In the commercial banking law area, actions by regulatory agencies are frequent and extensive. In addition, Congress and the state legislatures are engaged in consideration of new laws on many aspects of commercial banking, and state and federal courts are constantly issuing significant decisions. — Milton Schroeder

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.

Fed chairman Ben Bernanke, in a recent speech, said:
“a central element of the [Dodd-Frank] legislation is the requirement that the Federal Reserve and other financial regulatory agencies adopt a so-called macroprudential approach--that is, an approach that supplements traditional supervision and regulation of individual firms or markets with explicit consideration of threats to the stability of the financial system as a whole. The act also created a new Financial Stability Oversight Council, whose membership comprises a diverse group of federal and state financial regulators, to coordinate the government's efforts to identify and respond to systemic risks.”

A chapter in the Law & Regulation of Financial Institutions describes the powers of the Financial Stability Oversight Council and the other changes to financial regulation that the Dodd-Frank Act established in order to shift federal financial regulatory supervision from a microprudential approach to a more macroprudential approach.

Amendments to UCC Article 9. In the summer of 2010, the sponsoring organizations of the Uniform Commercial Code adopted amendments to the official version of Article 9 on Secured Transactions. State legislatures have begun the process of considering these amendments. The sponsors propose that States enact the amendments with a uniform effective date of July 1, 2013. The Law and Regulation of Financial Institutions features an in depth explanation of these amendments and how they would change existing law if adopted.

New federal electronic payment requirement. The U.S Treasury Department to requires recipients of federal payments to receive payment by an electronic transfer process. After May 1, 2011, new recipients of federal benefits such as Social Security, Veterans Benefits, federal wages and retirement payments, and other types of federal payments must receive payments by electronic means. Existing recipients of federal benefits by check will be required, subject to exceptions, to switch to an electronic form of payment later. The Law and Regulation of Financial Institutions explains how the new Treasury regulation operates, the exceptions to the requirement, and the implication of the changes for accounts at financial institutions in which federal payments are deposited.

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!

Highlights of Our Latest Update Table of Contents Preface Index Table of Cases UCC Citations Secondary Citations
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About Milton R. Schroeder

Milton R. Schroeder is an Emeritus 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. He has taught these subjects and published extensively about them for more than twenty years. He has been an academic visitor at the University of Melbourne and Ormond College, Melbourne, Australia, in the field of banking law. 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. See all works by Professor Schroeder