Chapter 8

1. Chapter 8 Commercial Banking Structure, Regulation, and Performance

2. The banking regulatory structure • The structure of the commercial banking system • 我国的商业银行

3. Commercial banks make several decisions • the interest rates they will pay to “hire” funds • the types of deposits they will offer • the interest rates they will charge to lend their funds • the types of loans they will make • the types of securities they will acquire • Each of these decisions affects the supply and demand for funds

4. The Banking Regulatory Structure • Regulation involves the formulation and issuance of specific rules to govern the structure and conduct of banks • The primary reason the banking system is regulated is to preserve its safety and soundness and ensure the fair and efficient delivery of banking services

5. The Banking Regulatory Structure • The regulatory structure in place at the beginning of the 1970s was created during the 1930s • put in place as a result of bank failures during the Great Depression • the failure of these banks was alleged to be due to • “excessive and destructive” competition among banks leading to excessively high interest rates • the granting of overly risky loans (particularly to stock market speculators)

6. The Banking Regulatory Structure • The Glass-Steagall Act of 1933 • established maximum ceiling on interest rates paid by banks on deposits (known as Regulation Q) • interest payments on demand deposits were prohibited • established the Federal Deposit Insurance Corporation (FDIC)（存款保险公司） 1933年格拉斯-斯蒂格尔法案：是关于银行业的立法，针对大萧条，提出Q条例，制定了利率上限；并将商业银行和投资银行分离，创建了联邦存款保险公司。 Q条例：大萧条时期制定的关于商业银行存款利率上限的条例，1980年废止。

7. The Banking Regulatory Structure • The Glass-Steagall Act of 1933 • separated commercial banking from investment banking • banks could not own or underwrite corporate securities • the assets a bank could hold were limited to cash, government securities, and loans

8. The Banking Regulatory Structure • The Fed is the most important regulator of commercial banks (that are members of the Fed) • From the 1930s to the 1980s, the Fed shared regulatory responsibilities with two federal bodies • the Comptroller of the Currency（货币管理署，核准国民银行的联邦机构） • the FDIC

9. The Banking Regulatory Structure • Prior to the 1980s, the scope of regulation included restrictions on • entry • branching • types of assets and liabilities permitted • financial services that could be offered • interest that could be paid on deposits • interest that could be charged on loans

10. The Banking Regulatory Structure • Today, banks have found ways around many of these regulations • Many of the regulations have also been relaxed or eliminated

11. Dual Banking (Chartering) System • Commercial banks in the U.S. are chartered（核准：银行必须得到联邦政府或州政府的许可才可以经营商业银行业务） • they are given permission to engage in the business of banking by either the federal or a state government • if the bank’s charter is granted by the federal government, it is a national bank（国民银行：获得联邦政府许可） • the Office of the Comptroller is the federal government agency that charters national banks

12. National Banks • Banks that are federally chartered must be members of the Fed and must subscribe to federal deposit insurance with the FDIC • The standard insurance amount currently is $250,000 per depositor. The $250,000 limit is permanent for certain retirement accounts (includes IRAs) and is temporary for all other deposit accounts through December 31, 2013. On January 1, 2014, the standard insurance amount will return to $100,000 per depositor for all deposit accounts except certain retirement accounts, which will remain at $250,000 per depositor.

13. State-Chartered Bank • A state-chartered bank will be regulated by its state banking authority • If it choose to join the Fed, it must also subscribe to federal deposit insurance • can also subscribe to federal deposit insurance without joining the Fed

14. Dual Banking (Chartering) System • Primary regulatory responsibility is assigned to one authority who then shares the information with the others • Some banks will be subject to regulation and supervision by as many as 3 regulatory authorities • 双银行核准体系：该体系中的银行经营由联邦或州政府两者中的一个许可即可。

15. Dual Banking (Chartering) System • Federal Financial Institutions Examinations Council (FFIEC) 联邦金融机构检查委员会：是一个联邦机构，为联储、联邦存款保险公司、货币管理署进行联邦金融机构检查制定统一的原则、标准、报告形式，并就提高金融机构监管的一致性问题给出政策建议。

16. Bank Failures since the Inception of the FDIC, 1934-2003

17. Recap • The purpose of banking regulation is to insure the safety and sounding of the banking system and the fair and efficient delivery of banking services. • The Fed is the most important regulator of the banking system. In addition, the Comptroller of the Currency and the Federal Deposit Insurance (FDIC) share regulatory responsibility with state banking departments. The FDIC insures deposits of banks and savings associations. • The Glass-Steagall Act of 1933, enacted in response to the Great Depression, established Regulation Q interest rate ceilings, separated commercial and investment banking, and created the FDIC.

18. Commercial banks must be chartered. The United States has a dual banking system whereby banks may have either a national or state charter. National banks are chartered by the Comptroller of the Currency, must belong to the Fed and must have FDIC insurance. • State banks are chartered by the state in which they do business, and may or may not belong to the Fed. If they belong to the Fed they must also have FDIC insurance, otherwise not.

19. The Structure of the Banking Industry • Suppose that the industry was served by a large number of small banks • this would encourage competition and efficiency • the public would be provided with the largest quantity of financial services at the lowest prices • the pressure of competition would increase the risk of failure of each bank

20. The Structure of the Banking Industry • Suppose that the industry was served by a small number of large banks • this would limit competition and efficiency • the public would be provided with fewer options • fewer banks would fail

21. The Structure of the Banking Industry • Because of these issues, regulators were interested in monitoring and influencing the structure of the banking market • Regulators used their powers to control entry into the market, mergers among existing firms, and branching • to maintain competition • Regulators also tried to protect banks from excessive competition

22. The Structure of the Banking Industry • The McFadden Act • passed by Congress in 1927 • prohibited federally chartered national banks from branching across state lines • required national banks to abide by state branching laws 麦克法登法案：1927年国会颁布的法案，不允许设立跨州的分支机构，并要求国民银行在所属州内遵守各州关于州内分支机构的法律。

23. The Structure of the Banking Industry • The Interstate Banking and Branching Efficiency Act (IBBEA) • passed in 1994 • allowed unimpeded nationwide branching beginning mid-1997 州际银行分支机构效率法案：1994年9月，国会颁布的法案，允许在全国范围内不受限制地设立分支机构。

24. Size-Distribution of FDIC-Insured Banks as of September 23, 2003

25. Recap • Regulations on chartering have affected the structure of banking. The McFadden Act of 1927 outlawed interstate branching and made national banks abide by the intrastate branching laws of the state in which they were located. • The Interstate Banking and Branching Efficiency Act (IBBEA) of 1994 repealed the McFadden. Prior to its passage, large banks had found ways around the McFadden Act. • A small number of large banks control a very large percentage of banking assets. A large number of small banks control a very small portion of banking assets. Banking is becoming even more heavily concentrated.

26. 我国的商业银行 • 政策性银行：国家开发银行、中国进出口银行、中国农业发展银行 • 中国工商银行、中国农业银行、中国银行中国、建设银行 • 全国性股份制银行：交通银行、中信银行、中国光大银行、华夏银行、广东发展银行、深圳发展银行、招商银行、上海浦东发展银行、兴业银行、民生银行、恒丰银行、浙商银行、渤海银行 • 地方性银行