BRIEF HISTORY OF BANKING LAWS
1. National Currency & Bank Acts (1863-64)
Provided for chartering of National Banks by the U.S. Comptroller of the
Currency
Provided for nationally-issued currency
2. Federal Reserve Act (1913)
Establishes the Federal Reserve System
3. McFadden Pepper Act (1927)
Limited branching by national banks to state banking law limitations
Prohibited branching across state lines
4. Bank Act of 1933 (Glass-Steagall)
Prohibits payment of interest on demand deposits
Establishes the FDIC
Separates banking from investment banking
Establishes interest rate ceilings on savings and time deposits
Allows Federal Reserve to set stock margin requirements
5. Bank Holding Company Act (1956)
Regulates formation of bank holding companies (BHC)
Allows nonbank subsidiaries to operate across state lines
6. Bank Merger Act (1966)
Establishes merger guidelines and denotes competition as a criterion
7. Amendment to Bank Holding Company Act (1970)
Regulates one-bank holding companies
8. Depository Institutions Deregulation and Monetary Control Act, DIDMCA, (1980)
Establishes uniform reserve requirements for all depository institutions
Phases out deposit rate ceilings by April 1, 1986
Allows NOW accounts at all depository institutions
Allows thrifts to make consumer loans and issue credit cards
9. Depository Institutions Act of 1982 (Garn-St. Germain)
Allows possibility of interstate and interinstitutional mergers
Gives thrifts authority to make some commercial loans
Created Money Market Deposit Accounts (MMDAs)
10. Competitive Equality in Banking Act (CEBA of 1987)
Limits growth of nonbank banks
Changes definition of “bank” to include FDIC-insured institutions
Allows FDIC to create “Bridge Banks”
11. Financial Institutions Reform, Recovery, and Enforcement Act (1989
FIRREA)
Created Resolution Trust Corp. (RTC) to resolve failed thrifts
Changes structure of thrift institution regulation (eliminated FSLIC)
Changes federal deposit insurance structure and financing
Allowed banks to purchase thrifts and vice versa
12. Federal Deposit Insurance Corporation Improvement Act (1991
FDICIA)
Provided backup funding provisions to guarantee the FDIC bank insurance fund
would not run short of cash
Provided for “early closure” of severely undercapitalized depository institutions,
risk-based deposit insurance premiums, and operating restrictions for institutions
that were not adequately capitalized. “Well-capitalized” institutions were
allowed to have investment bank subsidiaries and issue brokered deposits.
Required “Prompt Corrective Action” for undercapitalized banks
13. The Riegle-Neal Interstate Banking & Branching Efficiency Act of 1994
(10/22/94)
As of 10/22/95 strong BHCs may acquire banks in any other state as long as:
* They are at least 5 years old and
* The new bank combination doesn’t control over 30% of deposits in the
state or 10% of nationwide deposits
As of 6/1/97 banks in BHCs across state lines may be converted to branches of
the parent bank. Foreign banks may do the same thing.
14. The Gramm-Leach-Bliley Financial Modernization Act (11/12/99)
Repeals the anti-competitive aspects of the Glass-Steagall Act of 1933
Permits mergers & affiliations between banks/thrifts and brokers, investment
and insurance companies
Permits banks/thrifts, insurors and investment/brokers to sell each others’
products
Prohibits non-financial companies from buying banks, thrifts, insurors or brokers
Allows wider access to borrowing from Federal Home Loan banks for small
banks and thrifts
Strengthens consumer privacy and CRA protection
15. The USA Patriot Act, 2001
Requires banks and other FIs to identify their customers…
And to check customer IDs against terror suspects list…
And to report suspicious customer transactions
16. The Sarbanes – Oxley Accounting Standards Act of 2002
Creates a panel to promote objective audits of Public Companies
Requires CEOs & CFOs to personally sign their company’s financial statements
17. Fair and Accurate Credit Transacts (FACT) Act, 2003
Allows customers to get one free credit report per year
Makes filing ID Theft reports easier
18. Check 21, 2004
Allows images instead of paper checks to be returned to customers
Allows for banks to clear check images rather than paper checks among
themselves
19. FDIC Insurance Reform Act, 2006
Raises insurance limits on IRAs, etc. to $250K
Allows for inflation adjustments later
Merges the FDIC’s, BIF and SAIF insurance funds