Supervision and Regulation of Financial Institutions

This department’s primary objectives include protecting depositors’ funds, maintaining a stable monetary system, promoting an efficient and competitive banking system, and protecting consumer rights related to banking relationships and transactions.

The Supervision and Regulation (S&R) Department of the Federal Reserve Bank of Cleveland provides services to ensure the safe and sound operation of Fourth District financial institutions. More specifically, examiners supervise the activities of bank holding companies and financial holding companies, their nonbank subsidiaries, and state-chartered member banks. Examiners also monitor these institutions’ financial condition and review them for compliance with federal laws and regulations.

Functional Areas of Supervision and Regulation

The Consumer Affairs and CRA Supervision Section examines state member banks for compliance with consumer protection laws and regulations, including the Community Reinvestment and Fair Lending acts. It also investigates consumer complaints and refers them to the appropriate federal regulatory agency.

Foreign Activities Supervision examines the overseas facilities, lending, foreign exchange, and investment activities of state member banks; Edge Act agreement corporations; and foreign banking organizations’ domestic branches, bank holding companies, and representative offices.

Information Technology Supervision oversees information systems, operations, independent service bureaus, and technology activities for all Fourth District organizations and examines banking organizations’ corporation-wide information systems.

Safety and Soundness Supervision of Commercial Banks and Financial and Bank Holding Companies conducts examinations/inspections of state member banks and financial and bank holding companies in the Fourth Federal Reserve District.

Specialized Activities examiners are skilled in reviewing the fiduciary, capital markets, insurance, and securities activities of bank and financial holding companies, state member banks, and nonbank subsidiaries. Reviews of fiduciary activities include asset management, corporate and personal trust, employee benefit, global custody, investment advisory, mutual fund, private banking, securities lending, securities processing, and transfer agent services. Capital markets reviews include funding and liquidity, securities and investments, asset securitization, and private equity merchant banking as well as modeling for capital allocation, value-at-risk, and interest rate risk. Insurance and securities reviews include sales, consumer sales disclosures, use of insurance to mitigate risk, as well as coordination with state insurance commissioners on insurance activities and with the SEC/NASD on securities brokerage and investment advisory services. Examiners also conduct inspections of nonbank lenders who extend credit secured by margin stock under Regulation U.