Supervision and Regulation
The Federal Reserve has supervisory and regulatory authority over a
wide range of financial institutions and activities. It works with other federal
and state supervisory authorities to ensure the safety and soundness of
financial institutions, stability in the financial markets, and fair and
equitable treatment of consumers in their financial transactions. As the U.S.
central bank, the Federal Reserve also has extensive and well established
relationships with the central banks and financial supervisors of other
countries, which enables it to coordinate its actions with those of other
countries when managing international financial crises and supervising
institutions with a substantial international presence.
The Federal Reserve has responsibility for supervising and regulating
the following segments of the banking industry to ensure safe and sound banking
practices and compliance with banking laws:
Although the terms bank supervision and bank regulation are often used
interchangeably, they actually refer to distinct, but complementary,
activities. Bank supervision involves the monitoring, inspecting, and examining
of banking organizations to assess their condition and their compliance with
relevant laws and regulations. When a banking organization within the Federal
Reserve’s supervisory jurisdiction is found to be noncompliant or to have other
problems, the Federal Reserve may use its supervisory authority to take formal
or informal action to have the organization correct the problems.
Bank regulation entails issuing specific regulations and guidelines
governing the operations, activities, and acquisitions of banking organizations.