Banking / Finance

Banking laws apply to state and federal financial institutions that are involved in the borrowing, lending, and depositing of money. In addition to traditional banks, many other entities must comply with banking and financing laws. Examples of specific categories of banking law include real estate finance, acquisition finance, and international banking. These laws seek to ensure that lenders’ and individuals’ privacy rights are protected and that banks do not abuse their customers’ funds. Since many people come to banks seeking large sums of money in the form of a loan, banks have the ability to offer unfair terms or to take advantage of an individual’s monetary needs. These laws ensure that banks offer fair terms for loans and mortgages and that individuals who lack experience with financial matters are protected. 

Banks and financial institutions are subject to a vast number of state and federal regulations. For example, the Federal Government enacted the Dodd-Frank Act in 2010, which contains over 1,500 separate laws and almost 400 rule mandates. One of the most prominent and well-recognized financial institutions is the Federal Deposit Insurance Corporation (FDIC). Any individual who deposits money with an FDIC is eligible for the FDIC’s deposit insurance program, which provides insurance of up to $100,000 for deposits.

Other banking laws include the Gramm-Leach-Bliley Act of 1999, which authorizes banks, securities firms, and insurance companies to affiliate with one another. More recent statutes have focused on the prevention of white-collar crime, money laundering, and mortgage refinancing. Additionally, depending on the location in which the bank is chartered and the scope of its operations, the institution may be required to comply with the FDIC, the Federal Reserve, the Office of the Comptroller of the Currency, and any applicable state regulations.

Finance law applies to individuals and companies who invest money in the stock market, as well as situations in which an individual or company borrows money to fund a particular project. A common example of a financing transaction is when a college student takes out a federal student loan in order to pay for tuition. Another example of a financing transaction is when an individual takes out a loan to purchase a car. In the business realm, most finance transactions involve a company issuing stock shares to investors. This gives the investor an equity stake in the company in exchange for the investor’s monetary contribution to the business or enterprise.

If a new company is unable to attract investors, it may decide to take out a loan from a bank in order to build the business. If the loan is used to purchase equipment or land, the bank may require that the property serve as collateral for the loan. This means that in the event the business is unable to repay the loan, the bank has the authority to take the property and land.

In order to ensure that their operations are complying with these regulations, directors of the organization often rely on banking and finance attorneys. Attorneys who practice banking and financial law handle a wide variety of matters. Some lawyers represent the institutions and help with daily operations like complaints against the bank and customer disputes. In general, the primary function of a lawyer who works for a bank is to ensure that the bank is complying with any regulatory laws that apply to the institution. Considering the extraordinary number of rules and regulations that apply to banks, ensuring regulatory compliance is a daily affair. These attorneys can also deal with complex matters like litigation and communicating with investors, government entities, and individuals, or training bank employees about regulatory issues.

In the event that the bank is subjected to a regulatory investigation or enforcement action, the lawyer will typically help defend the institution against the allegations and provide legal counsel to any officers or employees who have been specifically implicated. Regulatory agencies have broad authority to impose costly sanctions against a bank, including the termination of an insurance policy, civil fines, and cease and desist orders.

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