Compendium

US Financial Regulation — Prudential, Market Conduct, and Consumer

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US Financial Regulation — Prudential, Market Conduct, and Consumer

US financial regulation is a fragmented multi-regulator system that grew accretively from the 1863 National Bank Act through three crisis-driven rebuilds: the 1933-1940 New Deal statutes (Glass-Steagall, the 1933 and 1934 Securities Acts, the 1935 Banking Act, the 1940 Investment Company and Advisers Acts), the post-S&L-crisis rebuild (FIRREA 1989, FDICIA 1991, GLBA 1999), and the post-2008 rebuild (Dodd-Frank 2010, Basel III implementation 2013-2019, the partial 2018 EGRRCPA rollback). Unlike the UK’s twin-peaks model (PRA + FCA) or the EU’s single supervisory mechanism, the US splits oversight along three orthogonal axes: (1) charter type — national bank versus state-chartered bank versus thrift versus credit union versus broker-dealer versus futures commission merchant versus insurance company; (2) regulatory function — prudential safety-and-soundness versus market conduct versus consumer protection; (3) federal versus state jurisdiction. A single mid-sized broker-dealer-affiliated bank holding company faces at minimum the Federal Reserve (holding company prudential), the OCC or a state regulator (bank-level prudential), the FDIC (deposit insurance), the SEC (broker-dealer + investment adviser), FINRA (broker-dealer SRO), the CFPB (consumer financial products), and 50 state regulators (insurance, money transmission, blue sky securities). This note maps that architecture and the substantive rules each piece enforces.

See also

1. The Regulator Map

1.1 The Federal Reserve System

Established by the Federal Reserve Act of 1913 (12 USC §§ 221-522). Three-tier structure: (1) the Board of Governors in Washington (seven members, 14-year staggered terms, Senate-confirmed; Chair and Vice Chair Senate-confirmed for four-year terms); (2) twelve regional Federal Reserve Banks (Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, San Francisco); (3) the Federal Open Market Committee (FOMC — seven Governors plus the New York Fed President plus four rotating Reserve Bank Presidents) which sets monetary policy. Chairs since the global financial crisis: Ben Bernanke (2006-2014), Janet Yellen (2014-2018), Jerome Powell (2018-, second term began February 2022 through May 2026).

The Fed wears multiple hats:

  • Monetary policy — open market operations, discount window, interest on reserve balances (IORB since 2008, replacing the federal funds rate as the primary policy tool), overnight reverse repo (ON RRP), the Standing Repo Facility (added 2021), the Foreign and International Monetary Authorities (FIMA) repo facility. Quantitative easing 2008-2014, 2020-2022; quantitative tightening 2017-2019, 2022-.
  • Bank holding company supervision — under the Bank Holding Company Act of 1956 and the Gramm-Leach-Bliley Act of 1999, the Fed is the umbrella regulator for all BHCs and financial holding companies.
  • State-member bank supervision — for state-chartered banks that opted into Federal Reserve membership.
  • Foreign banking organizations — under Regulation K, the Fed supervises US operations of foreign banks (branches, agencies, FBOs).
  • Payment system operator — Fedwire (large-value RTGS), the National Settlement Service, FedACH, and since July 2023 FedNow (the Fed’s instant payment rail).
  • Designated systemically important financial market utilities (DFMUs) — supervisory authority over eight DFMUs designated by FSOC: DTCC subsidiaries (DTC, FICC, NSCC), CME, ICE Clear Credit, OCC (the Options Clearing Corporation), CLS Bank.
  • Designated nonbank SIFIs — under Dodd-Frank Title I, FSOC may designate nonbank firms for Fed supervision; the original designees AIG, GE Capital, Prudential, MetLife were de-designated 2017-2018, and the framework went dormant until the FSOC’s 2023 reactivation guidance.

1.2 The Office of the Comptroller of the Currency

OCC, established by the National Bank Act of 1863 (now codified at 12 USC §§ 1-95a), is the prudential regulator and chartering authority for national banks and federal savings associations (thrifts). Bureau of the Treasury. Comptroller is Senate-confirmed for five-year terms. Acting Comptrollers since 2017: Joseph Otting (2017-2020), Brian Brooks (acting 2020), Michael Hsu (acting 2021-2025), Jonathan Gould (nominee 2025).

OCC’s powers include chartering national banks and federal thrifts, examining safety and soundness, enforcing federal consumer financial laws against national banks (subject to CFPB primary authority over the largest), and preempting state law for national banks (the post-Cuomo v Clearing House Association preemption is narrower than pre-2009 OCC interpretations; Cuomo v Clearing House Association LLC, 557 US 519 (2009)).

The OCC fintech charter (the Office of Innovation, announced 2016, formally proposed 2018) was litigated by state regulators (Conference of State Bank Supervisors v OCC, S.D.N.Y. 2019 — vacated; Second Circuit 2021 — reversed and remanded; pending). The 2021 Brooks-era “true lender” rule was repealed via the Congressional Review Act in June 2021.

1.3 The Federal Deposit Insurance Corporation

FDIC, established by the Banking Act of 1933 (12 USC §§ 1811-1835a), is the deposit insurer (currently 100,000 by EESA 2008), the primary federal supervisor for state-chartered non-member banks, and the receiver for failed insured depository institutions.

Five-member board: the Chair (Senate-confirmed five-year term), the Vice Chair, an additional director, plus the Comptroller and the Director of the CFPB ex officio. Chairs: Sheila Bair (2006-2011), Martin Gruenberg (2012-2018, then 2022-2025), Jelena McWilliams (2018-2022), Travis Hill (acting 2025-).

The Deposit Insurance Fund (DIF) is funded by risk-based premiums assessed on insured banks. Following the March 2023 failures of Silicon Valley Bank, Signature Bank, and First Republic, the FDIC invoked the systemic risk exception under FDICIA section 13(c)(4)(G) to protect all depositors (including the uninsured), recovered the cost through a special assessment on banks with over $5B in uninsured deposits (the “special assessment” rule finalized November 2023).

The FDIC’s Title II Orderly Liquidation Authority (OLA) under Dodd-Frank provides an alternative to bankruptcy for systemically important financial institutions. Never used as of 2026 — every major resolution since 2010 (IndyMac, Washington Mutual residuals, the March 2023 trio) used standard FDIA receivership.

1.4 The National Credit Union Administration

NCUA (12 USC §§ 1751-1795k), established 1970, charters and supervises federal credit unions and administers the National Credit Union Share Insurance Fund (NCUSIF) which insures both federal and state-chartered credit union shares to $250K. Three-member board, Senate-confirmed, six-year staggered terms.

Credit unions are not-for-profit member-owned cooperatives, exempt from federal income tax under IRC § 501(c)(14)(A) and from CRA. Field-of-membership requirements (occupational, associational, geographic) were liberalized in NCUA’s 2016 chartering rule (upheld in American Bankers Association v NCUA, D.C. Cir. 2019).

1.5 The Securities and Exchange Commission

Established by Section 4 of the Securities Exchange Act of 1934 (15 USC § 78d). Five commissioners (no more than three from one party), Senate-confirmed five-year staggered terms; Chair designated by the President. The substantive disclosure and antifraud regime is covered in detail at sec-disclosure-regime and securities-regulation-deep; this note treats the SEC’s role in the regulatory architecture.

Five divisions: Corporation Finance (reviews registration statements and periodic reports); Trading and Markets (regulates exchanges, broker-dealers, transfer agents, clearing agencies, and SROs); Investment Management (regulates investment companies and registered advisers under the 1940 Acts); Enforcement (the largest division — investigations, administrative proceedings, federal court litigation); Examinations (the National Examination Program, formerly OCIE). Plus the Division of Economic and Risk Analysis (DERA).

Chairs: Mary Schapiro (2009-2012), Elisse Walter (2012-2013), Mary Jo White (2013-2017), Jay Clayton (2017-2021), Gary Gensler (2021-2025), Paul Atkins (2025-).

1.6 The Commodity Futures Trading Commission

CFTC, established by the Commodity Futures Trading Commission Act of 1974 (7 USC §§ 1-27f). Five commissioners, no more than three from one party. Regulates futures, options on futures, and (post-Dodd-Frank Title VII) most swaps. Designated contract markets (CME, ICE Futures US, MGEX, Nodal Exchange, Bitnomial, KalshiEX, ErisX/CXAD, NYSE Liffe US discontinued 2014). Swap execution facilities (SEFs — Bloomberg SEF, TW SEF, Tradeweb, MarketAxess, NEX SEF, BGC Derivatives, Tradition SEF). Derivatives clearing organizations (DCOs — CME ClearPort + CME Clearing US, ICE Clear US, ICE Clear Credit, LCH SA + LCH Ltd, OCC futures division).

Chairs: Gary Gensler (2009-2014, before later SEC chairmanship), Timothy Massad (2014-2017), J. Christopher Giancarlo (2017-2019), Heath Tarbert (2019-2021), Rostin Behnam (2021-2025), Caroline Pham (acting 2025-).

The SEC-CFTC jurisdictional line is the most contested boundary in US financial regulation: it splits “securities” (SEC) from “commodities” (CFTC) by reference to the Howey investment-contract test and the underlying instrument. Bitcoin and ether were classified by the CFTC as commodities (CFTC v McDonnell, E.D.N.Y. 2018 — Bitcoin; multiple CFTC enforcement orders treating ETH as a commodity 2019-2024). The SEC under Gensler 2021-2025 asserted that nearly all other tokens are securities; the Atkins SEC reversed course in 2025. The FIT21 bill (passed House May 2024, awaiting Senate in 2026) would codify a jurisdictional allocation.

1.7 FINRA, MSRB, NFA — the Self-Regulatory Organizations

Self-regulatory organizations are private entities with statutorily delegated examination and enforcement authority, subject to SEC or CFTC oversight.

  • FINRA (Financial Industry Regulatory Authority) — formed July 2007 by merger of NASD with NYSE Regulation. Examines and disciplines all US broker-dealers (~3,300 firms, ~620,000 registered representatives as of 2024). Operates the Central Registration Depository (CRD), BrokerCheck (public disclosure of registered persons), TRACE (corporate-bond transaction reporting since 2002), the OTC Bulletin Board successor OTC Markets Group, and the Order Audit Trail System (OATS, superseded by the Consolidated Audit Trail CAT). FINRA rules require SEC approval under Exchange Act Section 19(b). Notable rules: FINRA Rule 2010 (just and equitable principles of trade), 2020 (use of manipulative devices), 2111 (suitability — partly preempted by SEC Reg BI 2020), 2210 (communications with the public), 3110 (supervision), 4511 (books and records), 6730 (TRACE reporting), 7440 (CAT reporting).
  • MSRB (Municipal Securities Rulemaking Board) — established by the Securities Acts Amendments of 1975. Rules govern municipal securities dealers, brokers, and (since Dodd-Frank) municipal advisors. Notable rules: MSRB G-17 (fair dealing), G-37 (political contribution pay-to-play limits — challenge in Blount v SEC, D.C. Cir. 1995 rejected First Amendment attack), G-23 (separation of underwriting and advisory). EMMA (Electronic Municipal Market Access) is the MSRB-operated public disclosure portal. Enforcement by FINRA, SEC, and federal banking regulators (for bank dealers).
  • NFA (National Futures Association) — CFTC-registered SRO for futures commission merchants, introducing brokers, commodity trading advisors, commodity pool operators, and swap dealers. Operates BASIC (Background Affiliation Status Information Center). Notable NFA rules: Compliance Rule 2-4 (just and equitable principles of trade), 2-9 (supervision), 2-30 (KYC for non-retail customers), Bylaw 1101 (membership requirements).
  • PCAOB (Public Company Accounting Oversight Board) — created by Sarbanes-Oxley 2002 to register and inspect auditors of SEC-reporting companies; not technically an SRO but a private corporation overseen by the SEC. Five-member board.
  • National securities exchanges (NYSE Group, Nasdaq, Cboe, IEX, MEMX, MIAX, LTSE) are SROs with rule-making and disciplinary authority over their members.

1.8 State Regulators

  • State banking departments charter and supervise state banks and money-services businesses (under state money transmission acts plus federal FinCEN registration). The Conference of State Bank Supervisors (CSBS) coordinates through the Nationwide Multistate Licensing System (NMLS).
  • State insurance commissioners are the sole prudential and market-conduct regulators for insurance under the McCarran-Ferguson Act of 1945 (15 USC §§ 1011-1015). The National Association of Insurance Commissioners (NAIC) develops model laws and runs the Insurance Regulatory Information System (IRIS).
  • State securities administrators enforce state “blue sky” laws (registration, broker-dealer/IA registration, antifraud), subject to substantial federal preemption under the National Securities Markets Improvement Act of 1996 (NSMIA). The North American Securities Administrators Association (NASAA) coordinates. The “covered security” preemption under NSMIA exempts exchange-listed securities, Reg D 506 offerings, and Section 4(a)(7) resales from state registration.
  • State AG offices enforce state consumer protection and UDAP laws against financial institutions (subject to Cuomo limits for national banks but expanded by Dodd-Frank section 1042 for federal consumer laws).

1.9 The Consumer Financial Protection Bureau

Created by Title X of Dodd-Frank (Public Law 111-203, 12 USC §§ 5481-5603). Independent bureau within the Federal Reserve System; funded by Fed transfers (not congressional appropriation), challenged successfully on funding under Fifth Circuit’s CFSA v CFPB (Oct 2022), reversed by Supreme Court in CFPB v CFSA, 601 US 416 (May 2024) (7-2, Justice Thomas — bureau’s funding mechanism does not violate Appropriations Clause).

Director Senate-confirmed five-year term. Seila Law LLC v CFPB, 591 US 197 (2020) struck down for-cause-only removal as violating separation of powers — the President may remove the Director at will. Directors: Richard Cordray (2012-2017), Mick Mulvaney (acting 2017-2018), Kathy Kraninger (2018-2021), Dave Uejio (acting 2021), Rohit Chopra (2021-2025), Russell Vought (acting 2025).

Authority covers “consumer financial products and services” defined by the enumerated consumer laws in section 1002(15) plus the broad UDAAP authority of section 1031. Supervises depository institutions over $10B in assets for consumer compliance plus all nonbank consumer-finance firms in specified markets (mortgage origination, mortgage servicing, payday lending, private student loans, larger participants in consumer reporting, debt collection, international money transfers, automobile financing, student loan servicing, prepaid cards, takeover of buy-now-pay-later expanded 2024).

1.10 FSOC and the Treasury

The Financial Stability Oversight Council (FSOC) is the macroprudential coordination body created by Title I of Dodd-Frank (12 USC § 5321). Ten voting members (Treasury Secretary as Chair, the heads of the Fed, OCC, FDIC, NCUA, CFPB, SEC, CFTC, FHFA, and an independent member with insurance expertise). Five nonvoting members (OFR Director, FIO Director, state banking commissioner, state insurance commissioner, state securities commissioner).

FSOC’s principal powers: designation of nonbank SIFIs (12 USC § 5323), designation of financial market utilities and payment, clearing, and settlement activities (12 USC § 5463), and the “recommendation” authority to the primary financial regulators (12 USC § 5330). The Office of Financial Research (OFR) is FSOC’s data and analysis arm.

Treasury also houses FinCEN (Financial Crimes Enforcement Network — BSA administrator), OFAC (Office of Foreign Assets Control — sanctions), and the IRS (tax administration, including FATCA and CRS).

1.11 FHFA, GNMA, and the Housing Regulators

The Federal Housing Finance Agency (FHFA) regulates Fannie Mae, Freddie Mac, and the eleven Federal Home Loan Banks. FHFA placed Fannie and Freddie in conservatorship September 2008; the conservatorship continues in 2026 with periodic re-litigation of the net-worth sweep (Collins v Yellen, 594 US 220 (2021) — limited remedy; Trump-era directives to release in late 2025-2026 pending).

The Ginnie Mae (GNMA) is a wholly-owned government corporation within HUD that guarantees MBS backed by FHA, VA, RHS, and PIH loans.

2. Prudential vs Market-Conduct vs Consumer — The Three Functions

A useful frame: every financial regulator does one or more of three things, and the US system splits them across agencies rather than concentrating them.

Prudential safety-and-soundness — capital, liquidity, asset quality, earnings, management, and risk-governance. Goal: keep institutions solvent and the system stable. Tools: capital rules, liquidity rules, stress tests, supervisory enforcement, resolution planning. Lead agencies: Fed (BHCs, state-member banks, FBOs), OCC (national banks, federal thrifts), FDIC (state non-member banks, deposit insurance, resolution), NCUA (credit unions), state banking departments, state insurance commissioners (for insurers; the only material US example of prudential authority outside banking).

Market conduct — disclosure, antifraud, manipulation, market structure, trading rules, custody, capital adequacy of intermediaries from the customer-protection angle (not solvency per se). Lead agencies: SEC, CFTC, FINRA, MSRB, NFA, state securities administrators.

Consumer protection — UDAAP, truth-in-lending, fair credit reporting, fair debt collection, ECOA, RESPA, fair housing, mortgage origination and servicing, debt collection, credit reporting, money transmission consumer protection, privacy under GLBA. Lead agencies: CFPB (for nondepositories and depositories > 10B), FTC (for nonbank nonfinancial UDAP), state AGs and state regulators, HUD (fair housing).

The split sometimes produces friction. The 2017-2018 fight between the CFPB and the OCC over the OCC fintech charter centered on whether a national-bank charter without deposit-taking authority swept consumer-financial-product oversight into the OCC and away from the CFPB. The 2023 SVB collapse exposed friction between the Fed (BHC supervisor), the California DFPI (state-chartered bank supervisor), and the FDIC (deposit insurer + receiver).

3. The Statutory Architecture

3.1 Glass-Steagall (1933) and its Repeal

The Banking Act of 1933 (Pub. L. 73-66) had four core “Glass-Steagall” provisions, named for Senator Carter Glass (D-VA) and Representative Henry Steagall (D-AL):

  • § 16 — limited national banks’ securities activities to riskless principal transactions and full-faith-and-credit US debt; in particular barred underwriting and dealing in corporate securities.
  • § 20 — prohibited commercial banks from affiliating with firms “engaged principally” in securities underwriting and dealing.
  • § 21 — prohibited securities firms from taking deposits.
  • § 32 — prohibited interlocking directorates between commercial banks and securities firms.

Sections 20 and 32 were repealed by the Gramm-Leach-Bliley Act of 1999 (Pub. L. 106-102). Sections 16 and 21 remain on the books (interpreted narrowly by the OCC).

GLBA’s principal structural innovation was the “financial holding company” — a BHC that, upon satisfying capital-and-management-and-CRA criteria, may engage in any activity that is “financial in nature” or “incidental” or “complementary,” including securities underwriting, insurance underwriting, merchant banking, and physical commodities (subject to Fed regulation). Citigroup-Travelers merger in 1998 was negotiated around GLBA’s pending passage.

3.2 The Gramm-Leach-Bliley Act of 1999

Five titles: Title I (Facilitation of Affiliation Among Banks, Securities Firms, and Insurance Companies — the financial holding company framework); Title II (Functional Regulation); Title III (Insurance); Title IV (Unitary Savings and Loan Holding Companies); Title V (Privacy — the GLBA Privacy Rule, codified in CFTC, FTC, and bank-regulator rules at 12 CFR Parts 40, 216, 332, 573 and 17 CFR Part 248).

GLBA’s privacy framework is the original federal-level financial privacy regime: annual privacy notices to consumers, opt-out before sharing nonpublic personal information with nonaffiliated third parties (with exceptions for service providers, joint marketing, and law enforcement), and the Safeguards Rule (FTC 2003; updated 2021) requiring information security programs.

3.3 Dodd-Frank (2010)

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111-203, July 21, 2010), 16 titles, the most consequential post-1934 statute in US financial regulation:

  • Title I — Financial Stability Oversight Council, OFR, nonbank SIFI designation, living wills.
  • Title II — Orderly Liquidation Authority for systemically important financial companies.
  • Title III — Transfer of OTS functions to OCC, FDIC, Fed (eliminated the OTS).
  • Title IV — Private Fund Investment Advisers Registration Act — required hedge funds and private equity advisers with $150M+ AUM to register with the SEC.
  • Title V — Federal Insurance Office (FIO) in Treasury, with no direct regulatory authority (insurance remained state).
  • Title VI — Bank and Thrift Holding Company Reforms — Volcker Rule (§ 619) banning proprietary trading and certain hedge-fund and private-equity sponsorship by banking entities (implementing rule 79 FR 5535, December 2013; “Volcker 2.0” simplification October 2019; “covered fund” amendments June 2020).
  • Title VII — Wall Street Transparency and Accountability Act — derivatives reform: mandatory clearing for “swaps” (CFTC) and “security-based swaps” (SEC), exchange/SEF/SBSEF trading, swap dealer and major swap participant registration, capital and margin, position limits.
  • Title VIII — Payment, Clearing, and Settlement Supervision — Fed supervision of FSOC-designated FMUs and PCS activities.
  • Title IX — Investor Protections — Office of the Whistleblower, clawbacks, say-on-pay, internal pay disparity disclosure, accelerated 14-day insider reporting.
  • Title X — Bureau of Consumer Financial Protection (the CFPB).
  • Title XI — Federal Reserve System Provisions — limits on 13(3) emergency lending, GAO audit of emergency facilities.
  • Title XII — Improving Access to Mainstream Financial Institutions.
  • Title XIII — Pay It Back Act — restrictions on TARP repayments.
  • Title XIV — Mortgage Reform and Anti-Predatory Lending Act — ability-to-repay rule, qualified mortgages (CFPB QM rule, 12 CFR § 1026.43), high-cost mortgage rule.
  • Title XV — Miscellaneous (conflict minerals, mine safety, extractive industries payments).
  • Title XVI — Section 1256 Contracts.

3.4 The 2018 Partial Rollback — EGRRCPA / “CHOICE Act”

The Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155, Pub. L. 115-174, May 24, 2018) was the principal post-2008 rollback statute. It is sometimes informally called the “S. 2155 Act” or grouped with the failed Financial CHOICE Act (HR 10, 115th Congress; passed House 2017, never enacted).

Principal provisions:

  • Raised the threshold for “enhanced prudential standards” (Dodd-Frank section 165) from 250B in total consolidated assets; banks 250B received the Fed’s “tailored” approach (preserved at the Fed’s discretion).
  • Reduced CCAR/DFAST stress testing frequency for banks 250B.
  • Exempted banks under $10B from the Volcker Rule.
  • Eased mortgage rules for small banks (banks under $10B in assets making fewer than 1,000 mortgages annually qualify for QM status).
  • Modified the supplementary leverage ratio for custody banks (BNY Mellon, State Street, Northern Trust).

A central critique of EGRRCPA is that it raised the SIFI threshold from 250B and that the March 2023 trio (SVB ~110B, First Republic ~250B threshold and thus escaped the most stringent supervisory regime.

3.5 Sarbanes-Oxley (2002)

SOX (Pub. L. 107-204) responded to Enron and WorldCom:

  • § 302 — CEO/CFO certifications of periodic reports.
  • § 404 — management ICFR assessment + auditor attestation (smaller reporting companies exempt from § 404(b) auditor attestation per JOBS Act 2012).
  • § 906 — criminal certification (up to $5M / 20 years for willful false certification).
  • § 802 — document destruction crime (18 USC § 1519).
  • § 906 — wire/mail fraud penalty enhancement.
  • Title I — created the PCAOB.
  • Title II — auditor independence (prohibits non-audit services to audit clients; mandates partner rotation).
  • § 304 — clawback of bonuses upon restatement due to misconduct (sharpened by Dodd-Frank § 954 and Item 402(w) of Reg S-K, finalized October 2022).
  • § 806 — whistleblower protection (an independent civil cause of action; reinstatement remedy).
  • § 807 — securities fraud criminal statute (18 USC § 1348).

See securities-regulation-deep for the post-SOX disclosure controls regime.

4. Bank Capital and Liquidity — Basel III and US Implementation

4.1 Basel III Origin

Basel Committee on Banking Supervision is a Basel-based body of the BIS with no formal legal authority but de facto rulemaker for cross-border banking. Three Accords:

  • Basel I (1988) — risk-weighted capital (8% minimum total capital to RWA), narrow asset classification.
  • Basel II (2004) — internal-ratings-based credit risk, operational risk, Pillar II supervisory review, Pillar III market discipline.
  • Basel III (December 2010, with subsequent amendments) — post-crisis rebuild: tighter capital definition, capital conservation buffer, countercyclical buffer, leverage ratio, liquidity coverage ratio, net stable funding ratio. Basel III “endgame” or “Basel III Finalization” (December 2017) — limits on internal-models advantage, output floor.

4.2 US Implementation

The US implements Basel through joint Fed/OCC/FDIC rules:

  • Common Equity Tier 1 (CET1) ratio minimum 4.5% of RWA + capital conservation buffer 2.5% = 7% effective minimum.
  • Tier 1 capital minimum 6% + CCB = 8.5%.
  • Total capital minimum 8% + CCB = 10.5%.
  • Leverage ratio — Tier 1 / total assets >= 4%.
  • Supplementary leverage ratio (SLR) — Tier 1 / total leverage exposure (on + off balance sheet) >= 3% globally, 5% for US G-SIBs.

GSIB surcharge — additional CET1 buffer for the eight US G-SIBs (JPMorgan, Citigroup, Bank of America, Goldman Sachs, Morgan Stanley, Wells Fargo, BNY Mellon, State Street). Method 2 (US-specific method, more demanding than Basel Method 1) was finalized in 2015. JPMorgan’s GSIB surcharge ~4.5% as of 2024.

Stress capital buffer (SCB) — adopted March 2020 by the Fed; replaces the static 2.5% CCB for large banks with a stress-derived buffer based on annual CCAR results.

Basel III endgame — Fed/OCC/FDIC proposed July 2023 (88 FR 64028) implementing the December 2017 Basel III finalization, raising RWAs particularly for operational risk, equity exposures, and credit cards. Heavy industry pushback; Fed Vice Chair Barr announced September 2024 a “re-proposal” that cut the aggregate RWA increase from ~16% to ~9% for the largest banks. Final rule pending in 2026.

4.3 Liquidity Rules

  • Liquidity Coverage Ratio (LCR) — High-Quality Liquid Assets / projected 30-day net cash outflows under stress >= 100%. Adopted by US agencies September 2014 (79 FR 61440). Tiered: full LCR for >50-$250B (eliminated by the May 2019 tailoring rule for banks under the new threshold); not applicable to community banks.
  • Net Stable Funding Ratio (NSFR) — Available Stable Funding / Required Stable Funding >= 100%, measured over a one-year horizon. Adopted October 2020 (85 FR 9088), effective July 2021.

4.4 CCAR and DFAST

The Federal Reserve’s stress testing program operates in two tracks:

  • DFAST (Dodd-Frank Act Stress Test, 12 USC § 5365(i)) — quantitative supervisory exercise required by Dodd-Frank section 165(i). Public results.
  • CCAR (Comprehensive Capital Analysis and Review) — supervisory exercise added by the Fed in 2011, includes qualitative review of capital planning. Combined “capital plan rule” (12 CFR § 225.8).

Annual cycle: scenario release in February, submission in April, results published in June. Three scenarios: baseline, adverse, severely adverse. Severely adverse 2024 included a 36% peak-to-trough decline in equity prices and 8.5% peak unemployment.

The April 2025 stress test became controversial when the Fed published preliminary methodological documents at Vice Chair Barr’s departure, then revised them under the new Vice Chair for Supervision; banks (through BPI and ABA) sued in late 2024 (Bank Policy Institute v Federal Reserve, S.D. Ohio) seeking notice-and-comment for stress test scenarios — settled by Fed agreeing to publish methodology for comment.

4.5 TLAC and Long-Term Debt

Total Loss-Absorbing Capacity (TLAC) — Fed rule December 2016 (81 FR 8266) — US G-SIBs must hold minimum eligible TLAC = 18% RWA + 7.5% leverage exposure (effective January 2019). LTD (long-term debt) component within TLAC = 6% RWA + 4.5% leverage exposure.

A 2023 proposal (88 FR 64524) would extend LTD requirements to Category II, III, IV BHCs (assets $100B+).

4.6 The Broker-Dealer Net Capital Rule (15c3-1)

Exchange Act Rule 15c3-1 (17 CFR § 240.15c3-1) imposes a minimum net capital requirement on US broker-dealers. The basic structure:

  • “Net capital” = net worth, with deductions (“haircuts”) for proprietary positions and unsecured receivables.
  • Basic minimum: 100,000 for one carrying customer funds but no securities; less for various functions.
  • Aggregate indebtedness method: maintain net capital >= 1/15 of aggregate indebtedness (“the 15:1 rule”).
  • Alternative standard: maintain net capital >= 2% of aggregate debit items computed under Rule 15c3-3 (customer protection rule). Used by most clearing broker-dealers.

Customer Protection Rule (Rule 15c3-3) — separation of customer assets through the Special Reserve Account for the Exclusive Benefit of Customers, with required formula computation. The MF Global October 2011 collapse exposed customer-funds shortfalls in commodity-FCM context (parallel CFTC Rule 1.25); CFTC tightened FCM rules post-MF Global.

5. Securities Market-Conduct Rules

5.1 Regulation T

12 CFR § 220, issued by the Federal Reserve under Section 7 of the Exchange Act. Governs extension of credit by broker-dealers for the purchase of securities. Initial margin: 50% for equities (since 1974). Reg T accounts vs cash accounts; long market value vs short market value; T+1 settlement (effective May 28, 2024, shortened from T+2).

Maintenance margin is set by FINRA Rule 4210, not Reg T — typically 25% for long equity, 30% for short equity (with concentration adjustments).

Portfolio margining (FINRA Rule 4210(g)) — alternative to Reg T strategy-based margining for accounts $5M+, computes margin based on TIMS-derived theoretical worst-case loss across a portfolio. Available to qualified customers.

5.2 Regulation M — Trading Practices in Distributions

17 CFR § 242.100-105. Limits trading activities that could affect the price of a security being distributed (typically IPOs or secondary offerings):

  • Rule 101 — restrictions on bids and purchases by underwriters during the restricted period.
  • Rule 102 — restrictions on issuers, selling security holders, and affiliated purchasers.
  • Rule 103 — passive market-making safe harbor.
  • Rule 104 — stabilizing transactions, syndicate covering, penalty bids.
  • Rule 105 — short selling in connection with public offerings (the “short-and-then-cover” prohibition).

5.3 Regulation NMS (2005) and Best Execution

Regulation NMS (17 CFR § 242.600-613), adopted June 2005, overhauled US equity market structure:

  • Rule 611 (Order Protection Rule / “trade-through rule”) — prohibits execution of an order at a price inferior to a protected quotation (NBBO) without routing to the better quote. Drove the proliferation of Smart Order Routers and the migration to fully electronic trading.
  • Rule 610 (Access Rule) — fair and non-discriminatory access to displayed quotations; capped access fees at $0.003 per share (the “30-mil cap”).
  • Rule 612 (Sub-Penny Rule) — minimum quote increment 1.00. SEC’s September 2024 amendments adopted a tiered MPV including half-penny quoting for tick-constrained NMS stocks, effective November 2025.
  • Rule 605 — monthly market center execution quality statistics. September 2024 amendments expanded covered orders and required smaller reporting timeframes.
  • Rule 606 — quarterly broker order routing disclosures.

Best execution — historically a FINRA Rule 5310 (and predecessor NASD Rule 2320) duty; FINRA Notice 15-46 reaffirmed broad obligation. SEC December 2022 proposed a SEC-level best execution rule (Reg Best Ex); finalized in September 2024 alongside the order competition rule and other “Equity Market Structure” amendments — the order competition rule (Rule 615) was eventually scaled back to a narrow customer-disclosure regime in the final adoption.

5.4 Short Selling — Reg SHO

17 CFR § 242.200-205 (Regulation SHO), adopted 2004, replaced prior Rules 3b-3, 10a-1, and 10a-2:

  • Rule 200 — defines “short sale” and “long sale.”
  • Rule 201 — the “alternative uptick rule.” If an NMS security drops 10% intraday from prior day’s close, short sales for the remainder of that day plus next day must be at a price strictly above (not equal to) the NBB. Effective February 2011.
  • Rule 203 — locate requirement — broker-dealers must have “reasonable grounds to believe” the security can be borrowed for delivery before accepting a short-sale order.
  • Rule 204 — close-out for fails to deliver — must purchase or borrow by start of trading on T+1 (settlement date for short sales).

The original uptick rule (Rule 10a-1, 1938) requiring short sales only on a plus tick was repealed by the SEC in July 2007; the 10% trigger alternative was adopted in 2010 in response to the 2008 short-selling controversy.

SEC October 2023 final rule under Dodd-Frank Section 929X — Rule 13f-2 — requires institutional managers with significant short positions to file Form SHO monthly (with aggregated public release). SEC October 2023 also adopted Rule 10c-1a — securities lending transparency, with disclosures to FINRA and public dissemination. Both effective January 2026.

5.5 Insider Trading and Rule 10b-5

Detailed at securities-regulation-deep (insider trading section). Key elements: classical theory (Chiarella v US, 445 US 222 (1980); Dirks v SEC, 463 US 646 (1983)); misappropriation theory (US v O’Hagan, 521 US 642 (1997)); personal benefit (Salman v US, 580 US 39 (2016), repudiating Newman; US v Newman, 773 F.3d 438 (2d Cir 2014); US v Blaszczak, 947 F.3d 19 (2d Cir 2019), vacated and remanded 2021 after Kelly v US — narrowed wire fraud theory for confidential government information); awareness vs use (Rule 10b5-1, the affirmative defense for pre-planned trades); the SEC’s December 2022 10b5-1 amendments tightened the affirmative defense (cooling-off periods, certifications, overlapping-plan ban).

5.6 Market Manipulation

  • § 9(a)(2) of the Exchange Act — manipulation of exchange-listed securities via wash sales, matched orders, or manipulative purchases/sales.
  • § 10(b) + Rule 10b-5 — broader antimanipulation.
  • § 14(e) (Williams Act) — antifraud in tender offers.
  • Dodd-Frank § 747 added 7 USC § 6c(a)(5) (Commodity Exchange Act) — anti-spoofing provision criminalizing the placement of orders with intent to cancel before execution.
  • Layering — placement of multiple orders on one side of the book to create false impression of supply or demand, then executing on the opposite side.
  • Momentum ignition — designed to start a price trend that other algorithms will chase.

Notable enforcement: US v Coscia (N.D. Ill. 2015) — first criminal spoofing conviction post-Dodd-Frank; Sarao (US v Sarao, N.D. Ill. 2017) — the “Flash Crash” spoofing case; Phantom Securities (multiple FINRA proceedings 2015-2019); JPMorgan precious metals spoofing 2020 ($920M DPA, three traders convicted 2022); Bill Hwang / Archegos (S.D.N.Y. 2024 conviction on market manipulation in Total Return Swap reference-shares).

5.7 Order Audit Trail — The CAT

The Consolidated Audit Trail, mandated by SEC Rule 613 (2012), is a single repository of every order event for NMS securities and OTC equity securities. Operated by FINRA CAT LLC, in production since 2020. Replaces OATS (the predecessor FINRA-only audit trail). Funding allocation between exchanges, ATSs, and broker-dealers has been heavily litigated (the May 2023 funding model challenged in American Securities Association v SEC, 11th Cir. 2024 — vacated; remand pending).

6. Anti-Money Laundering / Bank Secrecy Act

6.1 The BSA Framework

The Bank Secrecy Act of 1970 (31 USC §§ 5311-5336, originally Pub. L. 91-508, formally the Currency and Foreign Transactions Reporting Act) is the foundational AML statute. Administered by FinCEN (Treasury). Implementing rules in 31 CFR Chapter X.

Core obligations on “financial institutions” (broadly defined to include banks, broker-dealers, FCMs, MSBs, casinos, jewelers, precious metal/stone dealers, mutual funds, insurance companies for permanent products):

  • Customer Identification Program (CIP) — under 31 CFR § 1020.220 and parallel sections; collect name, DOB, address, ID number at account opening.
  • Customer Due Diligence (CDD) — the “fifth pillar” under FinCEN’s CDD Rule (May 2018, 81 FR 29398): identify beneficial owners >= 25% equity + a control person; understand purpose and nature of relationship; conduct ongoing monitoring.
  • Currency Transaction Reports (CTRs) — for currency transactions > $10,000 in a single day by a single customer. Form 112 (formerly 4789).
  • Suspicious Activity Reports (SARs) — for transactions 2,000+ (MSBs) that the institution “knows, suspects, or has reason to suspect” involve illicit funds, are designed to evade BSA, lack apparent purpose, or facilitate criminal activity. 30 days to file; safe-harbor from civil liability for filing.
  • Recordkeeping — five-year retention for various transaction records; the “Travel Rule” (FinCEN Rule, 31 CFR § 1010.410(f)) requires transmittal of originator/beneficiary info on funds transfers >= $3,000.
  • Currency and Monetary Instrument Reports (CMIRs) — for cross-border currency/monetary instrument transport > $10,000.

The Anti-Money Laundering Act of 2020 (AMLA, part of NDAA FY21, Pub. L. 116-283) was the most significant BSA update since 2001:

  • Established beneficial ownership reporting to FinCEN (the Corporate Transparency Act, 31 USC § 5336) — most US legal entities must report ultimate beneficial owners. Compliance dates rolled out from January 2024; the rule was nationwide-vacated and reinstated and re-vacated through 2024-2025 (NSBA v Yellen, N.D. Ala.; Texas Top Cop Shop v Garland, E.D. Tex.; the Fifth Circuit denied stays pending appeal, the Supreme Court ordered a January 2025 stay continuation; the Trump Treasury announced a March 2025 suspension of enforcement for US-citizen reporting companies pending rulemaking).
  • Expanded whistleblower program (AMLA § 6314).
  • Increased penalties.
  • Created a “Subcommittee on Innovation and Technology” within BSAAG.
  • “Geographic targeting orders” (GTOs) authority codified more clearly.

6.2 OFAC Sanctions

Office of Foreign Assets Control administers economic sanctions under International Emergency Economic Powers Act (IEEPA, 50 USC §§ 1701-1708), the Trading with the Enemy Act (TWEA, 50 USC §§ 4301-4341), the Cuban Liberty and Democratic Solidarity (LIBERTAD) Act (Helms-Burton 1996), and dozens of country/regional sanctions statutes.

Specially Designated Nationals and Blocked Persons (SDN) list; Sectoral Sanctions Identifications (SSI) list (Russia/Iran sectoral); Foreign Sanctions Evaders (FSE) list. Strict liability for transactions with blocked parties; civil penalty up to greater of $356,579 (annually adjusted) or twice the transaction value (post-CAATSA 2017).

Major recent action: comprehensive Russia sanctions post-February 2022 invasion of Ukraine (asset freezes on the Russian Central Bank, designation of 1,000+ persons/entities, oil price cap coordinated with G7+EU+Australia, export controls coordinated through BIS); Iran (sectoral + comprehensive); North Korea (UNSC-mandated); Venezuela (sectoral relaxed October 2023, re-tightened April 2024); China (Uyghur sanctions, semiconductor export controls under BIS October 2022/October 2023/December 2024 updates).

6.3 Recent AML Enforcement

  • TD Bank — October 2024 plea agreement: 670M in drug-trafficking proceeds; allowing five anti-money-laundering officers to have direct knowledge of structuring schemes without filing SARs; backlog of unprocessed transactions for years.
  • Binance / CZ — November 2023 50M personal fine and four-month sentence served April-September 2024.
  • Wells Fargo — multiple BSA-related orders 2017-2024, total roughly $2B in BSA-specific components.

7. Consumer Protection Statutes (Title X CFPB and Predecessors)

7.1 The Enumerated Consumer Laws

Dodd-Frank section 1002(15) transferred administrative authority for these statutes to the CFPB:

  • Truth in Lending Act (TILA, 15 USC § 1601 et seq., 1968) — disclosure of credit terms; APR computation; right of rescission for non-purchase-money home loans; ability-to-repay rule for residential mortgages. Implementing rule: Regulation Z (12 CFR § 1026).
  • Real Estate Settlement Procedures Act (RESPA, 12 USC §§ 2601-2617, 1974) — settlement-cost disclosures; anti-kickback (§ 8); escrow account rules. Implementing rule: Regulation X (12 CFR § 1024). TILA-RESPA Integrated Disclosure (TRID, the Loan Estimate and Closing Disclosure forms) effective October 2015.
  • Equal Credit Opportunity Act (ECOA, 15 USC § 1691, 1974) — prohibits credit discrimination on basis of race, color, religion, national origin, sex, marital status, age, public assistance receipt, or exercise of consumer credit protection rights. Regulation B (12 CFR § 1002).
  • Home Mortgage Disclosure Act (HMDA, 12 USC §§ 2801-2810, 1975) — public disclosure of mortgage data. Regulation C (12 CFR § 1003).
  • Fair Credit Reporting Act (FCRA, 15 USC § 1681, 1970) — consumer reporting agencies, accuracy/dispute rights, permissible purposes, FACT Act 2003 amendments (identity-theft red flags, credit-freeze).
  • Fair Debt Collection Practices Act (FDCPA, 15 USC §§ 1692-1692p, 1977) — restrictions on third-party debt collectors. Regulation F (12 CFR § 1006), CFPB’s 2020 final rule (validation notice, electronic communication).
  • Electronic Fund Transfer Act (EFTA, 15 USC §§ 1693-1693r, 1978) — error resolution, liability limits for unauthorized electronic transfers, payroll card disclosures. Regulation E (12 CFR § 1005).
  • Consumer Leasing Act (CLA, 15 USC §§ 1667-1667f, 1976) — vehicle lease disclosures.
  • Fair Housing Act (42 USC §§ 3601-3619, 1968) — HUD-administered, with CFPB enforcement against creditors.
  • GLBA Title V privacy.
  • Service Members Civil Relief Act (50 USC §§ 3901-4043) financial provisions.
  • Truth in Savings Act (12 USC §§ 4301-4313).
  • Homeowners Protection Act (12 USC §§ 4901-4910) — PMI cancellation.

7.2 UDAAP — The CFPB’s Distinctive Authority

Section 1031 of Dodd-Frank (12 USC § 5531) created the “unfair, deceptive, or abusive acts or practices” (UDAAP) standard for the CFPB, broader than the FTC’s UDAP authority (which is “unfair or deceptive” only).

  • Unfair — causes or is likely to cause substantial injury that is not reasonably avoidable by consumers and is not outweighed by countervailing benefits. (Codifies the FTC’s Unfairness Statement of 1980.)
  • Deceptive — material representation, omission, or practice that is likely to mislead a reasonable consumer.
  • Abusive — added by Dodd-Frank, the most contested. Material interference with consumer’s ability to understand a term or condition; OR taking unreasonable advantage of consumer’s lack of understanding, inability to protect interests, or reasonable reliance on the institution to act in their interests.

The CFPB’s UDAAP Examination Manual update in March 2022 incorporated discrimination as a “unfair” practice (CRA-style discrimination analysis); the rule was vacated as exceeding statutory authority in Chamber of Commerce v CFPB, S.D. Tex. September 2023; affirmed by the Fifth Circuit in 2024. The CFPB then withdrew the policy under the Trump administration in 2025.

7.3 CFPB Enforcement Patterns

Section 1054 enables federal court actions; section 1053 administrative proceedings. Civil penalties tiered: Tier 1 (any violation, up to 6,813 in 2025), Tier 2 (reckless, up to 1,362,567 / day).

Major actions:

  • Wells Fargo - September 2016 fake accounts (\3B across CFPB+OCC+SEC+DOJ); December 2022 (\2B remediation to consumers + \$1.7B civil penalty); multiple subsequent.
  • Synapse / Evolve Bank — 2024 collapse of FBO bank-fintech middleware, exposed ledger reconciliation failures across Synapse customer programs; CFPB inquiries pending.
  • Bank of America — July 2023 ($250M for fees on rejected card swipes + denied bonuses + unauthorized accounts).
  • Affirm BNPL — multiple state-level actions; CFPB issued June 2024 interpretive rule treating BNPL providers as credit-card “issuers” under Reg Z.
  • Capital One / Discover — settlements re fee practices and CARD Act compliance.

8. Swap Dealer Registration and Derivatives Reform

Dodd-Frank Title VII added Sections 1a-9 of the Commodity Exchange Act (for “swaps”) and Sections 3 et seq. of the Exchange Act (for “security-based swaps”). The CFTC regulates the swap market (~96% of the global notional); the SEC regulates security-based swaps (single-name CDS, equity total return swaps). Mixed swaps are jointly regulated.

Major obligations on swap dealers (SDs) and major swap participants (MSPs):

  • Registration with the CFTC (SDs >$8B in gross notional dealing activity over preceding 12 months) or SEC (SBSDs); de minimis exception.
  • Capital requirements — CFTC 17 CFR § 23.101 (effective October 2021); SEC Rule 18a-1 (effective October 2021).
  • Margin requirements — initial and variation margin for uncleared swaps phased in 2016-2022. Final phase (smaller end-users) September 2022.
  • External business conduct standards — disclosures to counterparties, suitability.
  • Internal business conduct standards — risk management, recordkeeping, supervision.
  • Mandatory clearing — for designated swap classes (interest rate, credit) through a DCO.
  • Mandatory SEF execution — required for swap classes that are subject to mandatory clearing and “made available to trade” (MAT) by a SEF.
  • Reporting to a swap data repository (DTCC, ICE Trade Vault, CME Trade Repository).
  • Position limits — CFTC final rule January 2021 (86 FR 3236) covering 25 core referenced futures contracts.

Cross-border application is governed by the CFTC’s 2013 Cross-Border Guidance plus 2020 final cross-border rules (85 FR 56924); SEC analog at 17 CFR § 240.3a71-3.

9. The Volcker Rule

Section 619 of Dodd-Frank (12 USC § 1851) bars “banking entities” from:

  1. Proprietary trading — short-term trading on the entity’s own account, with statutory exceptions for: underwriting; market making; risk-mitigating hedging; trading on behalf of customers; trading by insurance companies in regulated insurance investment accounts; foreign exchange and certain commodity transactions; certain affiliate transactions.
  2. Covered fund investments and sponsorship — banking entities cannot acquire or retain ownership interests in, or sponsor, hedge funds or private equity funds (originally defined broadly via reference to ICA § 3(c)(1) or (c)(7) exemptions).

Implementing rule (5 agencies — Fed, OCC, FDIC, SEC, CFTC): adopted December 2013 (79 FR 5535). “Volcker 2.0” simplification October 2019 (84 FR 61974) and covered fund amendments June 2020 (85 FR 46422) substantially eased compliance:

  • Risk-mitigating hedging documentation requirements reduced for “limited trading assets and liabilities” entities (< $1B trading assets+liabilities).
  • “Reasonably expected near-term demand” (RENTD) standard for market making moved from quantitative to principles-based.
  • Covered fund exclusions added for venture capital funds, family wealth management vehicles, credit funds, customer-facing facilitation activities.

EGRRCPA 2018 exempted banks with under $10B in total assets and trading assets+liabilities < 5% of total assets from the Volcker Rule entirely.

10. Insurance Regulation (State-Level, Briefly)

Per insurance-and-actuarial, insurance is regulated by state insurance commissioners under McCarran-Ferguson. The NAIC’s model laws coordinate:

  • Risk-Based Capital (RBC) — adopted by NAIC 1993, implemented state-by-state. Tiered action levels based on TAC / ACL RBC ratio.
  • Statutory Accounting Principles (SAP) — distinct from GAAP; promulgated by NAIC.
  • Insurance Holding Company System Regulatory Act — Form A (acquisition of control), Form B (annual registration), Form F (ERM enterprise risk report), Form D (transactions with affiliates).
  • Own Risk and Solvency Assessment (ORSA) — annual internal capital adequacy assessment for insurers >$500M direct + assumed.
  • Market conduct examinations — claim handling, agent licensing, rate filings.

Federal touchpoints: the FIO (Federal Insurance Office) at Treasury (information-gathering, international representation, no rulemaking); the Fed’s supervisory authority over insurance-affiliated SIFIs (originally AIG, GE Capital, Prudential, MetLife — all de-designated 2017-2018); state-federal coordination through NAIC and FSOC’s Nonbank Designations Committee.

11. Recent Crisis-Era Lessons

11.1 The 2023 Regional Bank Failures

March 8-13, 2023:

  • Silvergate Capital — voluntary liquidation March 8 (crypto-deposit run after FTX November 2022 collapse).
  • Silicon Valley Bank — closed March 10 by California DFPI; FDIC receivership. Run triggered by March 8 SEC filing disclosing $1.8B loss on AFS securities sale plus capital raise; uninsured deposits ~94% of total.
  • Signature Bank — closed March 12 by NYDFS; FDIC receivership. Also crypto-heavy deposit base.
  • First Republic Bank — extended deposit support from 11 large banks ($30B uninsured deposits in March); failed May 1, JPMorgan won FDIC auction.

Causes commonly identified: interest rate risk (AFS unrealized losses not deducted from regulatory capital under Category IV / EGRRCPA framework, leaving CET1 ratios overstated relative to economic capital); concentration risk (sector deposit base for SVB/Signature); social-media-accelerated run dynamics; supervisory delay.

Regulatory response:

  • Bank Term Funding Program (BTFP) — Fed 13(3) facility, March 12, 2023 - March 11, 2024. Loans up to one year against par-value collateral (US Treasuries, agency debt, agency MBS).
  • Systemic risk exception invoked to protect uninsured depositors at SVB and Signature.
  • Special assessment November 2023 on banks with > $5B uninsured deposits to recoup the systemic-risk cost.
  • FDIC’s options paper on deposit insurance reform (May 2023) — laid out targeted-coverage option for business-payment accounts; not adopted.
  • Basel III endgame proposed July 2023 — includes elimination of AOCI opt-out for Category III/IV firms.
  • Fed’s tailoring approach reconsidered; new long-term debt proposal August 2023 (88 FR 64524) for Category II-IV firms.
  • Strengthened liquidity rules under consideration; targeted resolution planning enhancements.
  • Silvergate — voluntary liquidation March 2023 amid Operation Choke Point 2.0 allegations; sweeping bank-regulator pressure on crypto deposits.
  • Signature — closed March 2023; the Signet real-time payment network for institutional crypto clients was a focal point.
  • Custodia Bank (Wyoming SPDI) — denied Federal Reserve master account January 2023; D. Wyo. ruling March 2024 upheld Fed discretion.

Bank-crypto deposit guidance: OCC IL 1170, 1172, 1174, 1179 (2020-2021) permitted national bank crypto custody, stablecoin reserves, blockchain participation; SAB 121 (March 2022, SEC Staff Accounting Bulletin) required exchange custody liabilities on balance sheet; rescinded by SAB 122 (January 2025).

12. Where to Read More

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