Read PDF Who Regulates Whom? An Overview of U.S. Financial Supervision

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The following is an outline of the U. The Fed is responsible for regulating the U. Broadly speaking, its mandate is to promote stable prices and economic growth. The Federal Reserve exerts regulatory oversight in a few different ways:.

It’s Financial Supervision, But Not As We Know It, As Changes Come Thick And Fast

United States. Amidst the financial crisis of , the Fed sought to use policy statements and its control of interest rates to influence legislative policy and calm capital markets.

Chairman Bernanke has also encouraged lawmakers to pass a plan aimed at stimulating liquidity in financial markets, and has supported moves by the U. Treasury to make money available to some failing U. The U. Department of the Treasury , originally created specifically to manage government revenues whereas the Federal Reserve manages payments , has evolved to encompass several different duties. It recommends and influences fiscal policy; regulates U. In terms of financial regulation, the Treasury Department functions primarily through the operations of two agencies it oversees, the Office of the Comptroller of the Currency and the Office of Thrift Supervision, which regulate banks and savings and loans:.

Paulson has taken a very active role amidst the financial turmoil of He has pressed the need for a plan aimed at stimulating liquidity in financial markets and has made Treasury money available to some failing U. He also devised and recommended a series of reforms aimed at reorganizing the manner in which the United States regulates financial institutions. The commission was created by Congress in and is also responsible for overseeing corporate takeovers. One of the primary tasks assigned to the commission is the promotion of transparency in securities markets and thus the protection of investors from fraud or corporate malfeasance, in part through requiring that firms file quarterly and annual financial reports.

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The SEC is tasked with providing guidance to corporations regarding U. The commission has subdivisions focused on regulating: corporate finance, trading and markets, investment management, and enforcement. The agency is governed by five commissioners, though all decisions ultimately run through the chairman.

The current chairman, Christopher Cox, is a conservative former California representative and an advocate of market deregulation. In late September , Cox moved to shut down the Consolidated Supervised Entities program, a largely voluntary regulatory program that oversaw investment banks like Bear Stearns and Lehman Brothers, saying it was "fundamentally flawed" and that the financial turmoil of "made it abundantly clear that voluntary regulation does not work. As a means of regulating market behavior, the SEC polices and licenses stock exchanges, and is responsible for regulating credit ratings agencies, which also have taken criticism during the current crisis.

The SEC has enforcement authority in that it can bring civil charges against individuals or companies thought to have violated securities law violations include trading on insider information, committing accounting fraud, providing false information to the SEC, etc. When criminal charges are involved, the commission recommends to the Justice Department whether to prosecute a case. The Justice Department has little direct oversight over financial market regulation, other than the ability to prosecute these cases sent to it by the SEC.

In some cases, state and local officials get involved in regulating markets and companies, independent of the SEC. For instance, in New York, which has extensive state law on securities regulation, the state attorney general has historically undertaken and prosecuted criminal legislation in fraud cases and other securities cases. Banks are categorized based on the extent of their reserves and liquidity. Typically, a U. The Commodities Futures Trading Commission , or CFTC, was founded as an independent agency in to provide a regulatory framework for the increasingly complex market in futures contracts through which traders agree to buy or sell a good at a specific time in the future for a specific price.

Traders now speculate on the future prices of any number of financial entities-from currencies, to government securities like Treasury bonds, to the valuation of different stock indices-and the CFTC has come to regulate all futures contracts, not just those involving commodities. Among other oversight roles, the CFTC regulates the derivatives clearinghouses that bring together buyers and sellers of futures contracts; approves and regulates the organizations responsible for actually executing futures trades; and monitors buyers and sellers in an attempt to ensure against fraud and other violations.

The National Credit Union Administration , or NCUA, in some ways functions both like the FDIC and the OCC, though it regulates credit unions rather than banks credit unions are nonprofit savings and loan institutions that pool the money of members in order to provide credit and banking services to one another, theoretically at lower rates than for-profit banks.

How to start a banking business in Italy

The Bank of Italy uses its own cookies and third-party cookies to ensure the smooth functioning of its website: for more information and to find out how to disable them, users are invited to read our Privacy Policy. To proceed to a different area of the website or to select an element on a webpage such as an image or a link users must first consent to the use of cookies. Anyone can take up the business of a credit institution through a stand-alone company or a subsidiary.

In both cases the authorization procedure follows the same rules. A subsidiary is a distinct legal entity from its parent company and is accordingly subject to the applicable prudential requirements. A branch is an extension of the credit institution to which it is affiliated, i. The establishment in Italy of the first branch of a non-EU bank is authorized by the Bank of Italy, after consulting the Ministry of Foreign Affairs and International Cooperation and taking due account of the conditions of reciprocity between the home and host countries.

The procedure is much smoother for EU-banks : operating in Italy through a branch does not require authorization by the Bank of Italy, just notification from the home competent authority. Branches of non-EU banks based in jurisdictions whose supervisory systems are considered equivalent to European banking regulation i. The provision of services without any permanent establishment in Italy by non-EU banks is authorized by the Bank of Italy.

Each depositor insured to at least $250,000 per insured bank

The procedure is much smoother for EU-banks : operating in Italy under the freedom to provide services does not require authorization by the Bank of Italy, just notification from the home competent authority. If the applicant does not meet the regulatory authorization requirements, the Bank of Italy can reject the application without requiring any decision by the ECB. If the Bank of Italy is satisfied that the application complies with all conditions laid down in the relevant national law, it will draw up a draft decision to grant an authorization and send it to the ECB.

The ECB then has ten working days with the option of extending this deadline by another ten days to assess whether it agrees with the draft decision. If it does, a positive authorization decision will be notified to the applicant.

You are encouraged to get in touch with the Bank of Italy. While not mandatory, pre-application discussions with prospective new banks can prove beneficial for applicants wishing to gain a better understanding of the various stages of the authorization process and of the Bank of Italy's expectations in this regard. When you submit an application, the Bank of Italy first assesses whether it is complete or not; if the application is not complete, the authorization process cannot begin or will be suspended until the additional information has been supplied.

The completeness of the information provided is crucial to ensuring that the authorization process begins and the application is processed as smoothly as possible. The following Frequently asked questions FAQ are intended to help applicants prepare complete applications by explaining the assessment criteria.

The Bank of Italy assesses the soundness of the initiative and the transparency and adequacy of the shareholding structure.

Financial regulation

If the new bank belongs to a group, the Bank of Italy assesses the group structure, the location of the foreign group members, the adequacy of its supervision, group members and, where applicable, the ability of the Bank of Italy to perform adequate consolidated supervision. A shareholder can borrow the funds to make the initial capital subscription. However, the Bank of Italy may require a higher level of initial capital where the bank's own funds are insufficient in relation to the planned scale and scope of the business or if the capital adequacy ratios are likely to be breached in the future.

In addition, under the current regulation, where the initial capital includes contributions in kind these may not exceed three-tenths of the total amount of capital. The Bank of Italy assesses the suitability of qualified shareholders i. The reputation, experience and financial soundness criteria are defined and assessed on the basis of European guidelines. Regarding financial soundness, the Bank of Italy assesses whether the financial situation of the shareholders is sufficiently sound to support the activities of the new bank after authorization.

The Bank of Italy also takes into account the degree of influence exerted by shareholders or others persons, and the existence and content of shareholders' agreements governing the bank's management. The ownership structure must enable the exercise of effective supervision and ensure the sound and prudent management of the new bank. For assessment purposes, the Bank of Italy takes into account links of whatever nature, including family or associational ties between shareholders and other persons.

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The Bank of Italy assesses the viability and sustainability of the proposed business plan, having regard to the amount of the initial investment required to create the technical and organizational structure, to the volumes of business that the bank proposes to achieve, and to expected outturns. The Bank of Italy evaluates applicants' ability to comply with the prudential rules during the start-up phase. Applicants are requested to provide a financial plan, including a projected balance sheet and profit and loss accounts for the base case and worst case scenarios for at least the first three business years , with evidence of their funding profile.

Where appropriate, the Bank of Italy may require that the applicant's shareholders offer financial commitments in order to safeguard the sound and prudent management of the bank. The origin of the resources used for the acquisition also comes under scrutiny. The Bank of Italy assesses the corporate governance structure in order to verify if it ensures the monitoring of all risks, it is consistent with the operations and the dimension of the new bank, it is clear in the allocation of tasks among different corporate bodies and in the relationships with shareholders.

The persons performing administrative, managerial or control functions - including board members and senior managers - must satisfy the fit and proper criteria:. The integrity requirements mainly refer to criminal proceedings, e.


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Board members and senior managers must prove that they have specific experience in managerial roles, academic positions, professional or civil servant career posts. The legislation also requires some directors to be independent meaning that they have to satisfy specific independence requirements. The Bank of Italy evaluates the consistency and the effectiveness of the bank's technical, organizational and geographical structure, along with its proposed dimension and scale of the activities to be carried out.

The IT system that the bank adopts must permit the smooth functioning of its activities and must satisfy the supervisory reporting requirements. Banks can outsource functions, depending upon their operational complexity; the outsourcing contract identifies the minimum guaranteed level of services and ensures the possibility of access for the supervisory authority. In any case, the bank is ultimately responsible for the outsourced activities. Banks should also ensure compliance with the anti-money laundering provisions adopted in line with the Italian regulation. Banks should respect the "know your customer" rule and the obligations to report suspicious transactions.

Please refer to the Italian version. The Bank of Italy also takes account of other information in its possession - such as supervisory records and the Central Credit Register CCR - or held by other public authorities, such as the competent supervisory authorities of the foreign countries concerned.