Supervision & Regulation

The Fed’s Role in Banking Supervision and Regulation

Congress gave the Fed broad regulatory and supervisory powers to enable it to address the nation’s banking panics. The Fed exercises these powers to reduce risk in the nation’s banking system. Objectives of the Supervision and Regulation function include protecting depositors’ funds; protecting consumer rights related to banking relationships and transactions; and maintaining a stable, efficient and competitive banking system.

The Board of Governors writes regulations and creates supervisory policy for the Federal Reserve System. However, many of the Fed’s banking supervision/regulation activities are delegated to the Reserve banks. These include conducting examinations, reviewing and approving most applications, and performing monitoring and surveillance activities.

The Fed supports our nation’s dual banking system and believes that it strengthens the nation’s economy. We work very closely with the state bank departments to ensure a consistent and unified supervisory approach for each state member bank.

Supervision Responsibilities

The Federal Reserve Bank of St. Louis’ supervision and regulation department is responsible for examining and inspecting state-chartered banks that are members of the Federal Reserve System, bank holding companies, savings and loan holding companies and financial holding companies. The boundaries of the Federal Reserve’s Eighth District include portions of Illinois, Indiana, Kentucky, Mississippi, Missouri, Tennessee and all of Arkansas.

The St. Louis Fed promotes a safe, sound, competitive and accessible banking system through:

Safety and Soundness Supervision

Safety and Soundness Supervision: Safety and soundness examiners are tasked with assessing the health and financial condition of financial institutions throughout the Eighth District. This assessment is based on a holistic approach to prudent supervision through a combination of offsite continuous monitoring and regularly scheduled bank examinations.

Consumer Affairs and CRA Supervision

Consumer Affairs and CRA Supervision: Consumer Affairs examiners are responsible for ensuring proper implementation of the laws and statues that are designed to inform and protect consumers from harm. To do this, examiners regularly evaluate the degree to which banking organizations are complying with these consumer protection and civil rights laws enacted by Congress.

Bank examiners also perform specialty examinations of other entities such as data-processing servicers, trust companies and other related financial service providers.

Holding Company Supervision

The Federal Reserve is the consolidated supervisor for all bank, financial, and savings and loan holding companies (referred to as “bank holding companies”). For decades, the majority of banks in the U.S. have operated under the auspices of the bank holding company structure because of the advantages they have found in the organizational structure.

Appeals Process for Material Supervisory Decisions

Appeals Process for Material Supervisory Decisions: For any institution examined by the Federal Reserve, an internal appeals process allows a supervised bank to appeal an adverse supervisory determination in areas including, but not limited to, examination or inspection ratings, the adequacy of loan loss reserves, and significant loan classifications. The St. Louis Fed and the Board of Governors continue to believe that objections to supervisory determinations are most effectively handled through the longstanding practice of resolving problems informally during the course of the examination process. However, these procedures clarify the steps to follow if an institution chooses to appeal a material supervisory determination, with the assurance of no negative repercussions.

Reference Materials

Supervision and Regulation staff members use a variety of reference materials to carry out their responsibilities, including:

These materials are made available to financial institutions as a resource for promoting regulatory compliance.

See a list of related links from our Supervisory Connection’s web resources brochure, or visit our Supervisory and Regulatory Guidance page for more information.

Bank Examiner Role

Do the key functions of a bank examiner appeal to you? Visit Career Central to learn what it’s like to be an examiner at the St. Louis Fed and to view our career opportunities.

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