Check Out These Pages www.nacha.org

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Check Out These Pages www.nacha.org

  1. 1. Check Out These Pages <ul><li>www.nacha.org </li></ul><ul><li>www.federalreserve. gov </li></ul><ul><li>www.afponline.org </li></ul>
  2. 2. The U.S. Financial Environment Reference: ECM Chapter 3
  3. 3. Financial Markets <ul><li>Money Markets & Capital Markets </li></ul><ul><li>Security Exchanges & Markets </li></ul><ul><li>Primary Markets & Secondary Markets </li></ul>
  4. 4. Financial Institutions <ul><li>Commercial Banks </li></ul><ul><li>Investment Banks and Brokerage Firm </li></ul><ul><li>Thrift Institutions </li></ul><ul><li>Credit Unions </li></ul><ul><li>Mutual Funds </li></ul><ul><li>Factors </li></ul><ul><li>Insurance Companies </li></ul><ul><li>Consumer Credit Companies </li></ul>
  5. 5. Commercial Bank Services <ul><li>Intermediation Services </li></ul><ul><li>Payment and Collections </li></ul><ul><li>Guarantor Services </li></ul><ul><li>Agent or Fiduciary Services </li></ul><ul><li>Consulting Services </li></ul><ul><li>Risk Management Services </li></ul><ul><li>Broker/Dealer Services </li></ul>
  6. 6. Intermediation Services <ul><li>Deposit Products </li></ul><ul><li>Demand Deposit Accounts (DDA) </li></ul><ul><li>Time Deposit Accounts </li></ul><ul><li>Other Interest Bearing Accounts </li></ul><ul><li>Credit Services </li></ul><ul><li>Short-term Loans </li></ul><ul><li>Long-term Loans </li></ul><ul><li>Leasing </li></ul><ul><li>Mortgages </li></ul>
  7. 7. Intermediation Services (continued) <ul><li>Investment Banking </li></ul><ul><li>Commercial Paper (CP) </li></ul><ul><li>Loan Sales </li></ul><ul><li>Private Placement </li></ul><ul><li>Corporate Bonds and Equity </li></ul>
  8. 8. Guarantor Services <ul><li>Letters of Credit </li></ul><ul><li>Standby L/Cs </li></ul><ul><li>Credit Enhancement Standby L/Cs </li></ul><ul><li>L/Cs Confirmations </li></ul>
  9. 9. Agent or Fiduciary Services <ul><li>Trustee Services </li></ul><ul><li>Investment Management </li></ul><ul><li>Corporate Pension Plans </li></ul><ul><li>Qualified Employees Benefit Plans </li></ul><ul><li>Corporate Trustee </li></ul><ul><li>Transfer and Paying Agent </li></ul><ul><li>Registrar </li></ul><ul><li>Custody Services </li></ul>
  10. 10. Investment Banking and Brokerage Firms Services <ul><li>Bond and Stock Underwriting </li></ul><ul><li>CP Dealers and Underwriters </li></ul><ul><li>Institutional and Retail Brokerage </li></ul><ul><li>Investment Advisory and Portfolio Management </li></ul><ul><li>Risk Management </li></ul><ul><li>Insurance Services </li></ul>
  11. 11. Regulatory Environment <ul><li>Federal Level </li></ul><ul><li>State Level </li></ul>
  12. 12. Federal Regulatory Agencies <ul><li>Federal Reserve </li></ul><ul><li>Federal Deposit Insurance Corporation (FDIC) </li></ul><ul><li>Office of the Comptroller of the Currency (OCC) </li></ul><ul><li>Securities and Exchange Commission (SEC) </li></ul><ul><li>Department of Justice </li></ul>
  13. 13. Federal Reserve: Roles <ul><li>Bank supervision </li></ul><ul><li>Monetary policy </li></ul><ul><li>Banking services </li></ul><ul><li>Fiscal Agent </li></ul>
  14. 14. Federal Reserve Supervision <ul><li>Member commercial banks </li></ul><ul><li>Bank holding companies </li></ul><ul><li>Edge Act banks </li></ul><ul><li>U.S. banking activities of foreign banks </li></ul><ul><li>Foreign activities of U.S. member banks </li></ul>
  15. 15. Federal Reserve: Monetary Policy <ul><li>Reserve Requirements </li></ul><ul><li>Discount Window Rate </li></ul><ul><li>Open Market Operations </li></ul>
  16. 16. Federal Reserve: Banking Services <ul><li>Check clearing </li></ul><ul><li>Wire transfer through Fedwire </li></ul><ul><li>Automated Clearing House System (ACH) </li></ul>
  17. 17. Federal Reserve: Fiscal Agent <ul><li>Banker for the federal government. </li></ul><ul><li>Accepts payment for federal taxes on behalf of the IRS. </li></ul><ul><li>Fiscal agent for the Treasury when issuing, redeeming, and transferring ownership of government securities. </li></ul>
  18. 18. Federal Reserve: Organization <ul><li>Board of Governors </li></ul><ul><li>Advisory Committees </li></ul><ul><li>Federal Open Market Committee (FOMC) </li></ul><ul><li>Federal District Banks </li></ul>
  19. 19. FDIC: Roles <ul><li>Supervisor of state-chartered non-member banks </li></ul><ul><li>Insurer </li></ul><ul><li>In charge of bank failure </li></ul>
  20. 20. FDIC: Insurance <ul><li>Administers the BAIF and SAIF </li></ul><ul><li>FDICA of 1991 mandates risk-based deposit insurance premiums </li></ul>
  21. 21. SEC: Roles <ul><li>Disclosure regulation for public companies, including quarterly and annual report filings. </li></ul><ul><li>Registration of securities to be sold to the public. </li></ul>
  22. 22. Federal Legislation <ul><li>Federal Reserve Act (1913) </li></ul><ul><li>Edge Act (1918) </li></ul><ul><li>McFadden Act (1927) </li></ul><ul><li>Glass Steagall Act (1933) </li></ul><ul><li>Electronic Funds Transfer Act (1978) </li></ul><ul><li>Depository Institutions Deregulation and Monetary Control Act (1980) </li></ul>
  23. 23. Financial Legislation <ul><li>Garn-St Germain Depository Institutions Act (1982) </li></ul><ul><li>Expedited Funds Availability Act (1988) </li></ul><ul><li>Financial Institutions Reform, Recovery, and Enforcement Act (1989) </li></ul><ul><li>Federal Deposit Insurance Corporation Improvement Act (1991) </li></ul><ul><li>Interstate Banking and Branching Efficiency Act (1994) </li></ul>
  24. 24. Federal Reserve Act 1913 <ul><li>Provided for the formation of FRS and the foundation for the current banking system </li></ul><ul><li>Gave the Fed supervisory powers over member banks </li></ul><ul><li>Member banks subjected to reserve requirements (RR) </li></ul><ul><li>Allowed the Fed to create a payment and collection system through member banks </li></ul>
  25. 25. Edge Act 1918 <ul><li>Permits domestic banks to invest in corporations that engage in international banking and finance. </li></ul><ul><li>Edge Act corporations can operate anywhere in the U.S. </li></ul><ul><li>Edge Act corporations are not subject to state banking laws. </li></ul><ul><li>Edge Act corporations can’t accept domestic deposits and make domestic loans. </li></ul>
  26. 26. McFadden Act 1927 <ul><li>Governs geographical expansion for banks. </li></ul><ul><li>Prohibited branching across state lines unless otherwise allowed by state laws. </li></ul><ul><li>Gave states jurisdiction over bank. Expansion within and across state lines. </li></ul><ul><li>Restrictions apply to state and national banks. </li></ul>
  27. 27. Glass Steagall Act 1933 <ul><li>Established the separation of banking and commerce, including investment banking </li></ul><ul><li>Prohibited commercial banks from underwriting securities other than government securities </li></ul><ul><li>Established deposit rate ceilings on deposit account, including a prohibition against payment of interest on DDA </li></ul><ul><li>Established the FDIC to insure bank deposits up to a stipulated maximum amount </li></ul>
  28. 28. Depository Institutions Deregulation and Monetary Control Act (DIDMCA) 1980 <ul><li>Imposed RR on all depository institutions regardless of FRS membership status. </li></ul><ul><li>Extended fed services to all deposit-taking institutions. </li></ul><ul><li>Mandated the fed to reduce or price payment system float. </li></ul>
  29. 29. DIDMCA (Continued) <ul><li>Mandated the pricing of previously free fed services according to standards of a tax-paying vendor. </li></ul><ul><li>Reduce banking float. </li></ul><ul><li>Allowed interest on consumer checking accounts. </li></ul>
  30. 30. Federal Deposit Insurance Corporation Improvement Act (FDICA) <ul><li>Established higher standards for safety and soundness for financial institutions. </li></ul><ul><li>Requires early closure of banks and thrifts when net worth falls below 2%. </li></ul><ul><li>Requires the establishment of risk-based deposit insurance premiums. </li></ul>
  31. 31. Interstate Banking and Branching and Efficiency Act 1994 <ul><li>Permits BHCs to acquire banks located in any state after September 1995. </li></ul><ul><li>Allows banks to merge operations with banks in another state so long as states have not opted-out of bill. </li></ul><ul><li>Allows banks to establish new branches provided state laws expressly permit it. </li></ul>
  32. 32. Gramm-Leach-Bliley Act 1999 <ul><li>Eliminated barriers among banking, insurance and securities firms. </li></ul><ul><li>Allowed easier entry by foreign banks. </li></ul><ul><li>Established Federal Reserve as the primary regulator of banks. </li></ul><ul><li>Establishment of privacy policies. </li></ul>

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