Banking regulators are government agencies that set rules for banks, check whether banks follow those rules, and step in when a bank fails or breaks the law.
In the United States, there is no single banking regulator. Instead, multiple agencies share the job depending on what kind of bank you're dealing with and what part of banking they oversee. A national bank answers to the Office of the Comptroller of the Currency (OCC). A state-chartered bank that belongs to the Federal Reserve answers to both the Federal Reserve and its state banking authority. A state-chartered bank that does not belong to the Federal Reserve answers to the Federal Deposit Insurance Corporation (FDIC) and its state authority. Credit unions answer to the National Credit Union Administration (NCUA).
Each of these agencies has the power to examine a bank's books, demand that it change its practices, fine it, or shut it down. They also set minimum standards for how much money a bank must keep on hand, what kinds of loans it can make, and how it must treat customers. When you file a complaint about a bank, it usually goes to one of these regulators, not to the bank itself.
Key Takeaways
- The OCC regulates national banks, the Federal Reserve regulates state banks that are members, the FDIC regulates state banks that are not members, and the NCUA regulates credit unions.
- Banking regulators examine banks regularly, set rules about lending and capital, and can fine or close a bank that breaks the law or becomes unsafe.
- If you have a complaint about a bank's conduct or a dispute over a transaction, you can file it with the bank's primary regulator, which will investigate.
- The FDIC insures deposits up to $250,000 per account type at member banks, but that insurance is separate from regulation—a bank can be insured and still be poorly run.
The four main federal banking regulators and what each one does
The Office of the Comptroller of the Currency is part of the U.S. Department of the Treasury. It grants charters to national banks (banks with "National" in the name or "N.A." at the end), and it is their primary regulator. The OCC examines national banks for safety and soundness, makes sure they follow consumer protection laws, and can take enforcement action if they do not. You can file a complaint about a national bank with the OCC's Customer Complaint Center.
The Federal Reserve is the central bank of the United States. It regulates state-chartered banks that choose to become members of the Federal Reserve system. It also supervises bank holding companies—the parent companies that own multiple banks. The Federal Reserve sets interest rates, manages the money supply, and acts as a lender to banks during crises. When you hear about the Federal Reserve raising or lowering rates, that is the Federal Reserve's monetary policy role, which is separate from its role as a bank regulator.
The Federal Deposit Insurance Corporation insures deposits at member banks and also regulates state-chartered banks that are not members of the Federal Reserve. The FDIC's main job is to protect depositors: if a bank fails, the FDIC pays out deposits up to $250,000 per depositor per account type. But the FDIC also examines banks to prevent failures in the first place. You can file a complaint about an FDIC-insured bank with the FDIC's Consumer Complaint Center.
The National Credit Union Administration charters and regulates federal credit unions and insures deposits at all federally insured credit unions up to $250,000. Credit unions are member-owned cooperatives, not banks, but they offer similar services—checking accounts, savings accounts, loans. The NCUA has two divisions: one that charters and supervises credit unions, and one that runs the insurance fund. You can file a complaint about a credit union with the NCUA.
What regulators actually check when they examine a bank
Banking regulators do not show up unannounced. They schedule examinations in advance, and banks know roughly when to expect them. During an examination, regulators look at the bank's financial statements, loan portfolio, internal controls, and compliance with laws. They check whether the bank has enough capital—money set aside to absorb losses. They review a sample of loans to see whether the bank made them fairly and did not discriminate. They look at whether the bank is following anti-money-laundering rules and sanctions laws.
Regulators also check whether a bank is treating customers fairly. They look at whether the bank disclosed fees clearly, whether it is charging illegal interest rates, whether it is following the rules about overdraft fees, and whether it is handling complaints properly. If a regulator finds a problem, it issues a written finding called a Matter Requiring Attention or a more serious enforcement action. The bank then has a important date to fix the problem. If the bank does not fix it, the regulator can issue a formal order, fine the bank, or remove the bank's leadership.
Regulators also stress-test large banks—they run computer models to see whether the bank could survive a severe economic downturn. This is required by law for banks with more than $10 billion in assets. The bank has to show that it could stay solvent even if unemployment spiked, real estate prices fell, and credit markets froze.
How to file a complaint with a banking regulator
First, you need to know which regulator oversees the bank. You can find this out by calling the bank and asking, or by looking at the bank's website—most banks list their primary regulator. You can also search the FDIC's bank finder tool or the Federal Reserve's bank data tool.
Once you know the regulator, you can file a complaint. The OCC has an online complaint form on its website. The FDIC has a complaint form you can submit online or by mail. The Federal Reserve has a complaint process that varies slightly by region. The NCUA has an online complaint form. Most regulators ask you to include your name, contact information, the bank's name, a description of what happened, what you want the bank to do about it, and any supporting documents like statements or emails.
After you file, the regulator will send the complaint to the bank and ask the bank to respond. The bank usually has 15 to 30 days to respond. The regulator then reviews both sides and sends you a letter explaining what it found. The regulator cannot force the bank to refund your money, but it can investigate whether the bank broke a law or violated a regulation. If it finds a violation, it can order the bank to fix the problem or pay restitution.
The difference between regulation and deposit insurance
Many people think that because a bank is FDIC-insured, it must be safe and well-run. That is not quite right. Deposit insurance and regulation are two separate things. A bank can be insured and still be poorly managed. The FDIC insures deposits so that if a bank fails, you do not lose your money (up to $250,000 per account type). But the FDIC's insurance fund is funded by premiums that banks pay, not by taxpayer money. If a bank fails, the FDIC pays out the insured deposits from this fund.
Regulation, on the other hand, is about preventing failures in the first place. Regulators examine banks, set rules, and enforce those rules. A bank can be insured and still violate consumer protection laws, charge unfair fees, or discriminate in lending. If that happens, the regulator can fine the bank or order it to change its practices, but the insurance does not prevent the violation from happening.
The FDIC is both an insurer and a regulator, which can be confusing. But remember: the insurance protects your money if the bank fails. The regulation is supposed to make failure less likely.
State banking regulators and how they fit in
Every state also has a banking regulator, usually called the Department of Banking or the Office of the State Comptroller. State regulators charter state banks, examine them, and enforce state banking laws. A state bank may also be examined by a federal regulator (the Federal Reserve or the FDIC), so it can end up with both a state and a federal supervisor.
State regulators handle some things that federal regulators do not. For example, many states have their own consumer protection laws that go beyond federal law. A state regulator can enforce those state laws. State regulators also handle complaints about mortgage lenders and other financial institutions that are not banks. If you have a complaint about a state-chartered bank, you can file it with your state's banking regulator, and it will investigate.
What happens when a bank fails
If a bank becomes insolvent—meaning it does not have enough assets to cover its liabilities—the regulator can close it. The FDIC then takes over and becomes the receiver. The FDIC sells the bank's assets, pays off its debts, and pays out insured deposits. This process usually takes a few weeks to a few months. Uninsured deposits—amounts over $250,000—are paid out only after all other creditors are paid, and they often recover only a fraction of what was owed.
The FDIC maintains a list of failed banks on its website, along with information about what happened to each one. Bank failures are rare in the modern era because of regulation and deposit insurance, but they do happen. Between 2008 and 2012, more than 400 banks failed during the financial crisis. Since then, failures have been much less common.
Frequently Asked Questions
How do I know which regulator oversees my bank?
Call your bank and ask, or look at your bank statements and account agreements—they usually mention the regulator. You can also search the FDIC's bank finder tool by entering your bank's name and state. The tool will tell you whether the bank is FDIC-insured and which regulator supervises it.
Can a regulator force my bank to refund money if I was overcharged?
A regulator cannot force a refund directly, but it can investigate whether the bank broke a law. If it finds a violation, it can order the bank to refund you and pay a penalty. You can also dispute the charge through your bank's dispute process or file a complaint with your state's attorney general.
What does it mean if a bank gets a "cease and desist" order?
A cease and desist order is a formal enforcement action issued by a regulator. It means the bank must stop a specific practice when ready. The order is public, and it signals that the regulator found a serious problem. Banks that receive cease and desist orders are often in trouble, and some eventually fail.
Is my money safe if my bank is not FDIC-insured?
FDIC insurance protects you if the bank fails, but it does not protect you from fraud or theft. If your bank is not FDIC-insured, your deposits are not protected by federal insurance. Credit unions are insured by the NCUA instead, which offers the same $250,000 protection. If you use a non-bank financial institution, check whether it has insurance.
Can regulators prevent a bank from closing my account?
Banks have the right to close accounts, and regulators generally do not interfere unless the closure violates a law—for example, if the bank closed the account because of your race or religion. If you believe your account was closed illegally, you can file a complaint with the regulator. Otherwise, the bank can close your account for any reason, though it must usually give you notice.