The Law & Regulation of Financial Institutions

Author: Milton R. Schroeder, Esq.
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Highlights of Our Latest Update Table of Contents Preface Index Table of Cases UCC Citations Secondary Citations
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The U.S. government is engaged in a massive effort to stimulate the economy, increase liquidity in credit markets, support faltering financial institutions, and protect the financial system from the destabilizing effects that failure of systemically important financial institutions might create. The key government agencies leading these efforts are ones of particular importance to financial institutions and their operations. The U.S. Department of the Treasury, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation are prominent players in the programs being designed to revive the economy and the health of U.S. financial markets. Congress has intervened with important legislation to address the crisis in the Housing and Economic Recovery Act of 2008, the Emergency Economic Stabilization Act of 2008, and the American Recovery and Reinvestment Act of 2009. As these recovery programs go forward, there is accompanying attention to analyzing the causes of the current economic crisis with the view toward revising and reforming the U.S. system of financial regulation to prevent a reoccurrence of the problems being experienced now.

The Law and Regulation of Financial Institutions provides a practical review and analysis of all the major laws and regulations governing commercial banking compliance and commercial transactions in three information-packed volumes. It covers the basic principles of how banks, savings associations, and related institutions are regulated, what laws control and limit the activities of such institutions, and what legal rights and duties apply to commercial transactions involving checks, credit cards, electronic transfers, secured financing, letters of credit, consumer credit, and bankruptcy. It is an excellent research tool, offering detailed descriptions of key judicial decisions, statutes, legislative history, and regulations. Extensive references to law reviews, professional journals, and other secondary sources are included.

This manual identifies and explains the key ways in which these governmental programs impact banks and other financial institutions. Topics covered include:

Proposals for regulatory reform. What are the key issues? What is being recommended by the leading financial system authorities?
Revision of the regulation of the government-sponsored enterprises, Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. What changes were made by the Housing and Economic Recovery Act of 2008? How did the government prevent Fannie and Freddie from failing? Who is now charged with regulating these entities? What additional powers does the new Federal Housing Finance Agency (FHFA) have to supervise the operations of these government sponsored enterprises? To what extent can the FHFA exercise regulatory powers like the prompt corrective action and civil monetary penalty authority available to the federal banking regulators?
Federal Reserve System authority as lender of last resort. What power does the Federal Reserve Board have to authorize Federal Reserve Banks to lend to nonbank parties?
Government support of credit markets and systemically important institutions. The Federal Reserve Board has undertaken several initiatives to support credit liquidity through the exercise of its lending and discount authority. These include a commercial paper funding facility, a money market investor funding facility, a term asset-backed loan facility (TALF), open market purchases of securities, and others. The Fed also has provided support to specific financial institutions, such as Bear Stearns, AIG, Citigroup, and Bank of America.
Initiatives by the Treasury Department to support financial institutions and credit markets. Treasury has developed programs to enhance liquidity in credit markets, encourage lending by financial institutions, and create incentives for private capital to invest in strengthening the position of banking institutions. The Emergency Economic Stabilization Act of 2008 authorized the Treasury Secretary to establish a troubled asset relief program (TARP) to purchase troubled assets from financial institutions. Using this authority, the Secretary has established programs to provide capital assistance to banking institutions, to support lending to households and small businesses, and to assist community development financial institutions. The TARP programs come with conditions, including restrictions on executive bonuses and golden parachute payments, required by the American Recovery and Reinvestment Act of 2009. Additionally, Treasury and the FDIC have announced plans for a public-private investment program to remove “legacy assets,” certain problematic real estate related loans and securities, from the balance sheets of banks.
The Federal Deposit Insurance Corporation (FDIC) emergency liquidity guarantee program to support depository institutions. The FDIC has adopted a temporary liquidity guarantee program that has two components: a transaction account guarantee program and a senior unsecured debt guarantee program. The transaction account guarantee program guarantees in full amounts held in qualifying noninterest-bearing transaction accounts. The debt guarantee program guarantees principal and interest on eligible senior unsecured debt issued by depository institutions and bank holding companies.
The FDIC temporary increase in the standard maximum deposit insurance amount to $250,000.
The actions by the FDIC in adopting plans to restore the deposit insurance fund to the level required by law and the corresponding increase in deposit insurance assessments on insured depository institutions.

To obtain an authoritative guide to the bewildering maze of statutes, cases, rules, and administrative policies that apply to your financial institution’s activities, order The Law and Regulation of Financial Institutions today.

MILTON R. SCHROEDER

Milton R. Schroeder is a leading expert and commentator on federal banking law and regulation. As author of Law and Regulation of Financial Institutions, published by A.S. Pratt & Sons, Professor Schroeder has for more than a decade tracked legislation, regulations, proposed regulations, and case law in the most comprehensive single publication on the financial services industry, one that is used by hundreds of banking professionals as their first-look resource on legal compliance.
A Professor of Law at the Arizona State University College of Law in Tempe, where he teaches courses in banking law, payments and credit systems, and commercial transactions, Professor Schroeder has taught these subjects and published extensively about them for more than twenty years. Professor Schroeder was in private practice in Washington, D.C. prior to joining the Arizona State University Law faculty.
He is a member of the bar of the states of Arizona and Illinois (inactive) and of the District of Columbia (inactive). He is a member of the American Law Institute and the American Bar Association and participates in numerous committees of these organizations concerned with banking and commercial law, including those involved in the revision of the Uniform Commercial Code Article 3 on negotiable instruments, Article 4 on bank deposits and collections, Article 4A on funds transfers, and Article 9 on secured transactions.