Comparing Policies and Procedures of the Three Federal Bank Regulatory Agencies

In most cases, each of the three Federal bank regulatory agencies, the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve System (FRS), and the Office of the Comptroller of the Currency (OCC), establishes its own procedures for carrying out its wide range of responsibilities. The degree of consistency in the approaches used by the agencies depends on many factors, including management's philosophy and pertinent Federal or States laws.

The two main areas of responsibility are regulation, the process of interpreting banking legislation and issuing rules, and supervision, the process of monitoring, examining, and ensuring compliance with sound practices and law. Although differences exist in the agencies' policies and procedures, there is also some uniformity and evidence of increased interagency cooperation in the last 2 years. This review discusses the affect the FDIC, FRS, and OCC have on approving charters, membership, insurance, and mergers; permissible business activities; single borrower lending limits; and assuring that employees do not become involved in situations with a conflict of interest. Bank supervision covers a wide range of monitoring activity including: frequency of commercial examinations; assessing capital adequacy, the quality of a bank's assets, and shared national credits; evaluating country risk; reviewing standby letters of credit; communicating with the bank's board of directors; identifying banks needing special supervisory attention; and issuing cease and desist orders.