A comparative analysis of the US and EU retail banking markets - Wsbi

In fact, it should be mentioned here that the role of
the European Parliament in the comitology procedure
has given rise to discussions in the last 5 years, as this
institution considered that its responsibilities had to
be similar to those of the Council i.e. right to call-back
implementing measures which are not in line with the
framework developed at level 1). Without entering
in more details, it can be said that discussions are still
ongoing in Europe as regards the precise role of the
European Parliament in this context.
4.2.1.3.3 Functional approach
Both the US and the EU follow a functional approach
in the area of financial services. However, the
differences between the various areas of the
financial sector seem to be more important in the
United States than in Europe. In the US, not only
are the applicable rules different from one area to
another, but also the structures are fundamentally
different, with a more federal approach in the
securities sector, a state approach in the insurance
sector and a mixed approach in the banking sector.
Although similar differences exist in Europe, illustrated
by the fact that the Lamfalussy process was originally
limited to the securities area as no need for such a
procedure was felt in the other areas, the differences
are not as important. The extension of Lamfalussy to
the other financial services sectors (banking, insurance
and asset management) illustrates a willingness to
apply the same rule-making process throughout the
different areas of the financial services sector.
4.2.1.3.4 Impact assessment
The US legal framework contains clear rules as regards
how regulatory impact assessments (RIA) should be
performed, and in which cases. For instance, the US
framework refers to a definition of “major rules”, for
which conducting a RIA is mandatory. This includes
not only an assessment of potential costs and benefits
of the proposed regulation, but also potential
alternatives to it. Ultimately regulation can only take
effect if the RIA is approved by the Office of
Management of the Budget (OMB). In Europe, the
topics of “better regulation” and “impact assessment”
have only recently reached the top of the agenda
of the EU law-makers. In the last five years however,
a number of impact assessments have been
undertaken by some individual Member States and
at the level of the European Union.
At EU level, impact assessments have however not
been conducted for all files and not yet with the
same level of quality. In this context, the importance
of improving economic analysis has been underlined
and some lessons could be learned from the more
formalised process in the US.
4.2.2 Responsible authorities/relevant bodies
in the financial services area
4.2.2.1 United States
As indicated above, in the US each sector (banking,
securities, insurance) is organised separately, which is
in general the result of a specific historical evolution.
Presenting the bodies involved in the regulation and
supervision of financial services therefore requires
presenting separately the three sectors.
4.2.2.1.1 Responsible authorities in the banking area
The responsibilities of the banking sector are shared
between authorities at the federal level and at the
state level.
4.2.2.1.1.1 Responsible authorities at the federal
level in the banking area
In the banking area, five “federal” bodies are involved
in the US regulatory and supervisory activities:
the Federal Reserve (Fed), the Federal Deposit
Insurance Corporation (FDIC), the Office of the
Comptroller of the Currency (OCC), the Office of
Thrift Supervision (OTS) and the National Credit
Union Association (NCUA).
4.2.2.1.1.1.1 Federal Reserve
The Fed was established in 1913 by the Federal
Reserve Act as the US central bank. As such, it was
given a monopoly power over the issuance of
currency. Currently, its primary responsibility is to
conduct US monetary policy. However, the Fed also
has regulatory and supervisory authority over a wide
range of financial institutions and activities.
Specifically, the Fed is responsible (either solely or
together with another agency) for regulating
and supervising the following categories of financial
institutions:
- All US bank holding companies, their non-bank
subsidiaries and their foreign subsidiaries;
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