Banking laws entail the rules and standards that govern the operation of all banks and financial institutions. It comprises several laws that regulate how financial institutions such as investment and commercial banks, insurance companies, credit unions, and so on perform businesses with their customers. Banking laws in the United States handle pertinent issues such as privacy, scam prevention, anti-money laundering, anti-terrorism, anti-usury lending, and encouragement of loans to lower-income groups.
The rise or fall of banks has their respective impacts and repercussions on customers and the economy as a whole. Consequently, legislators continuously formulate financial rules and regulations to ensure the transparent and proper running of banks. These laws ensure that customers’ funds and privacy are protected and safeguarded. The truth is, banking laws are not static; they change from time to time. Hence, banks must stay tuned and adjust to the dictates of these banking laws.
Many federal banking laws are contained in the twelfth chapter of the US Code. One of the important statutes is that the Federal Reserve System was created through the Federal Reserve Act passed in 1914. In line with the United States constitution, federal banking laws and other guidelines provided by federal banking regulatory agencies usually preempt state laws governing certain operations of federally chartered banking institutions and their branches. However, there are particular exceptions to the general federal preemption clause, e.g., escheat laws, contract law, and insurance regulations. Banking laws are regulated by many federal agencies, which include: