIC (insured branches of foreign banks)245, foreign state licensed branches and agencies are regulated by the Federal Reserve and the FDIC whilst foreign federally licensed branches and agencies are regulated by the OCC and the FDIC.246 Other regulators, namely the National Credit Union Administratio