Banks: What Type of Bank Is Your Bank in 2021

What Type of Banks Is Your Bank?:

No, this is not a trick question. Although most people think that a bank is a bank, it is a bank, but the financial institutions that we normally call a ‘bank’ actually have many variations. Some are organized under federal law, others under state law. Some are of a special kind called savings, savings, and loans or savings association. members of the Federal Reserve, others are not. Depending upon the types, they are regulated by different entities. I learned this at The Greatest Bank Robbery of All Time, which I reviewed a few weeks ago.

 some categories of banks in the United States:
1.National Bank.

These institutions are organized in accordance with federal laws. The main federal regulator is the Office of the Currency Controller (OCC). All national banks must be members of the Federal Reserve. Their names contain (but not necessarily) the word “national” or end with “N.A.” which stands for National Association. For example, Zions First National Bank and Bank of America N.A. are national banks.

2. Federal Savings Association.

These institutions are organized under the Federal Homeowners Act. They are expected to take out a significant amount of mortgage loans. The main federal supervisor is another branch of the Treasury Department called The Office of Thrift Supervision (OTS). They are NOT members of the Federal Reserve, but rather members of a parallel system of federal banks that lend real estate. Their names usually (but not always) contain the word “savings” or end with “FSB”, which stands for Federal Savings Bank. Washington Mutual Bank and ING Bank, FSB, for example, are federal savings societies.

Bank of the Member State. These institutions were organized in accordance with state law but were elected to join the Federal Reserve. The main federal regulator is the Federal Reserve. SunTrust Bank and Fifth Third Bank, for example, are state-approved banks that are also members of the Federal Reserve.

4. Non-state bank.

These institutions are organized by law, but they are NOT members of the Federal Reserve. The main federal regulator is the FDIC. Bank of the West and GMAC Bank, for example, are state-approved banks that are not members of the Federal Reserve.

5. State Savings Association.

Like their federal counterpart, these institutions also offer many mortgage loans, except that they are organized according to state law. The main federal regulator is the FDIC. The Emigrant Bank, for example, is a savings association of the government.

Do you as a customer need to worry? Today, as well as savings and loans, banks offer the same range of services. All are FDIC insured. This is probably why most people do not even know that they are otherwise under the hood. Those who run it can still make a difference. In the 1980s, banking regulators in some states and the predecessor of the OTS had more flexible rules that contributed to the massive savings and credit crisis.

But as long as the banks are federally insured, customers do not care if they are managed safely. They poured large sums of money into sick banks, while turbulent banks offered higher interest rates. This phenomenon is called moral danger.

Customers keep doing the same. The Wall Street Journal reports that Countrywide Bank raises $ 50 million a day at its highest interest rate. Customers are not worried about the negative publicity of Countrywide, because their deposits are secured.

In my opinion, you as a customer should be concerned about how your bank is managed, even if the deposits are guaranteed by the FDIC. Your decision has a moral aspect. If your pursuit of the highest return results in an FDIC payment, it means that you are receiving money from other depositors who are in worse shape than you. Doing so intentionally is wrong.

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