The financial crisis of 2007-2008 left many people feeling distrustful of the financial services industry as a whole. Following this, legislators and regulators created new agencies to monitor and control financial institutions. These regulators were designed to keep banks from making risky investments or issuing risky loans again and protect consumers from being taken advantage of through these institutions. Financial regulatory agencies have different goals; however, they all have the same ultimate goal, which is consumer protection. Each agency has a different scope and specific areas of concern that it monitors. For example, one regulatory agency may focus on consumer credit reporting practices, while another may focus on mortgage lending practices. These agencies fall under three primary categories: supervisory, self-regulatory, and hybrid regulatory agencies. In order these articles we’ll be covering each type of regulator in more detail so you can get an idea of which is right for your business.

Consumer Financial Protection Bureau (CFPB)

The Consumer Financial Protection Bureau was created in the wake of the financial crisis as a direct result of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. It is the primary financial regulatory agency that is responsible for consumer protection in the financial sector. The CFPB is a bureau of the United States Federal Government and is independent of the government. The CFPB was designed to oversee consumer financial products such as mortgages, credit cards, student loans, and more. It is responsible for regulating consumer reporting agencies, debt collection practices, and the financial management education of the public. The CFPB also has the power to enforce consumer protection laws, go after financial institutions that are fraudulent or misleading consumers, and collect fines from those who break the law.

US Commodity Futures Trading Commission (CFTC)

The CFTC is a supervisory regulatory agency whose purpose is to regulate the commodity futures and traded options markets in the United States. The Commodity Exchange Act is the primary source of authority for the CFTC. The CFTC was created to regulate commodity futures and option markets and to foster open, competitive, and financially sound markets. Through their authority and powers, the CFTC is responsible for protecting the integrity of the futures and option markets by regulating the trading of futures and options and the trading practices of futures commission merchants, commodity trading advisers, commercial brokers, and associated persons. The CFTC also regulates the activities of certain boards of trade that choose to be designated as contract markets.

Securities and Exchange Commission (SEC)

The SEC is a self-regulatory agency with the primary purpose and authority to regulate the securities industry. The securities market is primarily regulated by the SEC, the Federal Reserve, and state regulators. The SEC was created to protect investors, maintain fair and orderly securities markets, and offer accurate information about securities being traded. The SEC has a broad mandate that covers all aspects of the securities business, from securities exchanges to securities broker-dealers, investment advisers, and mutual funds. The SEC also has authority over the accuracy of information in the marketplace, such as the information in a company’s financial statements, as well as the timeliness of the disclosure of important information.

Federal Deposit Insurance Corporation (FDIC)

The FDIC is a regulatory agency that monitors the health of the banking industry and protects consumers who have money deposited in banks. The primary responsibility of the FDIC is to insure deposits and manage the closure of banks that are deemed too risky to remain open. The FDIC was created to restore public confidence in the banking system by providing deposit insurance. The FDIC was originally created to reopen banks that functioned as a result of the Great Depression. It has since been mandated to close banks that are deemed too risky to remain open. If a bank fails, the FDIC will attempt to pay off deposits, and will subsequently be responsible for closing the bank and paying any outstanding loans.

National Credit Union Administration (NCUA)

The NCUA is a regulatory agency that regulates and offers insurance to credit unions. Credit unions are financial institutions that are designed to serve a specific group of members, such as employees of a single company or members of a community. The primary goal of the NCUA is to foster financial health and confidence in all federally insured credit unions and promote the availability of credit to members of the credit union system. The NCUA also regulates credit unions by setting capital and liquidity standards, implementing risk management procedures, and examining the financial condition of credit unions. It also ensures that credit unions are adequately safeguarding assets and protecting members from theft or fraud.

Federal Reserve

The Fed is a supervisory regulatory agency that is responsible for regulating banks. The Fed was originally created to oversee and regulate financial institutions, but has since evolved into more of a supervisory role. Although the Fed does not directly regulate banks, it does play a role in how financial institutions are regulated. The Fed is primarily responsible for maintaining the health of the United States economy by controlling interest rates, monitoring banking and financial markets for signs of instability, and setting regulatory policies for banks. The Fed is also responsible for regulating and controlling the money supply by buying and selling government securities, which puts more money into or out of circulation.

Takeaway

The financial crisis of 2007-2008 left many people feeling distrustful of the financial services industry as a whole. Following this, legislators and regulators created new agencies to monitor and control financial institutions. These regulators were designed to keep banks from making risky investments or issuing risky loans again and protect consumers from being taken advantage of through these institutions. Financial regulatory agencies have different goals; however, they all have the same ultimate goal, which is consumer protection. Each agency has a different scope and specific areas of concern that it monitors. For example, one regulatory agency may focus on consumer credit reporting practices, while another may focus on mortgage lending practices. These agencies fall under three primary categories: supervisory, self-regulatory, and hybrid regulatory agencies. In order these articles we’ll be covering each type of regulator in more detail so you can get an idea of which is right for your business.