Federal Reserve regulations of banking (SLP)

Federal Reserve Regulations of Banking January 06, I chose Chase Bank because it is a large organization with many branches nationwide. Owned by JP Morgan, it is a bank offering individual and business services, online banking, mortgage and personal lending services and investment and retirement services. Chase Bank offers business credit cards, homeowner assistance and overdraft protection for your accounts. Chase is completely mobile with access online and also through your cellular and mobile phones.
It is the job of the Federal Reserve to ensure that financial institutions are operating in a safe and responsible manner and that they are fair in their treatment of consumers. Bank holding companies, foreign branches, and state member banks are each subject to Federal regulation (Supervision…). The Federal Reserve is responsible for bank regulation and bank supervision. Supervision includes monitoring, inspecting and auditing banking institutes to ensure that they are in compliance with regulations.
Bank regulation includes the rules, policies, and standards that banks such as Chase must follow. Regulation can be restrictive, or permissive. The Reserve has authority over institutions becoming a bank holding company and authority in bank mergers when the bank would become a state member bank. Chase and JP Morgan must comply with Federal Reserve banking regulations like any other banking institution. These regulations require that banks and any depository institute keep a certain percentage of their deposits in secure and safe assets. These balances influence the economy directly. This is the most influential regulation in banking by the Federal Reserve. Regulations also limit the amount of credit that may be extended to and by a banking institution.
Regulations are in place to reduce risks to the customer and business client. Banks are required to be an organized and structured institution and also to disclose the banks financial information to consumers. Reporting must follow a prescribed standard and must also maintain a certain rating which is available to the public. There are twelve different regions, each with regulating authority within the Federal Reserve.
In the preceding seven years Chase and JP Morgan have had numerous scandalous dealings. Chase was fined by NASD in 2002 for overcharging customers on commissions in the purchase of stock and in 2005 was fined again by NASD for illegal late trading of mutual fund shares (Plutta). More recently JP Morgan was accused of being less than favorable towards blacks and Latino’s in New York (Johnson). A community within New York withdrew 12.5 million dollars from Chase, refusing to do any further business with them on these grounds.
Chase’s underwent a merger with Bank One in 2004 and in 2011 was ranked the number one bank in the country, stealing the title from Bank of America. Profit was 4.26 billion during the third quarter, down slightly from a year previous (Rusli). Because of the Banks strength and performance Chase was able to successfully recover from 2008 bail outs. By improving their credit card business’ investor expectations were surpassed though there is still some loss over mortgage and foreclosures. JP Morgan settled allegations of misleading investors in June of 2011 with a 153.6 million dollar sum though this has not seemed to affect the Mega Corporation.
Chase Bank is obligated by the same regulation as smaller banks with the advantage of being more able to afford fines and penalties for inappropriate or unscrupulous behavior. Most of Chases’ past behaviors leading to fines or civil action involved investment banking though the allegations of preferential banking are a new concern.
References
CHASE Home: Personal Banking | Personal Lending | Retirement &amp. Investing | Business Banking. (2012). Retrieved 2012, from https://www.chase.com/
JOHNSON, S. (2011). Black and Latino homeowners to JP Morgan Chase: Dont ignore us!. New York Amsterdam News, 102(17), 40.
Pluta, J. (2007). Chase: A Bank for the New Century?. Dollars &amp. Sense, (270), 24.
Rusli, E. M. (2012, January 06). JPMorgan Chase &amp. Company (JPM) News – The New York Times. Times Topics – The New York Times. Retrieved 2012, from http://topics.nytimes.com/top/news/business/companies/morgan_j_p_chase_and_company/index.html
Supervision and Regulation. (2011). Board of Governors of the Federal Reserve System. Retrieved 2012, from http://www.federalreserve.gov/pf/pdf/pf_5.pdf