Who Regulates Whom? An Overview of the U.S. Financial Regulatory Framework

August 17, 2017 – October 13, 2023 R44918

Who Regulates Whom? An Overview of the
October 13, 2023
U.S. Financial Regulatory Framework
Marc Labonte
The financial regulatory system has been described as fragmented, with multiple overlapping
Specialist in
regulators and a dual state-federal regulatory system. The system evolved piecemeal, punctuated
Macroeconomic Policy
by major changes in response to various historical financial crises. The most recent financial

crisis also resulted in changes to the regulatory system through the Dodd-Frank Wall Street
Reform and Consumer Protection Act in 2010 (P.L. 111-203) and the Housing and Economic

Recovery Act of 2008 (HERA; P.L. 110-289). To address the fragmented nature of the system,
the Dodd-Frank Act created the Financial Stability Oversight Council (FSOC), a council of regulators and experts chaired by
the Treasury Secretary, but did not reduce the total number of regulators on net.
At the federal level, regulators can be clustered in the following areas:
• Depository regulators—Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance
Corporation (FDIC), and Federal Reserve for banks and National Credit Union Administration (NCUA) for
credit unions;
• Securities markets regulators—Securities and Exchange Commission (SEC) and Commodity Futures
Trading Commission (CFTC);
• Government-sponsored enterprise (GSE) regulators—Federal Housing Finance Agency (FHFA), created by
HERA, and Farm Credit Administration (FCA); and
• Consumer protection regulator—Consumer Financial Protection Bureau (CFPB), created by the Dodd-
Frank Act.
Other entities involved in financial regulation are interagency bodies, state regulators, and international regulatory fora.
Notably, federal regulators generally play a secondary role in the regulation of insurers and money transmitters.
Regulators regulate financial institutions, markets, and products (or activities) using licensing, registration, rulemaking,
supervisory enforcement, and resolution powers. In practice, regulatory jurisdiction is typically based on charter type, not
function. In other words, how and by whom a firm is regulated depends more on the firm’s legal status than the types of
activities it is engaged in. This means that a similar activity being conducted by two different types of firms can be regulated
differently by different regulators. Financial firms—notably large firms—may be subject to more than one regulator because
they engage in multiple financial activities. For example, a firm may be overseen by an institution regulator, by an activity
regulator when it engages in a regulated activity, and by a market regulator when it participates in a regulated market.
Financial regulation aims to achieve diverse goals, which vary from regulator to regulator: market efficiency and integrity,
consumer and investor protections, capital formation or access to credit, taxpayer protection, illicit activity prevention, and
financial stability. Policy debate revolves around the tradeoffs among these various goals. Different types of regulation—
prudential (safety and soundness), disclosure, standard setting, competition, and price and rate regulations—are used to
achieve these goals.
Many observers believe that the structure of the regulatory system influences regulatory outcomes. For that reason, there is
ongoing congressional debate about the best way to structure the regulatory system. Recently, the rapid growth in the
cryptocurrency industry has led to questions about which, if any, existing state or federal regulator is best suited to regulate
the industry and whether new or existing authority is appropriate to do so.

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Introduction
Federal financial regulation encompasses varied and diverse markets, participants, and regulators.
As a result, regulators’ goals, powers, and methods differ among regulators and sometimes within
each regulator’s jurisdiction. This report provides background on the financial regulatory
structure in order to help Congress evaluate specific policy proposals to change financial
regulation.
Historically, financial regulation in the United States has coevolved with a changing financial
system in which major changes are often made in response to crises. For example, the Securities
and Exchange Commission (SEC) and Federal Deposit Insurance Corporation (FDIC) were
created in the 1930s in response to the Great Depression. In response to the 2007-2009 financial
crisis, the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010 (P.L. 111-203)
and the Housing and Economic Recovery Act of 2008 (HERA; P.L. 110-289) also made
significant changes to the financial regulatory structure (see Appendix A).1
This report attempts to set out the basic frameworks and principles underlying U.S. financial
regulation and to give some historical context for the development of that system. The first
section briefly discusses the various types of financial regulation and tools used by regulators.
The next section identifies the major federal regulators and the types of institutions they supervise
(see Table 1). It then provides a brief overview of each federal financial regulatory agency.
Finally, the report discusses other entities involved in financial regulation—interagency bodies,
state regulators, and international standards. For information on how the regulators are structured
and funded, see CRS Report R43391, Independence of Federal Financial Regulators: Structure,
Funding, and Other Issues, by Henry B. Hogue, Marc Labonte, and Baird Webel.
The Financial System
The financial system matches the available funds of savers and investors with borrowers and
others seeking to raise funds in exchange for future payouts. Financial firms link individual
savers and borrowers together. Financial firms can operate as intermediaries that issue obligations
to savers and use those funds to make loans or investments for the firm’s profits. Financial firms
can also operate as agents playing a custodial role, investing the funds of savers on their behalf in
segregated accounts. The products, instruments, and markets used to facilitate this matching are
myriad, and they are controlled and overseen by a complex system of regulators.
To help understand how the financial regulators have been organized, financial activities can be
separated into distinct markets:2
• Banking—accepting deposits and making loans to businesses and households.
• Insurance—collecting premiums from and making payouts to policyholders
triggered by predetermined events.

1 For more information, see CRS Report R41350, The Dodd-Frank Wall Street Reform and Consumer Protection Act:
Background and Summary, coordinated by Baird Webel.
2 A multitude of diverse financial services are either directly provided or supported through guarantees by state or
federal government. Examples include flood insurance (through the Federal Emergency Management Agency),
mortgage insurance (through the Federal Housing Administration and the Department of Veterans Affairs), student
loans (through the Department of Education), trade financing (through the Export-Import Bank), and wholesale
payment systems (through the Federal Reserve). This report focuses only on the regulation of private financial
activities.
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Who Regulates Whom? An Overview of the U.S. Financial Regulatory Framework

• Securities or capital markets—issuing financial instruments that represent
financial claims on companies or assets. Securities, which are often traded in
financial markets, take the form of debt (a borrower and creditor relationship)
and equity (an ownership relationship). One special class of securities is
derivatives, which are financial instruments whose value is based on an
underlying commodity, financial indicator, or financial instrument.
• Financial market infrastructure—the “plumbing” of the financial system—
such as trade data dissemination, payment, clearing, and settlement systems—
that underlies transactions.
A distinction can be made between formal and functional definitions of these activities. Formal
activities are those, as defined by regulation, exclusively permissible for entities based on their
charters or licenses. By contrast, functional definitions acknowledge that from an economic
perspective, activities performed by types of different entities can be quite similar. This tension
between formal and functional activities is one reason why the Government Accountability Office
and others have called the U.S. regulatory system fragmented, with gaps in authority, overlapping
authority, and duplicative authority.3 For example, “shadow banking” refers to activities (such as
lending and deposit taking) that are economically similar to those performed by formal banks but
occur in securities markets. The activities described above are functional definitions. However,
because this report focuses on regulators, it mostly concentrates on formal definitions.
The Role of Financial Regulators
Financial regulation has evolved over time, with new authority usually added in response to
failures or breakdowns in financial markets and authority trimmed back during financial booms.
Because of this piecemeal evolution, powers, goals, tools, and approaches vary from market to
market. Nevertheless, there are some common overarching themes across markets and regulators
that are highlighted in this section.
The following provides a brief overview of what financial regulators do, specifically answering
four questions:
1. What powers do regulators have?
2. What policy goals are regulators trying to accomplish?
3. Through what means are those goals accomplished?
4. Who or what is being regulated?
Regulatory Powers
Regulators implement policy using their powers, which vary by agency. Powers, which can also
be thought of as tools, can be grouped into a few broad categories:
• Licensing, chartering, or registration. A starting point for understanding the
regulatory system is that most activities cannot be undertaken unless a firm,
individual, or market has received the proper credentials from the appropriate
state or federal regulator. Each type of charter, license, or registration granted by
the respective regulator governs the sets of financial activities that the holder is
permitted to engage in. For example, a firm cannot accept federally insured

3 U.S. Government Accountability Office (GAO), Financial Regulation, GAO-16-175, February 2016,
https://www.gao.gov/assets/680/675400.pdf.
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Who Regulates Whom? An Overview of the U.S. Financial Regulatory Framework

deposits unless it is chartered as a bank, thrift, or credit union by a depository
institution regulator. Likewise, an individual generally cannot buy and sell
securities to others unless licensed as a broker-dealer.4 To be granted a license,
charter, or registration, the recipient must accept the terms and conditions that
accompany it. Depending on the type, those conditions could include regulatory
oversight, training requirements, and a requirement to act according to a set of
standards or code of ethics. Failure to meet the terms and conditions could result
in fines, penalties, remedial actions, license or charter revocation, or criminal
charges.
• Rulemaking. Regulators issue rules (regulations) through the rulemaking
process to implement statutory mandates.5 Typically, statutory mandates provide
regulators with a policy goal in general terms, and regulations fill in the specifics.
Rules lay out the guidelines for how market participants may or may not act to
comply with the mandate.
• Oversight and supervision. Regulators ensure that their rules are adhered to
through oversight and supervision. This allows regulators to observe market
participants’ behavior and instruct them to modify or cease improper behavior.
Supervision may entail active, ongoing monitoring (as for banks) or investigating
complaints and allegations ex post (as is common in securities markets). In some
cases, such as banking, supervision includes periodic examinations and
inspections, whereas in other cases, regulators rely more heavily on self-
reporting. Regulators explain supervisory priorities and points of emphasis by
issuing supervisory letters and guidance.
• Enforcement. Regulators can compel firms to modify their behavior through
enforcement powers. Enforcement powers include the ability to issue fines,
penalties, and cease-and-desist orders; to undertake criminal or civil actions in
court or administrative proceedings or arbitrations; and to revoke licenses and
charters. In some cases, regulators initiate legal action at their own prompting or
in response to consumer or investor complaints. In other cases, regulators
explicitly allow consumers and investors to sue for damages when firms do not
comply with regulations, or they provide legal protection to firms that do comply.
• Resolution. Some regulators have the power to resolve a failing firm by taking
control of the firm and initiating conservatorship (i.e., the regulator runs the firm
on an ongoing basis) or receivership (i.e., the regulator winds the firm down).
Other types of failing financial firms are resolved through bankruptcy, a judicial
process separate from the regulators.
Goals of Regulation
Financial regulation is primarily intended to achieve the following underlying policy outcomes:6
• Market efficiency and integrity. Regulators seek to ensure that markets operate
efficiently and that market participants have confidence in the market’s integrity.

4 One may obtain separate licenses to be a broker or a dealer, but in practice, many obtain both.
5 For more information, see CRS Report R41546, A Brief Overview of Rulemaking and Judicial Review, by Todd
Garvey.
6 Regulators are also tasked with promoting certain social goals, such as community reinvestment or affordable
housing. Because this report focuses on regulation, it will not discuss social goals.
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Liquidity, low costs, the presence of many buyers and sellers, the availability of
information, and a lack of excessive volatility are examples of the characteristics
of an efficient market. Regulation can also improve market efficiency by
addressing market failures, such as principal-agent problems,7 asymmetric
information,8 and moral hazard.9 Regulators contribute to market integrity by
ensuring that activities are transparent, contracts can be enforced, and the “rules
of the game” they set are enforced. Integrity generally leads to greater efficiency.
• Consumer and investor protection. Regulators seek to ensure that consumers or
investors do not suffer from fraud, discrimination, manipulation, and theft.
Regulators try to prevent exploitative or abusive practices intended to take
advantage of unwitting consumers or investors. In some cases, protection is
limited to enabling consumers and investors to understand the inherent risks
when they enter into a transaction. In other cases, protection is based on the
principle of suitability—efforts to ensure that more risky products or product
features are accessible only to financially sophisticated or secure consumers or
investors.
• Capital formation and access to credit. Regulators seek to ensure that firms
and consumers are able to access credit and capital to meet their needs such that
credit and economic activity can grow at a healthy rate. Regulators try to ensure
that capital and credit are available to all worthy borrowers, regardless of
personal characteristics, such as race, gender, and location. Examples are fair
lending laws and fair housing goals.
• Illicit activity prevention. Regulators seek to ensure that the financial system
cannot be used to support criminal and terrorist activity. Examples are policies to
prevent money laundering, tax evasion, terrorism financing, and the
contravention of financial sanctions.
• Taxpayer protection. Regulators seek to ensure that losses or failures in
financial markets do not result in federal government payouts or the assumption
of liabilities that are ultimately borne by taxpayers. Only certain types of
financial activity are explicitly backed by the federal government or by regulator-
run insurance schemes that are backed by the federal government, such as the
Deposit Insurance Fund (DIF) run by the FDIC. Such schemes are self-financed
by the insured firms through premium payments unless the losses exceed the
insurance fund, in which case taxpayer money is used temporarily or
permanently to fill the gap. In the case of a financial crisis, the government may
decide that the “least bad” option is to provide funds in ways not explicitly
promised or previously contemplated to restore stability. “Bailouts” of large
failing firms in 2008 are the most well-known examples. In this sense, there may
be implicit taxpayer backing of parts or all of the financial system.
• Financial stability. Financial regulation seeks to maintain financial stability
through preventive and palliative measures that mitigate systemic risk. At times,
financial markets stop functioning well—markets freeze, participants panic,

7 For example, financial agents may have incentives to make decisions that are not in the best interests of their clients,
and clients may not be able to adequately monitor their behavior.
8 For example, firms issuing securities know more about their financial prospects than do investors purchasing those
securities, which can result in a “lemons” problem in which low-quality firms drive high-quality firms out of the
marketplace.
9 For example, individuals may act more imprudently if they are insured against a risk.
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credit becomes unavailable, and multiple firms fail. Financial instability can be
localized (to a specific market or activity) or more general. Sometimes instability
can be contained and quelled through market actions or policy intervention; at
other times, instability metastasizes and does broader damage to the real
economy. The most recent example of the latter was the financial crisis of 2007-
2009. Traditionally, financial stability concerns have centered on banking, but the
recent crisis illustrates the potential for systemic risk to arise in other parts of the
financial system as well.
These regulatory goals are sometimes complementary but at other times conflict with each other.
For example, without an adequate level of consumer and investor protections, fewer individuals
may be willing to participate in financial markets, and efficiency and capital formation could
suffer. But, at some point, too many consumer and investor safeguards and protections could
make credit and capital prohibitively expensive, reducing market efficiency and capital formation.
Regulation generally aims to seek a middle ground between these two extremes in which
regulatory burden is as small as possible and regulatory benefits are as large as possible. Because
some firms can cope with regulatory burden better than others can, sometimes regulation is
tailored so that smaller firms, for example, are exempted from a regulation or face a streamlined
version of a regulation. As a result, when taking any action, regulators balance the tradeoffs
between their various goals.
Types of Regulation
The types of regulation applied to market participants are diverse and vary by regulator but can be
clustered in a few categories:
• Prudential. The purpose of prudential regulation is to ensure an institution’s
safety and soundness. It focuses on risk management and risk mitigation.
Examples are capital requirements for banks. Prudential regulation may be
pursued to achieve the goals of taxpayer protection (e.g., to ensure that bank
failures do not drain the DIF), consumer protection (e.g., to ensure that insurance
firms are able to honor policyholders’ claims), or financial stability (e.g., to
ensure that firm failures do not lead to bank runs).
• Disclosure and reporting. Disclosure and reporting requirements are meant to
ensure that all relevant financial information is accurate and available to the
public and regulators so that the former can make well-informed financial
decisions and the latter can effectively monitor activities. For example, publicly
held companies must file disclosure reports, such as 10-Ks. Disclosure is used to
achieve the goals of consumer and investor protection, market efficiency, and
integrity.
• Standard setting. Regulators prescribe standards for products, markets, and
professional conduct. Regulators set permissible activities and behavior for
market participants. Standard setting is used to achieve a number of policy goals.
For example, (1) for market integrity, policies governing conflicts of interest,
such as insider trading; (2) for taxpayer protection, limits on risky activities; (3)
for consumer protection, fair lending requirements to prevent discrimination; and
(4) for suitability, limits on the sale of certain sophisticated financial products to
accredited investors and verification that borrowers have the ability to repay
mortgages.
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• Competition. Regulators ensure that firms do not exercise undue monopoly
power, engage in collusion or price fixing, or corner specific markets (i.e., take a
dominant position to manipulate prices). Examples include antitrust policy
(which is not unique to finance), anti-manipulation policies, concentration limits,
and the approval of takeovers and mergers. Regulators promote competitive
markets to support the goals of market efficiency and integrity and consumer and
investor protections. Within this area, a special policy concern related to financial
stability is ensuring that no firm is “too big to fail.”
• Price and rate regulations. Regulators set maximum or minimum prices, fees,
premiums, or interest rates. Although price and rate regulation is relatively rare in
federal regulation, it is more common in state regulation. An example at the
federal level is the Durbin Amendment, which caps debit interchange fees for
large banks.10 State-level examples are state usury laws, which cap interest rates,
and state insurance rate regulation. Policymakers justify price and rate
regulations on grounds of consumer and investor protections.
Prudential and disclosure and reporting regulations can be contrasted to highlight a basic
philosophical difference in the regulation of securities versus banking. For example, prudential
regulation is central to banking regulation, whereas securities regulation generally focuses on
disclosure. This difference in approaches can be attributed to differences in the relative
importance of regulatory goals. Financial stability and taxpayer protection are central to banking
regulation because of taxpayer exposure and the potential for contagion when firms fail, whereas
they are not primary goals of securities regulation because the federal government has made few
explicit promises to make payouts in the event of losses and failures.11 Prudential regulation relies
heavily on confidential information—in contrast to disclosure—that supervisors gather and
evaluate through examinations. Federal securities regulation is not intended to prevent failures or
losses; instead, it is meant to ensure that investors are properly informed about the risks that
investments pose.12 Ensuring proper disclosure is the main way regulators ensure that all relevant
information is available to any potential investor.
Regulated Entities
How financial regulation is applied varies, partly because of the different characteristics of
various financial markets and partly because of the historical evolution of regulation. The scope
of regulators’ purview falls into several different categories:
• Regulate certain types of financial institutions. Some firms become subject to
federal regulation when they obtain particular business charters or licenses, and
several federal agencies regulate only a single class of institution. Depository
institutions are a good example: A new banking firm chooses its regulator when it
decides which charter to obtain—national bank, state bank, credit union, etc.—
and the choice of which type of depository charter may not greatly affect the
institution’s business mix. The Federal Housing Finance Agency (FHFA)
regulates only three government-sponsored enterprises (GSEs)—Fannie Mae,
Freddie Mac, and the Federal Home Loan Bank (FHLB) system—chartered by

10 Section 1075 of the Dodd-Frank Act. For more information, see CRS Report R41913, Regulation of Debit
Interchange Fees, by Darryl E. Getter.
11 The Securities Investor Protection Corporation, discussed below, provides limited protection to investors.
12 By contrast, some states have also conducted qualification-based securities regulation, in which securities are vetted
based on whether they are perceived to offer investors a minimum level of quality.
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law. Regulation of institutions gives regulators a role in overseeing all aspects of
the firm’s behavior, including which activities it is allowed to engage in. As a
result, “functionally similar activities are often regulated differently depending
on what type of institution offers the service.”13
• Regulate a particular market. In some markets, all activities that take place
within that market (for example, on a stock exchange) are subject to regulation.
Often, the market itself, with the regulator’s approval, issues codes of conduct
and other internal rules that bind its members. In some cases, regulators may then
require that specific activities can be conducted only within a regulated market.
In other cases, similar activities take place both on and off a regulated market
(e.g., stocks can also be traded off-exchange in “dark pools”). In some cases,
regulators have different authority or jurisdiction in primary markets (where
financial products are initially issued) than secondary markets (where products
are resold).
• Regulate a particular financial activity or product. If activities are conducted
in multiple markets or across multiple types of firms, another approach is to
regulate a particular type or set of them, regardless of where the business occurs
or which entities are engaged in it. For example, on the view that consumer
financial protections should apply uniformly to all products, the Dodd-Frank Act
created the CFPB and gave it authority (subject to certain exemptions) over
financial products offered to consumers by an array of firms.
Crypto as a Case Study
The rapid growth in the cryptocurrency industry in recent years has led to a high-profile and contentious policy
debate over how it should be regulated. Crypto—or more broadly, digital assets—typically rely on cryptography
and blockchains, which allow them to be created and exchanged without any central intermediary. At the root of
this debate are many of the fundamental questions about regulation discussed in this report.
Any regulatory authority specific to crypto at the federal level would need to be granted through an act of
Congress. To date, Congress has debated but not enacted the creation of a dedicated, overarching regulatory
structure for crypto, but such legislation has seen action in the 118th Congress (H.R. 4763 and H.R. 4766). New
legislation would provide the opportunity to tailor a regulatory regime based on the characteristics of the
industry. Given the fragmented nature of the U.S. financial regulatory regime, Congress could grant authority over
crypto to one or more existing regulators or create new regulators specific to crypto. In the meantime, some
states have taken actions to regulate crypto firms, often with an eye toward attracting activity to their states.
In the absence of new statutory authority, regulators have considered whether crypto fits within their existing
regulatory powers. Although it might seem counterintuitive to assert that existing authority can be applied to an
industry that did not exist when that authority was promulgated, many regulators have broad authority, and so the
question mainly revolves around whether crypto is novel and unique or akin to an existing financial instrument in a
new technological package.
One might argue that crypto represents a type of commodity, security, or payment tool, and given the diversity of
crypto products, the answer may vary from one type of digital asset to another. Notably, a different regulator has
jurisdiction over each of those types of instruments—the CFTC regulates commodities, the SEC regulates

13 Michael Barr et al., Financial Regulation: Law and Policy (St. Paul: Foundation Press, 2016), p. 14.
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securities, and states regulate payments. However, the types of existing authorities to regulate each of those
products varies significantly, so the answer to the question of what type of product crypto is would result in
significantly different regulatory outcomes. For example, commodities can be regulated only on very limited
grounds compared to securities.
If a regulator believes that it has jurisdiction over some types of crypto products, it can establish jurisdiction using
its regulatory powers. It can issue regulations describing the rules that market participants must follow and use its
supervisory and enforcement powers to ensure that those regulations are enforced. New rules can be helpful to
tailor regulation if a new industry does not fit well within existing rules. Alternatively, a regulator can apply existing
rules created for other types of products to the new industry and use enforcement powers to compel industry
participants to comply with those rules. Generally, the latter has been the approach that federal regulators have
taken with crypto. Industry participants may dispute the agency’s interpretation that its rules apply to crypto, and
disputes have been taken to court to resolve.
When a new industry emerges and grows rapidly, as was the case for crypto, some industry actors may effectively
operate without adherence to existing rules for some initial period of time. Establishing jurisdiction is resource
intensive, which is easier to finance for agencies that set their own budgets than for those that must convince
Congress to appropriate additional funds. The burden is on the agency to require participants to comply—nothing
is stopping a new financial product from being issued until an enforcement action is initiated. Because enforcement
actions take significant time and resources to develop, there was a significant lag between the growth of the
industry and the enforcement crackdown now occurring. In addition, because enforcement actions must be
pursued on a case-by-case basis, one product may face an enforcement action while a similar product does not (at
least at that time).
If a firm or individual needs a license or charter to participate in a market, once a regulator establishes jurisdiction
over a market, it can then establish authority over market participants by requiring them to seek the proper
credentials, which will be granted only through regulatory compliance with existing rules. This means that even
though a crypto product may be decentralized—leaving it in effect without an issuer that can be regulated—
individuals who trade or offer services for that product can nevertheless be regulated. Ensuring regulatory
compliance can become more difficult when firms are domiciled abroad, however—as is the case for several
prominent crypto firms. Regulators can also regulate the use of crypto (through rulemaking, guidance, supervision,
or enforcement actions) for financial institutions under their jurisdiction even if that regulator does not have
jurisdiction over crypto. For example, bank regulators can use their safety and soundness authority to regulate
banks’ use of crypto.14
For more information, see CRS Report R47425, Cryptocurrency: Selected Policy Issues, by Paul Tierno.
Because it is difficult to ensure that functionally similar financial activities are legally uniform,
all three approaches are needed and sometimes overlap in any given area. Stated differently, risks
can emanate from firms, markets, or products, and if regulation does not align, risks may not be
effectively mitigated. For example, an activity could migrate to less regulated firms or markets.
Market innovation also creates financial instruments and markets that fall between industry
divisions. When regulatory jurisdiction is unclear, Congress or the courts have often been asked
to decide.
The Federal Financial Regulators
Table 1 sets out the current federal financial regulatory structure. Regulators can be categorized
into the three main areas of finance—banking (depository), securities, and insurance (where state
rather than federal regulators play a dominant role). There are also targeted regulators for specific
financial activities (consumer protection) and markets (agricultural finance and housing finance).
The table does not include interagency-coordinating bodies, standard-setting bodies, international
organizations, or state regulators, which are described later in the report. Appendix A describes
changes to this table since the 2008 financial crisis.

14 See CRS In Focus IF12320, Crypto and Banking: Policy Issues, by Marc Labonte, Andrew P. Scott, and Paul Tierno.
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Table 1. Federal Financial Regulators and Whom They Supervise
Other Notable
Regulatory Agency
Institutions Regulated
Authority
Depository Regulators
Federal Reserve
Bank holding companies and certain depository subsidiaries
Operates discount
(e.g., foreign subsidiaries), financial holding companies,
window (“lender of last
securities holding companies, and thrift (savings and loan)
resort”) for
holding companies
depositories; operates
Primary regulator of state banks that are members of the
parts of payment
Federal Reserve System, foreign banking organizations
system; conducts
operating in the United States, Edge Act corporations, and
monetary policy
any firm or payment system designated as systemically
significant by the Financial Stability Oversight Council
Office of the
Primary regulator of national banks, U.S. federal branches of

Comptroller of the
foreign banks, and federally chartered thrift institutions
Currency
Federal Deposit
Federally insured depository institutions
Operates deposit
Insurance Corporation
Primary regulator of state banks that are not members of the insurance for banks;
Federal Reserve System and state-chartered thrift institutions resolves failing banks
National Credit Union
Federally chartered or federally insured credit unions
Operates deposit
Administration
insurance for credit
unions; resolves failing
credit unions
Securities Markets Regulators
Securities and
Securities exchanges; broker-dealers; clearing and settlement
Approves rulemakings
Exchange Commission
agencies; investment funds, including mutual funds;
by self-regulatory
investment advisers, including hedge funds with assets over
organizations
$150 million; and investment companies
Nationally recognized statistical rating organizations
Security-based swap (SBS) dealers, major SBS participants,
and SBS execution facilities
Securities sold to the public
Commodity Futures
Futures exchanges, futures commission merchants,
Approves rulemakings
Trading Commission
commodity pool operators, commodity trading advisors,
by self-regulatory
derivatives clearing organizations, and designated contract
organizations
markets
Swap dealers, major swap participants, swap execution
facilities, and swap data repositories
Government-Sponsored Enterprise Regulators
Federal Housing
Fannie Mae, Freddie Mac, and Federal Home Loan Banks
Acting as conservator
Finance Agency
(since Sept. 2008) for
Fannie and Freddie
Farm Credit
Farm Credit System, Farmer Mac

Administration
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Other Notable
Regulatory Agency
Institutions Regulated
Authority
Consumer Protection Regulator
Consumer Financial
Nonbank mortgage-related firms, private student lenders,

Protection Bureau
payday lenders, and larger “consumer financial entities”
(CFPB)
determined by the CFPB (statutory exemptions for certain
firms)
Consumer financial products such as credit cards, loan
servicing, debt collection (statutory exemptions for certain
markets)
Rulemaking authority for all banks, supervisory authority for
banks with over $10 billion in assets for consumer
protection
Source: CRS.
A financial firm may be subject to more than one regulator because it may engage in multiple
financial activities, as illustrated in Figure 1. For example, a firm may be overseen by an
institution regulator and by an activity regulator when it engages in a regulated activity and a
market regulator when it participates in a regulated market. The complexity of the figure
illustrates the diverse roles and responsibilities assigned to various regulators.

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Figure 1. Regulatory Jurisdiction by Agency and Type of Regulation

Source: Government Accountability Office, Financial Regulation, GAO-16-175, February 2016, Figure 2.

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Furthermore, financial firms may form holding companies with separate legal subsidiaries that
allow subsidiaries within the same holding company to engage in more activities than is
permissible within any one subsidiary. Because of charter-based regulation, certain financial
activities must be segregated in separate legal subsidiaries. However, as a result of the Gramm-
Leach-Bliley Act of 1999 (GLBA; P.L. 106-102) and other regulatory and policy changes that
preceded it, these different legal subsidiaries may be contained within the same financial holding
companies (i.e., conglomerates that contain bank subsidiaries and are permitted to engage in a
broad array of financially related activities). For example, a banking subsidiary is limited to
permissible activities related to the “business of banking” but is allowed to affiliate with another
subsidiary that engages in activities that are “financial in nature.”15 As a result, each subsidiary is
assigned a primary regulator, and firms with multiple subsidiaries may have multiple institution
regulators. If the holding company is a bank holding company, financial holding company, or
thrift holding company (with at least one banking or thrift subsidiary, respectively), then the
holding company is regulated by the Fed.16
To illustrate how a firm could have multiple primary regulators, Figure 2 shows a stylized
example of a special type of bank holding company, known as a financial holding company. This
financial holding company would be regulated by the Fed at the holding company level. Its
national bank would be regulated by the Office of the Comptroller of the Currency (OCC), its
securities subsidiary would be regulated by the SEC, and its loan company might be regulated by
the CFPB. These are only the primary regulators for each box in Figure 2; as noted above, it
might have other market or activity regulators as well based on its lines of business.
Figure 2. Stylized Example of a Financial Holding Company

Source: CRS.
Depository Institution Regulators
Regulation of depository institutions (i.e., banks and credit unions) in the United States has
evolved over time into a system of multiple regulators with overlapping jurisdictions.17 There is a
dual banking system, in which each depository institution is subject to regulation by its chartering

15 However, banks are not allowed to affiliate with commercial firms, although exceptions are made for industrial loan
companies and unitary thrift holding companies.
16 Bank holding companies with nonbank subsidiaries are also referred to as financial holding companies.
17 For more information, see CRS In Focus IF10035, Introduction to Financial Services: Banking, by Raj Gnanarajah.
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authority: state or federal.18 Even if state chartered, any state or federally chartered institution that
accepts insured deposits is subject to at least one federal primary regulator (i.e., the federal
authority responsible for examining the institution for safety and soundness and for ensuring its
compliance with federal banking laws). Depository institutions have three broad types of
charter—commercial banks, thrifts19 (also known as savings banks or savings associations and
previously known as savings and loans), and credit unions.20 For any given institution, the
primary regulator depends on its type of charter. The primary federal regulator for
• national banks and thrifts is the OCC, their chartering authority;
• state-chartered banks that are members of the Federal Reserve System is the
Federal Reserve;
• state-chartered thrifts and banks that are not members of the Federal Reserve
System is the FDIC;
• foreign banks operating in the United States is the Fed or OCC, depending on the
type;
• credit unions—if federally chartered or federally insured—is the National Credit
Union Administration (NCUA), which administers a deposit insurance fund
separate from the FDIC’s.
National banks, state-chartered banks, and thrifts are also subject to FDIC regulatory authority,
because their deposits are covered by FDIC deposit insurance. Primary regulators’ responsibilities
are illustrated in Figure 3.

18 For more information, see CRS Report R47014, An Analysis of Bank Charters and Selected Policy Issues, by
Andrew P. Scott.
19 The Office of Thrift Supervision was the primary thrift regulator until the Dodd-Frank Act abolished it and
reassigned its duties to the bank regulators. Thrifts are a good example of how the regulatory system evolved over time
to the point where it no longer bears much resemblance to its original purpose. With a charter originally designed to be
quite distinct from the bank charter (e.g., narrowly focused on mortgage lending), thrift regulation evolved to the point
where there were relatively few differences between large, complex thrift holding companies and bank holding
companies. Because of this convergence and because of safety and soundness problems during the 2008 financial crisis
and before that during the1980s savings and loan crisis, policymakers deemed thrifts to no longer need their own
regulator (although they maintained their separate charter). For a comparison of the powers of national banks and
federal savings associations, see OCC, Summary of the Powers of National Banks and Federal Savings Associations,
July 1, 2019, http://www.occ.treas.gov/publications/publications-by-type/other-publications-reports/pub-other-fsa-nb-
powers-chart.pdf.
20 The charter dictates the activities the institution can participate in and the regulations it must adhere to. Any
institution that accepts deposits must be chartered as one of these institutions. However, not all institutions chartered
with these regulators accept deposits.
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Figure 3. Jurisdiction Among Depository Regulators

Source: Federal Reserve, The Fed Explained, August 2021, Figure 5.3.
Whereas bank and thrift regulators strive for consistency among themselves in how institutions
are regulated and supervised, credit unions are regulated under a separate regulatory framework
from banks.
Because banks receive deposit insurance from the FDIC and have access to the Fed’s discount
window, they expose taxpayers to the risk of losses if they fail.21 Banks also play a central role in
the payment system, the financial system, and the broader economy. As a result, banks are subject
to safety and soundness (prudential) regulation that most other financial firms are not subject to at
the federal level.22 Safety and soundness regulation uses a holistic approach, evaluating (1) each
loan, (2) the balance sheet of each institution, and (3) the risks in the system as a whole. Each
loan creates risk for the lender. The overall portfolio of loans extended or held by a bank, in
relation to other assets and liabilities, affects that institution’s stability. The relationship of banks
to each other, and to wider financial markets, affects the financial system’s stability.
Banks are required to keep capital in reserve against the possibility of a drop in value of loan
portfolios or other risky assets. Banks are also required to be liquid enough to meet unexpected
funding outflows. Federal financial regulators take into account compensating assets, risk-based

21 Losses to the FDIC and Fed are first covered by the premiums or income, respectively, paid by users of those
programs. Ultimately, if the premiums or income are insufficient, the programs could affect taxpayers by reducing the
general revenues of the federal government. In the case of the FDIC, the FDIC has the authority to draw up to $100
billion from the U.S. Treasury if the DIF is insufficient to meet deposit insurance claims. In the case of the Fed, any
losses at the Fed’s discount window reduce the Fed’s profits, which are remitted quarterly to Treasury, where they are
added to general revenues.
22 Exceptions are the housing-related institutions regulated by the FHFA and the Farm Credit System regulated by the
Farm Credit Administration. Insurers are regulated for safety and soundness at the state level.
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capital requirements, the quality of assets, internal controls, and other prudential standards when
examining the balance sheets of covered lenders.
When regulators determine that a bank is taking excessive risks or engaging in unsafe and
unsound practices, they have a number of powerful tools at their disposal to reduce risk.
Regulators can require banks to reduce specified lending or financing practices, dispose of certain
assets, and order banks to take steps to restore sound balance sheets. Banks must comply because
regulators have “life-or-death” options, such as withdrawing their charters or deposit insurance or
seizing the banks outright.
The federal banking agencies are briefly discussed below. Although these agencies are the banks’
institution-based regulators, banks are also subject to CFPB regulation for consumer protection,
and to the extent that banks are participants in securities or derivatives markets, those activities
are also subject to regulation by the SEC and the Commodity Futures Trading Commission
(CFTC).
Office of the Comptroller of the Currency
The OCC was created in 1863 as part of the Department of the Treasury to supervise federally
chartered banks (“national” banks; 13 Stat. 99). The OCC regulates a wide variety of financial
functions but only for federally chartered banks. The head of the OCC, the Comptroller of the
Currency, is also a member of the board of the FDIC and a director of the Neighborhood
Reinvestment Corporation. The OCC has examination powers to enforce its responsibilities for
the safety and soundness of nationally chartered banks. The OCC has strong enforcement powers,
including the ability to issue cease-and-desist orders and revoke federal bank charters. Pursuant to
the Dodd-Frank Act, the OCC is the primary regulator for federally chartered thrift institutions.
Federal Deposit Insurance Corporation
Following bank panics during the Great Depression, the FDIC was created in 1933 to provide
assurance to small depositors that they would not lose their savings if their banks failed (P.L. 74-
305). The FDIC is an independent agency that insures deposits (up to $250,000 for individual
accounts), examines and supervises financial institutions, and manages receiverships, assuming
and disposing of the assets of failed banks. The FDIC is the primary federal regulator of state
banks that are not members of the Federal Reserve System and state-chartered thrift institutions.
Backing deposit insurance is the DIF, which is managed by the FDIC and funded by risk-based
assessments levied on depository institutions. The DIF is used primarily for resolving failed or
failing institutions. To safeguard the DIF, the FDIC uses its power to examine individual
institutions for all insured depository institutions to monitor and enforce safety and soundness.
Acting under the principles of “prompt corrective action” and “least cost resolution,” the FDIC
has powers to resolve troubled banks rather than allowing failing banks to enter the bankruptcy
process. The Dodd-Frank Act also expanded the FDIC’s role in resolving other types of troubled
financial institutions that pose a risk to financial stability through the Orderly Liquidation
Authority.
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Federal Reserve
The Federal Reserve System was established in 1913 as the nation’s central bank following the
Panic of 1907 to provide stability in the banking sector (P.L. 63-43).23 The system consists of the
Board of Governors in Washington, DC, and 12 regional reserve banks. In its regulatory role, the
Fed has safety and soundness examination authority for a variety of lending institutions, including
bank holding companies, most types of foreign banks operating in the United States, and state-
chartered banks that are members of the Federal Reserve System. Membership in the system is
mandatory for national banks and optional for state banks. Members must purchase stock in the
Fed.
The Fed regulates the largest, most complex financial firms operating in the United States. Under
GLBA, the Fed serves as the umbrella regulator for financial holding companies. The Dodd-
Frank Act made the Fed the primary regulator of all nonbank financial firms that are designated
as systemically significant by the Financial Stability Oversight Council (FSOC), of which the Fed
is a member. All bank holding companies with more than $50 billion in assets and designated
nonbanks are subject to enhanced prudential regulation by the Fed. In addition, the Dodd-Frank
Act made the Fed the principal regulator for savings and loan holding companies.
The Fed’s responsibilities are not limited to regulation. As the nation’s central bank, it conducts
monetary policy by targeting short-term interest rates.24 The Fed also acts as a “lender of last
resort” by making short-term collateralized loans to banks through the discount window. It also
operates some parts and regulates other parts of the payment system. Title VIII of the Dodd-Frank
Act gave the Fed additional authority to set prudential standards for payment systems that have
been designated as systemically important.
National Credit Union Administration
The NCUA, originally part of the Farm Credit Administration, became an independent agency in
1970 (P.L. 91-206). The NCUA is the safety and soundness regulator for all federal credit unions
and those state credit unions that elect to be federally insured. It administers a Central Liquidity
Facility, which is the credit union lender of last resort, and the National Credit Union Share
Insurance Fund, which insures credit union deposits. The NCUA also resolves failed credit
unions. Credit unions are member-owned financial cooperatives, and they must be nonprofit
institutions.25
Consumer Financial Protection Bureau
Before the financial crisis, jurisdiction over consumer financial protection was divided among a
number of agencies (see Figure A-1). Title X of the Dodd-Frank Act created the CFPB to
enhance consumer protection and bring the consumer protection regulation of depository and
nondepository financial institutions into closer alignment.26 The bureau is formally housed
within—but fully independent from—the Federal Reserve. The director of the CFPB is also on
the FDIC’s board of directors. The Dodd-Frank Act granted new authority and transferred

23 For more information, see CRS In Focus IF10054, Introduction to Financial Services: The Federal Reserve, by Marc
Labonte.
24 For more information, see CRS In Focus IF11751, Introduction to U.S. Economy: Monetary Policy, by Marc
Labonte.
25 For more information, see CRS Report R43167, Policy Issues Related to Credit Union Lending, by Darryl E. Getter.
26 See CRS In Focus IF10031, Introduction to Financial Services: The Consumer Financial Protection Bureau
(CFPB), by Cheryl R. Cooper and David H. Carpenter.
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existing authority from a number of agencies to the CFPB over an array of consumer financial
products and services (including deposit taking, mortgages, credit cards and other extensions of
credit, loan servicing, check guaranteeing, consumer report data collection, debt collection, real
estate settlement, money transmitting, and financial data processing). The CFPB administers rules
that, in its view, protect consumers by setting disclosure standards, setting suitability standards,
and banning abusive and discriminatory practices.
The CFPB also serves as the primary federal consumer financial protection supervisor and
enforcer of federal consumer protection laws over many of the institutions that offer these
products and services. However, the bureau’s regulatory authority varies based on institution size
and type. Regulatory authority differs for (1) depository institutions with more than $10 billion in
assets, (2) depository institutions with $10 billion or less in assets, and (3) nondepositories. The
CFPB can issue rules that apply to depository institutions of all sizes but can supervise only
institutions with more than $10 billion in assets. For depositories with less than $10 billion in
assets, the primary depository regulator continues to supervise for consumer compliance. The
Dodd-Frank Act also explicitly exempts a number of different entities and consumer financial
activities from the bureau’s supervisory and enforcement authority. Among the exempt entities
are
• merchants, retailers, or sellers of nonfinancial goods or services to the extent that
they extend credit directly to consumers exclusively for the purpose of enabling
consumers to purchase such nonfinancial goods or services,
• automobile dealers,
• real estate brokers and agents,
• financial intermediaries registered with the SEC or the CFTC, and
• insurance companies.
In some areas where the CFPB does not have jurisdiction, the Federal Trade Commission retains
consumer protection authority. State regulators also have a role in consumer protection.27
Securities Regulation
For regulatory purposes, securities or capital markets can be divided into derivatives and other
types of securities. Derivatives are mostly regulated by the CFTC.28 Other types of securities fall
under the SEC’s jurisdiction. Standard-setting bodies and other self-regulatory organizations
(SROs) play a special role in securities regulation, and they are overseen by the SEC or the
CFTC. In addition, banking regulators oversee the securities activities of banks. Banks are major
participants in some parts of securities markets.
Securities and Exchange Commission
The New York Stock Exchange dates from 1793. Following the stock market crash of 1929, the
SEC was created as an independent agency in 1934 to enforce newly written federal securities
laws (P.L. 73-291). Thus, when Congress created the SEC, stock and bond market institutions and

27 See the “Other State Regulation” section below.
28 Security-based swaps are regulated by the SEC.
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mechanisms were already well-established, and federal regulation was grafted onto the existing
structure.29
The SEC has jurisdiction over the following:
• Participants in securities markets:
• issuers—firms that issue securities (e.g., equity and bonds);
• asset managers—investment advisers and investment companies (e.g.,
mutual funds, money market funds, and private funds) that are custodial
agents investing on behalf of clients;
• intermediaries that act as market makers (e.g., broker-dealers) or help issuers
bring securities to market (securities underwriters and securitizers);
• experts who are neither issuing nor buying securities (e.g., credit rating
agencies and research analysts);
• Securities markets (e.g., stock exchanges) and market utilities (e.g.,
clearinghouses) where securities are traded, cleared, and settled; and
• Securities products (e.g., security-based swaps).
The SEC is not primarily concerned with ensuring the safety and soundness of the firms it
regulates but rather with “protect[ing] investors, maintain[ing] fair, orderly, and efficient markets,
and facilitat[ing] capital formation.”30 This distinction largely arises from the absence of
government guarantees for securities investors comparable to deposit insurance. The SEC
generally does not have the authority to limit risks taken by market participants31 nor the ability to
prop up a failing firm.
Firms that sell securities—stocks and bonds—to the public are required to register with the SEC.
Registration entails the publication of detailed information about the firm, its management, the
intended uses for the funds raised through the sale of securities, and the risks to investors. The
initial registration disclosures must be kept current through the filing of annual and quarterly
reports (as well as special reports when there is a material change in the firm’s financial condition
or prospects).
Beyond these disclosure requirements, and certain other rules that apply to corporate governance,
the SEC does not have any direct regulatory control over publicly traded firms. Bank regulators
are expected to identify unsafe and unsound banking practices in the institutions they supervise,
and they have the power to intervene and prevent banks from taking excessive risks. The SEC has
no comparable authority: The securities laws simply require that risks be disclosed to investors.

29 For more information, see CRS In Focus IF10032, Introduction to Financial Services: The Securities and Exchange
Commission (SEC), by Gary Shorter.
30 SEC, “What We Do,” https://www.sec.gov/about/whatwedo.shtml.
31 Since 1975, the SEC has enforced a net capital rule applicable to all registered brokers and dealers. The rule requires
brokers and dealers to maintain an excess of capital above mere solvency to ensure that a failing firm stops trading
while it still has assets to meet customer claims. Net capital levels are calculated in a manner similar to the risk-based
capital requirements under the Basel Accords, but the SEC has its own set of risk weightings, which it calls haircuts:
The riskier the asset, the greater the haircut. Although the net capital rule appears to be very close in its effects to the
banking agencies’ risk-based capital requirements, there are significant differences. The SEC has no authority to
intervene in a broker’s or dealer’s business if it takes excessive risks that might cause net capital to drop below the
required level. Rather, the net capital rule is often described as a liquidation rule—not meant to prevent failures but to
minimize the impact on customers. Moreover, the SEC has no authority comparable to the banking regulators’ prompt
corrective action powers: It cannot preemptively seize a troubled broker or dealer or compel it to merge with a sound
firm.
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Registration with the SEC, in other words, is in no sense a guarantee that a security is a good or
safe investment.
Besides publicly traded corporations, a number of securities market participants are also required
to register with the SEC (or with one of the industry SROs32 that the SEC oversees). These
include stock exchanges, securities brokerages (and numerous classes of their personnel), mutual
funds, auditors, investment advisers, and others. To maintain their registered status, all these
entities must comply with rules meant to protect public investors, prevent fraud, and promote fair
and orderly markets. The degree of protection granted to investors depends on their level of
sophistication. For example, only “accredited investors” that have, for example, high net worth
can invest in riskier hedge funds and private equity funds. Originally, de minimis exemptions to
regulation of mutual funds and investment advisers created space for the development of a
trillion-dollar hedge fund industry. Under the Dodd-Frank Act, private advisers, including hedge
funds and private equity funds, with more than $150 million in assets under management must
register with the SEC, but they maintain other exemptions.
Several provisions of law and regulation protect brokerage customers from losses arising from
brokerage firm failure. The Securities Investor Protection Corporation (SIPC), a private nonprofit
created by Congress in 1970 and overseen by the SEC, operates an insurance scheme funded by
assessments on brokers-dealers (and with a backup line of credit with the U.S. Treasury). SIPC
guarantees customer accounts up to $500,000 for losses arising from brokerage failure or fraud.
Unlike the FDIC, however, SIPC does not protect accounts against market losses or examine
broker-dealers, and it has no regulatory powers.
Some securities markets are exempted from parts of securities regulation. Prominent examples
include the following:
• Foreign exchange. Buying and selling currencies is essential to foreign trade and
investment, and the exchange rate determined by traders has major implications
for a country’s macroeconomic policy. The market is one of the largest in the
world, with trillions of dollars of average daily turnover.33 Nevertheless, no U.S.
agency has regulatory authority over the foreign exchange market.
Trading in currencies takes place among large global banks, central banks, hedge
funds and other currency speculators, commercial firms involved in imports and
exports, fund managers, and retail brokers. There is no centralized marketplace
but rather a number of proprietary electronic platforms that have largely
supplanted the traditional telephone broker market.
• Treasury securities. Treasury securities were exempted from SEC regulation by
the original securities laws of the 1930s. In 1993, following a successful
cornering of a Treasury bond auction by Salomon Brothers, Congress passed the
Government Securities Act Amendments of 1993 (P.L. 103-202), which required
brokers and dealers that were not already registered with the SEC to register as
government securities dealers, extended anti-fraud and anti-manipulation
provisions of the federal securities laws to government securities brokers and
dealers, and gave the U.S. Treasury authority to promulgate rules governing
transactions. (Existing broker-dealer registrants were simply required to notify
the SEC that they were in the government securities business.) Nevertheless, the

32 See the section below entitled “Standard-Setting Bodies and Self-Regulatory Organizations.”
33 For more information, see CRS In Focus IF10112, Introduction to Financial Services: The International Foreign
Exchange Market, by James K. Jackson.
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government securities market remains much more lightly regulated than the
corporate securities markets. Regulatory jurisdiction over various aspects of the
Treasury market is fragmented across multiple regulators. The SEC has no
jurisdiction over the primary market.34 Since 2017, the Financial Industry
Regulatory Authority has required broker-dealers to report Treasury market
transactions to a central (nonpublic) repository. An interagency working group
composed of staff from Treasury, the Fed, the SEC, and the CFTC has proposed
various reforms to enhance the stability and resiliency of Treasury markets
through new regulatory requirements.35
• Municipal securities. Municipal securities were initially exempted from SEC
regulation. In 1975, the Municipal Securities Rulemaking Board was created, and
firms transacting in municipal securities were required to register with the SEC
as broker-dealers. The Dodd-Frank Act required municipal advisors to register
with the SEC. However, issuers of municipal securities remain exempt from SEC
oversight, partly because of federalism issues.36
• Private securities. The securities laws provide for the private sales of securities,
which are subject to reduced registration and disclosure requirements compared
to those that apply to public securities. However, private securities are subject to
anti-fraud provisions of federal securities laws. Generally, private placements of
securities cannot be sold to the general public and may be offered only to limited
numbers of “accredited investors” who meet certain asset tests. There are also
restrictions on the resale of private securities.
The size of the private placement market is subject to considerable variation from
year to year, but at times the value of securities sold privately exceeds what is
sold into the public market. In recent decades, venture capitalists and private
equity firms have come to play important roles in corporate finance. The former
typically purchase interests in private firms, which may be sold later to the
public, whereas the latter often purchase all the stock of publicly traded
companies and take them private.
Commodity Futures Trading Commission
The CFTC was created in 1974 to regulate commodities futures and options markets, which at the
time were poised to expand beyond their traditional base in agricultural commodities to
encompass contracts based on financial variables, such as interest rates and stock indexes.37 The
CFTC was given “exclusive jurisdiction” over all contracts that were “in the character of” options
or futures contracts, and such instruments were to be traded only on CFTC-regulated exchanges.
In practice, exclusive jurisdiction was impossible to enforce, as over-the-counter derivatives
contracts, such as swaps—which were not exchange-traded—proliferated. In the Commodity
Futures Modernization Act of 2000 (P.L. 106-554), Congress exempted swaps from CFTC

34 U.S. Department of the Treasury et al., Joint Staff Report: The U.S. Treasury Market on October 15, 2014, July 13,
2015, https://www.treasury.gov/press-center/press-releases/Documents/Joint_Staff_Report_Treasury_10-15-2015.pdf.
35 U.S. Department of the Treasury, Board of Governors of the Federal Reserve System, Federal Reserve Bank of New
York, SEC, and CFTC, Enhancing the Resilience of the U.S. Treasury Market: 2022 Staff Progress Report, November
10, 2022, https://home.treasury.gov/system/files/136/2022-IAWG-Treasury-Report.pdf.
36 SEC, Report on the Municipal Securities Market, July 2012, https://www.sec.gov/news/studies/2012/
munireport073112.pdf.
37 For more information, see CRS In Focus IF10117, Introduction to Financial Services: Derivatives, by Rena S.
Miller.
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regulation, but the Dodd-Frank Act repealed this exemption following problems with derivatives
in the financial crisis, including large losses at the American International Group that led to its
federal rescue.38
The Dodd-Frank Act greatly expanded the CFTC’s jurisdiction by eliminating exemptions for
certain over-the-counter derivatives.39 As a result, swap dealers, major swap participants, swap
clearing organizations, swap execution facilities, and swap data repositories are required to
register with the CFTC. These entities are subject to reporting requirements and business conduct
standards contained in statute or promulgated as CFTC rules. The Dodd-Frank Act required
swaps to be cleared through a central clearinghouse and traded on exchanges where possible.
The CFTC’s mission is to prevent excessive speculation, manipulation of commodity prices, and
fraud. It primarily has authority over derivatives, not the reference products underlying them.
Like the SEC, the CFTC oversees SROs—the futures exchanges and the National Futures
Association—and requires the registration of a range of industry firms and personnel, including
futures commission merchants (brokers), floor traders, commodity pool operators, and
commodity trading advisers.
Like the SEC, the CFTC does not directly regulate the safety and soundness of individual firms—
with the exception of a net capital rule for futures commission merchants and capital standards
pursuant to the Dodd-Frank Act for swap dealers and major swap participants.
Standard-Setting Bodies and Self-Regulatory Organizations
SROs play important roles in the regulation of securities and derivatives. National securities
exchanges (e.g., the New York Stock Exchange) and clearing and settlement systems may register
as SROs with the SEC or CFTC, making them subject to SEC or CFTC oversight.40 According to
the SEC:
SROs must create rules that allow for disciplining members for improper conduct and for
establishing measures to ensure market integrity and investor protection. SRO proposed
rules are published for comment before final SEC review and approval.41
Title VIII of the Dodd-Frank Act gave the SEC and CFTC additional prudential regulatory
authority over clearing and settlement systems that have been designated as systemically
important. (Exchanges, contract markets, and other entities were exempted.42)
One particularly important type of SRO in the regulatory system is the group of standard-setting
bodies. Most securities or futures markets participants must register and meet professional
conduct and qualification standards. The SEC and CFTC have delegated responsibility for many
of these functions to official standard-setting bodies, such as the following:
• FINRA—The Financial Industry Regulatory Authority writes and enforces rules
for brokers and dealers and examines them for compliance.

38 For more information, see CRS Report R42953, Government Assistance for AIG: Summary and Cost, by Baird
Webel.
39 For more information, see CRS Report R41398, The Dodd-Frank Wall Street Reform and Consumer Protection Act:
Title VII, Derivatives, by Rena S. Miller and Kathleen Ann Ruane.
40 A list of SROs registered with the SEC can be found at https://www.sec.gov/rules/sro.shtml.
41 SEC, “What We Do.”
42 Title VIII also gave the Fed and the FSOC limited authority to participate in and override SEC or CFTC regulation of
systemically important clearing and settlement systems if they pose risks to financial stability.
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• MSRB—The Municipal Securities Rulemaking Board establishes rules for
municipal advisors and dealers in the municipal securities market, conducts
required exams and continuing education for municipal market professionals, and
provides guidance to the SEC and others for compliance with and enforcement of
MSRB rules.
• NFA—The National Futures Association develops and enforces rules in futures
markets, requires registration, and conducts fitness examinations for a range of
derivatives markets participants, including futures commission merchants,
commodity pool operators, and commodity trading advisors.
• FASB—The Financial Accounting Standards Board establishes financial
accounting and reporting standards for companies and nonprofits.
• PCAOB—The Public Company Accounting Oversight Board oversees private
auditors of publicly held companies and broker-dealers.
These standard-setting bodies are typically set up as private nonprofits overseen by boards and
funded through member fees or assessments. Although their authority may be enshrined in
statute, they are not governmental entities. Regulators delegate rulemaking powers to them and
retain the right to override their rulemakings.
Regulation of Government-Sponsored Enterprises
Congress created GSEs as privately owned institutions with limited missions and charters to
support the housing and agricultural credit markets. It also created dedicated regulators—
currently, the FHFA and the Farm Credit Administration (FCA)—exclusively to oversee the
GSEs.
Federal Housing Finance Agency
HERA created the FHFA during the housing crisis to consolidate and strengthen regulation of a
group of housing-finance-related GSEs: Fannie Mae, Freddie Mac, and the 11 FHLBs.43 The
FHFA succeeded the Office of Federal Housing Enterprise Oversight (OFHEO), which regulated
Fannie and Freddie, and the Federal Housing Finance Board, which regulated the FHLBs. The act
also transferred authority to set affordable housing and other goals for the GSEs from the
Department of Housing and Urban Development to the FHFA.
The GSEs are private, for-profit institutions with limited charters that compete with other private
firms but enjoy statutory advantages such as their tax status, exemption from certain laws, and
implicit backing (which became explicit for Fannie and Freddie during the financial crisis) by the
federal government. Fannie Mae and Freddie Mac primarily create and guarantee mortgage-
backed securities, while the FHLBs primarily provide liquidity to financial institutions with at
least a modest presence in mortgage markets.
Facing concerns about Fannie and Freddie’s ongoing viability during the housing crisis, Congress
felt an impetus to create the FHFA from concerns about risks—including systemic risk—posed by
Fannie and Freddie. These two GSEs were profit-seeking, shareholder-owned corporations that
took advantage of their government-sponsored status to accumulate undiversified investment

43 For more on GSEs and their regulation, see CRS In Focus IF11715, Introduction to Financial Services: The Housing
Finance System, by Darryl E. Getter.
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portfolios of more than $1.5 trillion, consisting almost exclusively of home mortgages (and
securities and derivatives based on those mortgages).44
OFHEO was seen as lacking sufficient authority and independence to keep risk-taking at the
GSEs in check. The FHFA was given enhanced safety and soundness powers more similar to
those of the federal bank regulators. These powers included the ability to set capital standards, to
require internal controls and risk management standards, to order the enterprises to cease any
activity or divest any asset that posed a threat to financial soundness, and to replace management
and assume control of the firms if they became seriously undercapitalized. With the focus on the
GSEs’ financial problems when FHFA was created, FHFA was given stronger regulatory powers
over the GSEs than over the FHLBs. Nevertheless, the FHLBs are subject to some prudential
regulation as well, such as capital requirements.
FHFA conducts annual exams of the FHLBs and Fannie and Freddie for safety and soundness. In
addition, Fannie and Freddie are subject to ongoing monitoring and periodic targeted exams. The
FHLBs must submit periodic financial reports to FHFA. Under the Dodd-Frank Act as amended,
financial institutions with over $250 billion in assets are subject to stress tests, which includes
Fannie and Freddie but not any of the individual FHLBs. FHFA also oversees Fannie’s and
Freddie’s affordable housing goals and “duty to serve” underserved markets.
If a GSE is failing, FHFA has resolution powers—it can liquidate and reorganize an FHLB, and it
can take Fannie or Freddie into conservatorship or receivership. One of FHFA’s first actions was
to place both Fannie and Freddie in conservatorship to prevent their failure, giving FHFA much
closer control over the firms’ actions. Fannie and Freddie continue to operate under agreements
with FHFA and the U.S. Treasury, with more direct involvement of FHFA in the enterprises’
decisionmaking. The Treasury has invested funds in the GSEs (a combined $191 billion to date)
by means of preferred stock purchases to ensure that each remains solvent. In return, the
government received warrants equivalent to a 79.9% equity ownership position in the firms and
sweeps the firms’ retained earnings above a certain level of net worth. In 2019, the GSEs were
permitted to retain their earnings until higher capital levels were attained—one step toward
potential termination of conservatorship.45 Conservatorship was intended to be temporary, but
absent legislative reform, it has continued.
Farm Credit Administration
The FCA was created in 1933 during a farming crisis that was causing the widespread failure of
institutions lending to farmers. Following another farming crisis, it was made an “arm’s length”
regulator with increased rulemaking, supervision, and enforcement powers by the Farm Credit
Amendments Act of 1985 (P.L. 99-205). The Farm Credit System is a group of GSEs made up of
the cooperatively owned Farm Credit Banks and Agricultural Credit Banks, the Funding
Corporation (which is owned by the Credit Banks), and Farmer Mac (which is owned by
shareholders).46 Unlike the housing GSEs, the Farm Credit System operates in both primary and
secondary agricultural credit markets. The FCA oversees the Farm Credit System. For example,
the FCA regulates these institutions for safety and soundness through capital requirements.

44 FHFA, Report to Congress: 2008 (Revised), https://www.fhfa.gov/AboutUs/Reports/ReportDocuments/
2008_AnnualReportToCongress_N508.pdf.
45 Capital agreements and revisions are posted at https://www.fhfa.gov/Conservatorship/Pages/Senior-Preferred-Stock-
Purchase-Agreements.aspx.
46 For more information, see CRS Report RS21278, Farm Credit System, by Jim Monke.
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Regulatory Umbrella Groups
The need for coordination and data sharing among regulators has led to the formation of
innumerable interagency task forces to study particular market episodes and make
recommendations to Congress. Three interagency organizations have permanent status: the
FSOC, the Federal Financial Institution Examination Council, and the President’s Working Group
on Financial Markets (PWG). The latter is composed of the Treasury Secretary and the Fed, SEC,
and CFTC chairmen. The PWG occasionally releases position papers making financial reform
recommendations on various topics at the discretion of the Treasury Secretary. Its activity level
has varied by Administration.
Financial Stability Oversight Council
Few would argue that regulatory failure was solely to blame for the financial crisis, but it is
widely considered to have played a part. In February 2009, then-Treasury Secretary Timothy
Geithner summed up two key problem areas:
Our financial system operated with large gaps in meaningful oversight, and without
sufficient constraints to limit risk. Even institutions that were overseen by our complicated,
overlapping system of multiple regulators put themselves in a position of extreme
vulnerability. These failures helped lay the foundation for the worst economic crisis in
generations.47
One definition of systemic risk is that it occurs when each firm manages risk rationally from its
own perspective, but the sum total of those decisions produces systemic instability under certain
conditions.48 Similarly, regulators charged with overseeing individual parts of the financial
system may satisfy themselves that no threats to stability exist in their respective sectors but fail
to detect systemic risk generated by unsuspected correlations and interactions among the parts of
the global system. Before the financial crisis, the Federal Reserve was a kind of default systemic
regulator, expected to clean up after a crisis but with limited authority to take ex ante preventive
measures. Furthermore, the Fed’s authority was mostly limited to the banking sector.
The Dodd-Frank Act created the FSOC to assume a coordinating role, with the single mission of
detecting systemic stress before a crisis could take hold (and identifying firms whose individual
failure might trigger cascading losses with system-wide consequences). The FSOC is chaired by
the Secretary of the Treasury, and the other voting members are the heads of the Fed, FDIC,
OCC, NCUA, SEC, CFTC, FHFA, and CFPB and a member appointed by the President with
insurance expertise. Five nonvoting members serve in an advisory capacity—the director of the
Office of Financial Research (OFR, which was created by the Dodd-Frank Act to support the
FSOC); the head of the Federal Insurance Office (FIO, created by the Dodd-Frank Act); a state
banking supervisor; a state insurance commissioner; and a state securities commissioner.49
The FSOC is tasked with identifying risks to financial stability and responding to emerging
systemic risks while promoting market discipline by minimizing moral hazard arising from
expectations that firms or their counterparties will be rescued from failure. The FSOC’s duties
include

47 Remarks by Treasury Secretary Timothy Geithner, “Introducing the Financial Stability Plan,” February 10, 2009,
https://www.treasury.gov/press-center/press-releases/Pages/tg18.aspx.
48 For more information, see CRS Report R47026, Financial Regulation: Systemic Risk, by Marc Labonte.
49 For more information, see CRS Report R45052, Financial Stability Oversight Council (FSOC): Structure and
Activities, by Marc Labonte.
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• collecting information on financial firms from regulators and through the OFR;
• monitoring the financial system to identify potential systemic risks;
• proposing regulatory changes to Congress to promote stability, competitiveness,
and efficiency;
• facilitating information sharing and coordination among financial regulators;
• making regulatory recommendations to financial regulators, including “new or
heightened standards and safeguards;”
• identifying gaps in regulation that could pose systemic risk;
• reviewing and commenting on new or existing accounting standards issued by
any standard-setting body; and
• providing a forum for the resolution of jurisdictional disputes among council
members. (The FSOC may not impose any resolution on disagreeing members,
however.)
In addition, the FSOC is required to provide an annual report and testimony to Congress.
In contrast to some proposals to create a systemic risk regulator, the Dodd-Frank Act did not give
the FSOC authority (beyond the existing authority of its individual members) to respond to
emerging threats or close regulatory gaps it identifies. In many cases, the FSOC can make only
regulatory recommendations to member agencies or Congress—it cannot impose change.
Although the FSOC does not have direct supervisory authority over any financial institution, it
plays an important role in regulation because it designates firms and financial market utilities as
systemically important. Designated firms come under a consolidated supervisory safety and
soundness regime administered by the Fed that may be more stringent than the standards that
apply to nonsystemic firms. (Since 2018, there have not been any designated firms.) In a limited
number of other cases, regulators must seek FSOC advice or approval before exercising new
powers under the Dodd-Frank Act.
Federal Financial Institution Examinations Council
The Federal Financial Institutions Examination Council (FFIEC) was created in 1979 (P.L. 95-
630) as a formal interagency body to coordinate federal supervision of depository institutions.
Through the FFIEC, the federal banking regulators issue a single set of reporting forms for
covered institutions. The FFIEC also attempts to harmonize auditing principles and supervisory
decisions. The FFIEC is made up of the Fed, OCC, FDIC, CFPB, NCUA, and a representative of
the State Liaison Committee,50 each of which employs examiners to enforce regulations for
depository institutions.
Federal financial institution examiners evaluate the risks of covered institutions. The specific
safety and soundness concerns common to the FFIEC agencies can be found in the handbooks
employed by examiners to monitor depositories. Examples of safety and soundness subject areas
include important indicators of risk, such as capital adequacy, asset quality, liquidity, and
sensitivity to market risk.

50 The State Liaison Committee is, in turn, made up of representatives of the Conference of State Bank Supervisors, the
American Council of State Savings Supervisors, and the National Association of State Credit Union Supervisors.
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Nonfederal Financial Regulation
Insurance51
Insurance companies, unlike banks and securities firms, have been chartered and regulated solely
by the states for the past 150 years.52 There are no federal regulators of insurance akin to those for
securities or banks, such as the SEC or the OCC, respectively.
The limited federal role stems from both Supreme Court decisions and congressional action. In
the 1868 case Paul v. Virginia, the Court found that insurance was not considered interstate
commerce and thus not subject to federal regulation. This decision was effectively reversed in the
1944 decision U.S. v. South-Eastern Underwriters Association. In 1945, Congress passed the
McCarran-Ferguson Act (15 U.S.C. §1011 et seq.) specifically preserving the states’ authority to
regulate and tax insurance and also granting a federal antitrust exemption to the insurance
industry for “the business of insurance.”
Each state government has a department or other entity charged with licensing and regulating
insurance companies and those individuals and companies selling insurance products. States
regulate the solvency of the companies and the content of insurance products as well as the
market conduct of companies. Although each state sets its own laws and regulations for
insurance, the National Association of Insurance Commissioners (NAIC) acts as a coordinating
body that sets national standards through model laws and regulations. Models adopted by the
NAIC, however, must be enacted by the states before having legal effect, which can be a lengthy
and uncertain process. The states have also developed a coordinated system of guaranty funds,
designed to protect policyholders in the event of insurer insolvency.
Although the federal government’s role in regulating insurance is relatively limited compared
with its role in banking and securities, its role has increased over time. Various court cases
interpreting McCarran-Ferguson’s antitrust exemption have narrowed the definition of the
business of insurance, whereas Congress has expanded the federal role in GLBA and the Dodd-
Frank Act through federal oversight. For example, the Federal Reserve has regulatory authority
over bank holding companies with insurance operations as well as insurers designated as
systemically important by the FSOC. In addition, the Dodd-Frank Act created the FIO to monitor
the insurance industry and represent the United States in international fora relating to insurance.
Various federal laws have also exempted aspects of state insurance regulation, such as state
insurer licensing laws for a small category of insurers in the Liability Risk Retention Act of 1986
(15 U.S.C. §§3901 et seq.) and state insurance producer licensing laws in the National
Association of Registered Agents and Brokers Reform Act of 2015 (P.L. 114-1, Title II).
Money Transmitters53
Anyone who has sent or received money through a mobile app, received a paycheck, exchanged
foreign currency, used a digital currency, or used a prepaid card has most likely used a money

51 This section was written by Baird Webel, Specialist in Financial Economics.
52 For more information, see CRS In Focus IF10043, Introduction to Financial Services: Insurance, by Baird Webel.
53 This section was written by Andrew Scott, Analyst in Financial Economics. For more information, see CRS Report
R46486, Telegraphs, Steamships, and Virtual Currency: An Analysis of Money Transmitter Regulation, by Andrew P.
Scott.
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services business (MSB).54 This term refers to a range of nonbank financial institutions that
provide, among other things, money transmission services, prepaid and other payment
instruments, currency exchanges, and check cashing. One of the more common types of MSBs is
called a money transmitter. Americans use money transmitters to pay bills, purchase items online,
or send funds to family members and friends domestically and abroad. Although some prominent
companies—such as Western Union, MoneyGram, and PayPal—belong to this group of financial
institutions, thousands of money transmitters in the United States operate in the background of
financial services. More recently, many cryptocurrency firms have registered as money
transmitters.
Money transmitters are regulated and licensed at the state level—49 unique state regulatory
frameworks determine the general oversight and regulation of money transmitters.55 Each state’s
regulatory framework is unique, but there are often similarities in the types of requirements the
money transmitters must meet. Typically, states have some combination of the following
requirements for money transmitters: licensure; minimum net worth; reciprocity; security (such as
a corporate surety bond, line of credit, or a deposit of investments); and examinations.
Although state agencies have various frequency cycles for conducting examinations, most
licensed money transmitters are examined annually.56 State supervisors review a money
transmitter’s operations, financial condition, management, compliance function, and compliance
with anti-money laundering laws. Between exams, state regulators monitor their licensees on an
ongoing basis by reviewing the information submitted pursuant to reporting requirements.
Additionally, money transmitters must meet financial statement reporting requirements,
permissible investments adequacy, branch and agent listings, and transmission volume activity.
A few federal laws and regulations apply to money transmitters—notably, the Bank Secrecy Act
(P.L. 91-508) and the Electronic Fund Transfer Act (P.L. 95-630). The federal agencies
responsible for implementing regulations for money transmitters are the U.S. Department of the
Treasury’s Financial Crimes Enforcement Network (FinCEN) and the CFPB. FinCEN, which is
not considered a regulator because of its limited authority, is responsible for implementing the
Bank Secrecy Act and focuses on anti-money laundering and combating the financing of
terrorism. One of the ways FinCEN does this is by requiring MSBs to register with it.57 The
CFPB’s role in the regulation of money transmitters is limited to its rulemakings on remittances
made pursuant to the agency’s authority to implement provisions of the Electronic Fund Transfer
Act.

54 Many of these states use the term money services business to describe the umbrella of nonbank financial institutions
that provide money transmission services. In this light, the terms money transmitter and MSB are effectively
synonymous. This report will use money transmitter unless referring to specific statutory language.
55 According to the Conference of State Bank Supervisors, Montana is the sole state without an MSB legal framework.
For more, see Conference of State Bank Supervisors, “Chapter Four: Overview of Money Services Business,”
Reengineering Nonbank Supervision, October 2019, https://www.csbs.org/system/files/2020-05/Chapter%204%20-
%20MSB%20Final%20FINAL.pdf.
56 Conference of State Bank Supervisors and Money Transmitter Regulators Association, The State of State Money
Services Businesses Regulation and Supervision, May 2016, https://www.csbs.org/sites/default/files/2017-11/
State%20of%20State%20MSB%20Regulation%20and%20Supervision%202.pdf.
57 Exceptions to the registration requirement include MSBs that act solely as agents for other MSBs and state or federal
agencies, including the U.S. Postal Service. See FinCen, “MSB Exceptions,” https://www.fincen.gov/msb-exceptions.
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Other State Regulation
In addition to insurance, there are state regulators for banking and securities markets. State
regulation also plays a role in nonbank consumer financial protection, although that role has
diminished as the federal role has expanded.
As noted above, banking is a dual system in which institutions choose to charter at the state or
federal level. A majority of community banks and thrifts are state chartered, but national banks
and thrifts hold a greater share of industry assets.
Although state-chartered banks have state regulators as their primary regulators, federal
regulators still play a regulatory role. Most depositories have FDIC deposit insurance. To qualify,
they must meet federal safety and soundness standards, such as prompt corrective action ratios. In
addition, many state banks (and a few state thrifts) are members of the Federal Reserve System,
which gives the Fed supervisory authority over them. State banks that are not members of the
Federal Reserve System are supervised by the FDIC. Federal regulation of state and national
banks is largely equivalent.
In securities markets:
The federal securities acts expressly allow for concurrent state regulation under blue sky
laws. The state securities acts have traditionally been limited to disclosure and qualification
with regard to securities distributions. Typically, the state securities acts have general
antifraud provisions to further these ends.58
Blue sky laws are intended to protect investors against fraud. Registration is another area where
states play a role. In general, investment adviser firms that are granted exemptions from SEC
registration based on size are overseen by state regulators. Broker-dealers, by contrast, are
typically subject to both state and federal regulation. The National Securities Markets
Improvement Act of 1996 (P.L. 104-290) invalidated state securities law in a number of other
areas (including capital, margin, bonding, and custody requirements) to reduce the overlap
between state and federal securities regulation.
States also play a role in enforcement by taking enforcement actions against financial institutions
and market participants. This role is significant in states in which the financial industry has a
large presence, such as New York.
Federal regulation plays a central role in determining the scope of state regulation because of
federal preemption laws (that apply federal statute to state-chartered institutions) and state “wild
card” laws (that allow state-chartered institutions to automatically receive powers granted to
federal-chartered institutions).59 For example, firms, products, and professionals that have
registered with the SEC are not required to register at the state level.60
International Standards and Regulation
Financial regulation must also take into account the global nature of financial markets. More
specifically, U.S. regulators must account for foreign financial firms operating in the United
States, and foreign regulators must account for U.S. firms operating in their jurisdictions.
Sometimes regulators grant each other equivalency (i.e., leaving regulation to the home country)

58 Thomas Lee Hazen, Treatise on the Law of Securities Regulation (Toronto: Thomson Reuters, 2015), Chapter 8.1.
59 Michael Barr et al., Financial Regulation: Law and Policy (St. Paul: Foundation Press, 2016), Chapter 2.1.
60 GAO, Financial Regulation, GAO-16-175, February 2016, https://www.gao.gov/assets/680/675400.pdf.
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when firms wish to operate abroad, and other times foreign firms are subjected to domestic
regulation.
If financial activity migrates to jurisdictions with laxer regulatory standards, it could undermine
the effectiveness of regulation in jurisdictions with higher standards. To ensure consensus and
consistency across jurisdictions, U.S. regulators and the Department of the Treasury participate in
international fora with foreign regulators to set broad international regulatory standards or
principles that members voluntarily pledge to follow. Given the size and significance of the U.S.
financial system, U.S. policymakers play a substantial role in setting these standards. Although
these standards are not legally binding, U.S. regulators generally implement rulemaking or
Congress passes legislation to incorporate them.61 There are multiple international standard-
setting bodies, including one corresponding to each of the three main areas of financial
regulation:
1. the Basel Committee on Banking Supervision for banking regulation,
2. the International Organization of Securities Commissions for securities and
derivatives regulation, and
3. the International Association of Insurance Supervisors for insurance regulation.62
In addition, the G-20—an international body consisting of the United States, the European Union,
and 18 other economies—spearheaded international coordination of regulatory reform after the
financial crisis. It created the Financial Stability Board—consisting of the finance ministers and
financial regulators from the G-20 countries, four official international financial institutions, and
six international standard-setting bodies (including those listed above)—to formulate agreements
to implement regulatory reform. There was significant overlap between the board’s regulatory
reform agenda and the Dodd-Frank Act.
The relationship between these various entities is diagrammed in Figure 4.

61 For more information, see CRS In Focus IF10129, Introduction to Financial Services: International Supervision, by
Martin A. Weiss.
62 As noted above, the insurance industry is primarily regulated at the state level. The Dodd-Frank Act created the FIO,
in part, to act as the U.S. representative in these international fora. See CRS Report R45508, Selected International
Insurance Issues in the 116th Congress, by Baird Webel and Rachel F. Fefer.
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Figure 4. International Financial Architecture

Source: CRS In Focus IF10129, Introduction to Financial Services: International Supervision, by Martin A. Weiss.
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Appendix A. Changes to Regulatory Structure Since
2008
In 2010, the Dodd-Frank Act created four new federal entities related to financial regulation—
FSOC, OFR, FIO, and CFPB. OFR and FIO are offices within the Department of the Treasury
and are not regulators.
The Dodd-Frank Act granted new authority to the CFPB and transferred existing authority to it
from other regulators, as shown in Figure A-1 (represented by the arrows). (With the exception of
the Office of Thrift Supervision [OTS], the agencies shown in the figure retained all authority
unrelated to consumer protection, as well as some authority related to consumer protection.) The
section above entitled “Consumer Financial Protection Bureau” has more detail on the authority
granted to the CFPB and areas where the CFPB was not granted authority.
Figure A-1. Changes to Consumer Protection Authority in the Dodd-Frank Act

Source: CRS.
Notes: Blue = existing agency, Red = eliminated agency, Green = new agency.
In addition, the Dodd-Frank Act eliminated OTS and transferred its authority to the banking
regulators, as shown in Figure A-2.

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Figure A-2. Changes to the Oversight of Thrifts in the Dodd-Frank Act

Source: CRS.
Notes: Blue = existing agency, red = eliminated agency, green = new agency.
HERA created the FHFA and eliminated OFHEO and the FHFB. As shown in Figure A-3, HERA
granted the FHFA new authority, transferred the existing authority of the two eliminated agencies
(shown in red), and transferred limited existing authority from the Department of Housing and
Urban Development (HUD).
Figure A-3. Changes to the Oversight of Housing Finance in HERA

Source: CRS.
Notes: Blue = existing agency, red = eliminated agency, green = new agency.

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Appendix B. Experts List
Table B-1. CRS Contact Information
Author
Title
Regulation of:
Cheryl Cooper
Analyst in Financial Economics
Consumer financial protection
Darryl Getter
Specialist in Financial Economics
Housing finance, credit unions
Raj Gnanarajah
Analyst in Financial Economics
Accounting and auditing
Marc Labonte
Specialist in Macroeconomic Policy
Financial stability, Federal Reserve, regulatory
structure
Rena Miller
Specialist in Financial Economics
Derivatives, money laundering
James Monke
Specialist in Agricultural Policy
Farm credit
Andrew Scott
Analyst in Financial Economics
Banking, payments
Eva Su
Specialist in Financial Economics
Securities
Paul Tierno
Analyst in Financial Economics
Cryptocurrency, fintech
Baird Webel
Specialist in Financial Economics
Insurance
Martin Weiss
Specialist in International Trade and
International finance
Finance

Author Information

Marc Labonte

Specialist in Macroeconomic Policy

Acknowledgments
This report was originally authored by former CRS Specialists Mark Jickling and Edward
Murphy. Sections of this report use material from CRS products by Baird Webel and Andrew
Scott.
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Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan
shared staff to congressional committees and Members of Congress. It operates solely at the behest of and
under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other
than public understanding of information that has been provided by CRS to Members of Congress in
connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not
subject to copyright protection in the United States. Any CRS Report may be reproduced and distributed in
its entirety without permission from CRS. However, as a CRS Report may include copyrighted images or
material from a third party, you may need to obtain the permission of the copyright holder if you wish to
copy or otherwise use copyrighted material.

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