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In the United States,banking had begun by the 1780s, along with thecountry's founding. It has developed into a highly influential and complex system of banking andfinancial services. Anchored byNew York City andWall Street, it is centered on various financial services, such asprivate banking,asset management, anddeposit security.
The beginnings of the banking industry can be traced to 1780 when theBank of Pennsylvania was founded to fund theAmerican Revolutionary War. After merchants in theThirteen Colonies needed a currency as a medium of exchange, theBank of North America was opened to facilitate more advanced financial transactions.
As of 2018[update], thelargest banks in the United States wereJPMorgan Chase,Bank of America,Wells Fargo,Citigroup, andGoldman Sachs. In March 2024[update], there were 4,587 FDIC insured commercial banks and savings institutions in the U.S.[1]
Merchants traveled from Britain to the United States and established theBank of Pennsylvania in 1780 to fund theAmerican Revolutionary War (1775–1783).[2] During this time, theThirteen Colonies had not established a currency, and used informal trade[clarification needed] to finance their daily activities.[2] On January 4, 1782, the first commercial bank in the U.S.,Bank of North America, opened.[2] In 1791,U.S. Treasury SecretaryAlexander Hamilton created theBank of the United States, a national bank intended to maintain American taxes and pay off foreign debt.[2] However, PresidentAndrew Jackson closed the bank in 1832 and redirected all bank assets intoU.S. state banks.[2] State banks began printing money rapidly, sparkingrunaway inflation and leading to thePanic of 1837.[2]
Investment banking began in the 1860s with the establishment ofJay Cooke & Company, one of the first selling agents for government bonds.[2] In 1863, theNational Bank Act was passed to create a national currency and a federal banking system, and to make public loans.[2] But at that time not all parts of the country had become states. InOklahoma Territory, which did not become a state until 1907,Muskogee mayor H.B. Spaulding resigned in 1902 from his position as vice-president of the Territorial Trust and Surety Company, after his Spaulding Mercantile Company was given acharter to found a private bank. Similarly in 1903 several more private banks were founded. One contemporary banker from Oklahoma defending the vitality of these private non-US banks did note that a small number of bank failures had resulted from a "dip in deposits due to partial crop failure".[3]
In 1913 theFederal Reserve System was established and began executingmonetary policy.[2] TheGreat Depression led to the separation between investment and commercial banking known as the "Glass-Steagall Act",[2] but the Act was repealed in 1999, leading to the2008 financial crisis.[2]
While most countries have only one bank regulator, in the U.S., banking is regulated at both the federal and state levels[5] in an arrangement known as adual banking system.[6] Depending on its type of charter and organizational structure, a banking organization may be subject to numerous federal and state banking regulations. Unlike Switzerland and the United Kingdom (where regulatory authority over the banking, securities and insurance industries is combined into one single financial service agency), the U.S. maintains separate securities, commodities, and insurance regulatory agencies—separate from the bank regulatory agencies—at the federal and state levels.[7] U.S. banking regulations address privacy, disclosure, fraud prevention, anti-money laundering, anti-terrorism, anti-usury lending, and the promotion of lending to lower-income populations. Some individual cities also enact their ownfinancial regulation laws (for example, defining what constitutes usurious lending).[5]
Thecentral banking system of the United States, called theFederal Reserve System, was created in 1913 by the enactment of theFederal Reserve Act, largely in response to a series of financial panics, particularly a severepanic in 1907.[8][9] Over time, the roles and responsibilities of the Federal Reserve System have expanded and its structure has evolved.[10] Events such as theGreat Depression were major factors leading to changes in the system.[11] Its duties today, according to official Federal Reserve documentation, are to conduct the nation's monetary policy, supervise and regulate banking institutions, maintain the stability of the financial system and provide financial services todepository institutions, theU.S. government, and foreign official institutions.[12]
The Federal Deposit Insurance Corporation (FDIC) is aUnited States government corporation created by theGlass–Steagall Act of 1933. It providesdeposit insurance, which guarantees the safety of deposits in member banks, up to $250,000 perdepositor per bank. As of November 18, 2010[update], the FDIC insured deposits at 6,800 institutions.[13] The FDIC also examines and supervises certain financial institutions for safety and soundness, performs certain consumer-protection functions, and manages banks in receivership (failed banks). Since the start of FDIC insurance on January 1, 1934, no depositor has lost any insured funds as a result of a bank failure.[14]
The Office of the Comptroller of the Currency (OCC) is a U.S. federal agency established by theNational Currency Act of 1863 and serves to charter, regulate, and supervise allnational banks and the federal branches and agencies of foreign banks in the United States. The current comptroller of the currency isRodney E. Hood, who took office on February 10, 2025.[15]
The Office of Thrift Supervision is aU.S. federal agency under the Department of the Treasury. It was created in 1989 as a renamed version of another federal agency (that was faulted for its role in theSavings and loan crisis).[5] Like other U.S. federal bank regulators, it is paid by the banks it regulates. On July 21, 2011, the Office of Thrift Supervision became part of the Office of the Comptroller of the Currency.[5]
There are various classifications and charters that a bank can obtain in the United States. Depending on their classification, they may be overseen by the Federal Reserve and supervised by either the FDIC or OCC.
A national bank is a bank that is nationally or federally chartered and is allowed to operate throughout the country in any state. An advantage of holding a National Bank Act charter is that a national bank is not subject to state usury laws intended to prevent predatory lending.[16] (However, see alsoCuomo v. Clearing House Association, L. L. C., stating that federal banking regulations do not preempt the ability of states to enforce their own fair-lending laws.)[17] There is currently no federal cap on rates. The federal government only requires that whatever rates, fees, or terms are set by issuers be disclosed to the consumer in accordance with the Truth in Lending Act. A national bank must have "National" or "N.A." in its corporate name.
A state bank is a bank that is state chartered, meaning that it has been formed under the laws of a specific state government and not the federal government. Although historically state banks could only operate within the state where it was chartered, this distinction slowly eroded. In 2010, this distinction was eliminated with the passage of theDodd-Frank Act. Now state chartered banks may operate branches in any other state.[18] A state chartered bank cannot have "National" or "Federal" in its name.
These are the similar to state chartered banks but are not members of the federal reserve. They are still overseen by the FDIC.[19]
Federal savings associations (FSAs), including federal savings banks (FSBs), are chartered under theHomeowners Refinancing Act of 1933. Although originally focused on residential mortgage lending, they have expanded their business across the range of banking activities. They operate under a distinct regulatory framework from national banks that allows them, for example, to invest directly in real estate development companies. FSAs were originally overseen by the Office of Thrift Supervision, but theDodd–Frank Act transferred most regulatory jurisdiction to the Office of the Comptroller of the Currency.
This is similar to a federal savings association but is registered under state law. They are overseen by the FDIC.
| Code | Description of class of bank |
|---|---|
| N | Commercial bank, national (federal) charter and Fed member, supervised by the Office of the Comptroller of the Currency (OCC) |
| SM | Commercial or savings bank, state charter and Fed member, supervised by the Federal Reserve (FRB) |
| NM | Commercial bank, state charter and Fed nonmember, supervised by the FDIC or OCC |
| SB | Savings banks, state charter, supervised by the FDIC |
| SA | As of July 21, 2011, FDIC supervised state chartered thrifts and OCC supervised federally chartered thrifts. Before that date, state or federally chartered savings associations supervised by the Office of Thrift Supervision (OTS). |
| OI | Insured U.S. branch of a foreign chartered institution (IBA) |
Bank mergers can happen for many reasons in normal business: for example, to create a single larger bank in which operations of both banks can be streamlined; to acquire another bank's brands; or due to regulators closing the institution due to unsafe and unsound business practices or inadequate capitalization and liquidity. Banks may not go bankrupt in the United States. As of October 2008, depositor accounts are insured by the FDIC up to $250,000 per individual per bank. Banks that are in danger of failing are either taken over by the FDIC, or administered temporarily, then sold or merged with other banks. The FDIC maintains a list of banks showing institutions seized by regulators and the assuming institutions.
In the United States,banking privacy andinformation security is not protected through a singular law nor is it an unalienable right.[5] The regulation of banking privacy is typically undertaken by a sector-by-sector basis.[5] The most prominent federal law governing banking privacy in the U.S. is theGramm-Leach-Bliley Act (GLB).[5] This regulates the disclosure, collection, and use of non-public information by banking institutions.[5] Additionally, theFederal Trade Commission (FTC) serves as the primary protector of banking privacy by fining violators of federal and state banking privacy laws.[5] Unlikebanking in Switzerland or other European countries, violations of banking privacy are usually acivil offense not acriminal one.[5] However, theFinancial Industry Regulatory Authority (FINRA) offers numerous banking privacy provisions within its statutes.[20][21]
According to the FDIC, there were 6,799 FDIC-insured commercial banks in the United States as of February 11, 2014.[13] Every member of theFederal Reserve System is listed along with non-members who are also insured by the FDIC. The five largest banks by assets in 2011 wereJPMorgan Chase,Bank of America,Citigroup,Wells Fargo, andGoldman Sachs.[22]
Just before the founding of the Federal Reserve, the nation was plagued withfinancial crises. At times, these crises led to 'panics', in which people raced to their banks to withdraw their deposits. A particularly severe panic in 1907 resulted in bank runs that wreaked havoc on the fragile banking system and ultimately led Congress in 1913 to write the Federal Reserve Act. Initially created to address these banking panics, the Federal Reserve is now charged with a number of broader responsibilities, including fostering a sound banking system and a healthy economy.
It was founded by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system. Over the years, its role in banking and the economy has expanded.
Protection of financial and personal customer information is a key responsibility and obligation of FINRA member firms. Under the SEC's Regulation S-P, firms are required to have policies and procedures addressing the protection of customer information and records. This includes protecting against any anticipated threats or hazards to the security or integrity of customer records and information and against unauthorized access to or use of customer records or information. The rule also requires firms to provide initial and annual privacy notices to customers describing information sharing policies and informing customers of their rights.
Except for arbitration awards, which are publicly available, the documents and information in FINRA Dispute Resolution case files are confidential. FINRA Dispute Resolution limits access to personal confidential information to FINRA staff members who need it to perform their job functions, and to arbitrators, mediators, or other individuals involved directly in the arbitration or mediation process. Examples of personal confidential information include:
