U.S. Treasury Regulatory Measures on Financial Institutions

Instructor: Shannon Battle

Shannon has taught middle school and college classes and has a law degree.

This lesson explains why the U.S. Treasury regulates financial institutions. It will then list, define, and explain the major regulations that it enforces to protect a consumer's money.

Can you trust your financial institution?

Most people are customers of a bank; you probably have a checking account and maybe even a savings account. How do you know the money that you deposit will be there when you want it back? Are you sure that the fees you are being charged are fair? Do you have all the information you need when you sign loan or mortgage documents? Unless you are an expert in finance and banking, there is no way to make sure your money is safe, you have the information you need, and that you will be treated fairly and not overcharged. That's where the government steps in.

Several government departments regulate financial institutions - one is the U. S. Department of Treasury. Within the Department of Treasury is the Office of the Comptroller of Currency (the OCC). The OCC oversees financial institutions to make sure they are operating in accordance with the law. The OCC creates and enforces regulations (rules) that cover money protection, consumer information, privacy, and fairness so that consumers can trust financial institutions with their money.

Money Protection

The OCC has several regulations in place to protect consumers' money.

Reserve Requirement

One of the most important regulations is the reserve requirement, which sets out rules for computing the required amount of reserves the bank must have on hand (the money that a financial institution must keep and not loan out). Let's say you decided to save one thousand dollars per month for a year to buy a car. You'd be pretty upset if when you went to withdraw that money, the bank said they didn't have enough to give it to you all at once. This is why there is a reserve requirement, so that every client has access to their money when they request it.

Fund Availability

Beyond having the money to operate, regulations also protect consumers from having to wait for their deposits to clear. Have you ever deposited a big check, but had to wait days until the money was available for use? Under the Expedited Funds Availability Act, a financial institution must make the money available in one to two business days for most deposited checks (including: checks drawn on the U.S. Treasury; checks drawn on a Federal Reserve Bank (FRB) or a Federal Home Loan Bank (FHLB); checks drawn by a state or unit of general local government; cashier's, certified, or teller's checks; money orders; and checks drawn on the different branches of the same bank).


What about funds that are not cash or check? Electronic Fund Transfers (EFT) are also protected by the OCC. Examples of protected EFT transactions include ATM transactions, debit and credit card transactions, direct deposits, and even gift cards. The OCC has regulations that require financial institutions to keep consumers informed of all rules and restrictions, protect consumers against unauthorized transactions, and restrict certain fees associated with these transactions. For instance, you may have received a gift card but forgotten to use it. Then, when you found it and tried to use it, the store said it had expired or that the amount available was less than you expected due to a monthly fee. EFT regulations protect you by requiring that the company selling this gift card inform you of any expiration date or fees charged to the card.


The OCC also has several regulations that require financial institutions to disclose (or give information) all rules and fees associated with their accounts. This is usually in a document titled Disclosures.

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