The law governing banks, bank accounts, and lending in the United States is a hybrid of federal and state statutory law. Consumers and businesses may establish bank accounts in banks and savings associations chartered under state or federal law. The law under which a bank is chartered regulates that particular bank. A mix of state and federal law, however, governs most operations and transactions by bank customers.
Article 3 of the Uniform Commercial Code, as adopted by the various states, governs transactions involving negotiable instruments, including checks. Article 4 of the Uniform Commercial Code governs bank deposits and collections, including the rights and responsibilities of depository banks, collecting banks, and banks responsible for the payment of a check. Other provisions of the Uniform Commercial Code are also relevant to banking and lending law, including Article 4A (related to funds transfers), Article 5 (related to letters of credit), Article 8 (related to securities), and Article 9 (related to secured transactions).
A number of regulations govern a check when it passes through the Federal Reserve System. These regulations govern the availability of funds available to a depositor in his or her bank account, the delay between the time a bank receives a deposit and the time the funds should be made available, and the process to follow when a check is dishonored for non-payment. Federal law also provides protection to bank customers. Prompted by banking crises in the 1930s, the federal government established the Federal Deposit Insurance Corporation, which insures bank accounts of individuals and institutions in amounts up to $100,000.
A number of laws have been passed affecting banks, banking, and lending. A brief summary of these is as follows:
- National Bank Act of 1864 established a national banking systems and chartering of national banks.
- Federal Reserve Act of 1913 established the Federal Reserve System. Banking Act of 1933 (Glass-Steagall Act) established the Federal Deposit Insurance Corporation (FDIC), originally intended to be temporary.
- Banking Act of 1935 established the FDIC as a permanent agency.
- Federal Deposit Insurance Act of 1950 revised and consolidated previous laws governing the FDIC.
- Bank Holding Company Act of 1956 set forth requirements for the establishment of bank holding companies.
- International Banking Act of 1978 required foreign banks to fit within the federal regulatory framework.
- Financial Institutions Regulatory and Interest Rate Control Act of 1978 created the Federal Financial Institutions Examination Council; it also established limits and reporting requirements for insider transactions involving banks and modified provisions governing transfers of electronic funds.
- Depository Institutions Deregulation and Monetary Control Act of 1980 began to eliminate ceilings on interest rates of savings and other accounts and raised the insurance ceiling of insured account holders to $100,000.
- Depository Institutions Act of 1982 (Gar-St. Germain Act) expanded the powers of the FDIC and further eliminated ceilings on interest rates. Competitive Equality Banking Act of 1987 established new standards for the availability of expedited funds and further expanded FDIC authority.
- Financial Institutions Reform, Recovery, and Enforcement Act of 1989 set forth a number of reforms and revisions, designed to ensure trust in the savings and loan industry.
- Crime Control Act of 1990 expanded the ability of federal regulators to combat fraud in financial institutions.
- Federal Deposit Insurance Corporation Act of 1991 expanded the power and authority of the FDIC considerably.
- Housing and Community Development Act of 1992 set forth provisions to combat money laundering and provided some regulatory relief to certain financial institutions.
- Riegle Community Development and Regulatory Improvement Act of 1994 established the Community Development Financial Institutions Fund to provide assistance to community development financial institutions.
- Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 permitted bank holding companies that were adequately capitalized and managed to acquire banks in any state.
- Economic Growth and Regulatory Paperwork Reduction Act of 1996 brought forth a number of changes, many of which related to the modification of regulation of financial institutions.
- Gramm-Leach Bliley Act of 1999 brought forth numerous changes, including the restriction of disclosure of nonpublic customer information by financial institutions. The Act provided penalties for anyone who obtains nonpublic customer information from a financial institution under false pretenses.
Numerous federal agencies promulgate regulations relevant to banks and banking, including the Federal Deposit Insurance Corporation, Federal Reserve Board, General Accounting Office, National Credit Union Administration, and Treasury Department.
The ability for bank customers to engage in electronic banking has had a significant effect on the laws of banking in the United States. Some laws that govern paper checks and other traditional instruments are difficult to apply to corresponding electronic transfers. As technology develops and affects the banking industry, banking law will likely change even more.