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

The FDIC is also the federal supervisor of state savings
banks with federally insured deposits, while the OTS
supervises state-chartered savings associations that are
members of the Savings Association Insurance Fund.
4.2.4.1.3 Areas of responsibilities of the different
federal bodies in the area of supervision
(regarding federally and state-chartered
institutions)
The distribution of tasks among the different federal
bodies in the area of supervision can be summarised
as follows:
- The Federal Reserve supervises all bank holding
companies, their non-bank subsidiaries and their
foreign subsidiaries. The Fed also supervises statechartered
banks that are members of the Federal
Reserve System as well as their foreign branches
and subsidiaries.
- The OCC supervises all national banks and all
federal branches and agencies of foreign banks.
- The OTS charters thrift institutions at federal level
and is their primary regulator and supervisor.
The OTS also supervises state-chartered savings
associations that are members of the Savings
Association Insurance Fund.
- The NCUA is responsible for supervising federal
credit unions.
- Finally, the FDIC has a specific role as the back-up
supervisor for all insured banks and thrift
institutions. The FDIC is also the federal
supervisors of state-chartered banks that are not
members of the Federal Reserve System.
4.2.4.2 Europe
In the European context, there is a necessity to
differentiate clearly the areas of regulation and
supervision, as although the two spheres are
inextricably linked, on the question of the allocation
of competencies, the essential function encapsulated
in each of these responsibilities must be acknowledged.
In the EU the definitions given for each function are
as follows: supervision is the executive function
(control), while regulation is the underlying legislative
function (rule-making). The European project has, since
its inception, worked on the principle of establishing
the most effective allocation of governing competencies
(principle of subsidiarity) along these lines.
Although recent decades have seen a move towards
regulating at the European level (as explained in the
section “Legislative process in the European Union”),
supervision continues to remain firmly grounded in
the national remit. Moreover, a contrast exists in
terms of their operating procedures – while the
political element has always had a strong role in
regulation, it has been largely absent in supervision.
4.2.4.2.1 EU level
Supervision is the responsibility of the national
competent authorities 175 .
However, at the European level, a number of
mechanisms have been established to facilitate the
cooperation between national authorities. Specifically,
two forms of cooperation existed traditionally.
First, memoranda of understanding (MoU) were
passed between supervisors. These memoranda
could be either bilateral (in the banking and
insurance sector) or multilateral (in the insurance
sector). Second, forums were established for the
exchange of information and cooperation between
different supervisors.
The adoption of the Lamfalussy process in the
securities area (see also previous section on the
legislative process) and its subsequent extension to
the areas of banking, insurance and asset
management has changed significantly this second
form of cooperation, as the “Level 3” committees
(CESR, CEBS and CEIOPS) have as their main role
precisely to improve the coordination among
national regulators / supervisors and to ensure more
consistent and timely day-to-day implementation of
community legislation in the Member States. In fact,
since its creation in 2001, CESR has published
various standards, guidelines and recommendations
with a view to coordinating the approaches in the
EU, both in areas not covered by EU legislation
(e.g. standards for securities clearing and settlement
in the European Union 176 ) and in areas covered by EU
legislation (e.g. recommendations for the consistent
implementation of the EU legislation regarding the
drafting of prospectuses 177 ).
175 Article 26 of the Consolidated Banking Directive (Directive 2000/12/EC) states: “the prudential supervision of a credit institution (…) shall be the responsibility
of the competent authorities of the home Member State, without prejudice to those provisions of this Directive which give responsibility to the authorities of
the host Member State”. The Directive indicates that “‘competent authorities’ shall mean the national authorities which are empowered by law or regulation
to supervise credit institutions” (Article 1).
176 Standards for Securities Clearing and Settlement in the European Union, CESR and the European Central Bank, September 2004 Report (CESR/04-561).
177 CESR’s recommendations for the consistent implementation of the European Commission’s Regulation on Prospectuses nº 809/2004, CESR, February 2005
(CESR/05-054b).
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