Analysis Of The Regulatory Actions Of The U.s. Federal Banking Regulators Differences

In the financial system of a country, the structure of bank regulation and supervision is one of the most important issues concerning the efficiency of bank regulation and supervision, as well as the stability of the banking industry. Generally speaking, the main differences among different countries' bank regulatory and supervisory structure are in the following aspects. In some countries, such as the United Kingdom and Japan, the responsibility for supervising banks (as well as financial institutions and financial markets more generally) has been assigned to a single financial supervisory agency, rather than to the central bank. In the euro area, even as the European Central Bank has assumed responsibility for monetary policy, some national central banks or other national authorities have retained substantial supervisory powers. Various other institutional arrangements exist around the world, including the more traditional model in which the central bank also serves as a supervisor of the banking system. The most special structure which is well worth investigating is the bank regulatory and supervisory system in the United States: the central bank partially assumes the responsibility of bank regulation and supervision; there are other two agencies that also share the bank regulating and supervising right together with the central bank.To be specific, the U.S. bank regulatory and supervisory system is a segmented system where three federal bank agencies partially assumes the responsibility for regulating and supervising all commercial banks and thrift institutions in the U.S., that is, the Federal Reserve System (the FED), the Federal Deposit Insurance Corporation (the FDIC), and the Office of the Comptroller of the Currency (the OCC). Although the segmented system plays a major role in maintaining the safety and soundness of the U.S. banking sector in recent years, some disagreements and conflicts also exist among the supervisory behavior of the three agencies.Most of the researches in this field focus on the behavior of the FED, as it assumes both the responsibility of making and conducting monetary policy and the responsibility of bank regulation and supervision. However, the thesis conducts research based on the different revenue sources of the three agencies, and focuses on the special institutional characteristic of the OCC, to investigate the inconsistency of the three agencies' supervisory behavior. In addition, with the Formal Agreement (FA) issued by the three agencies as the analyzing instrument, the thesis investigates whether the supervisory behavior of the OCC is significantly different from the FED and the FDIC mainly from the following four aspects: the amount of the FA issued by them, the overall financial condition and risk level of the groups of banks (all banks under each agency and the banks that receive a FA) supervised by them, the assessment revenues of them, as well as the relationship between the amount of the FA and the macro economic cycle.The originality of the thesis is related to the data manipulation. In order to facilitate research, a data set containing all FA documents that issued by the three federal bank agencies towards commercial banks and thrift institutions from the 1^st quarter of 1999 to the 4^th quarter of 2006 is established. The data set could be categorized by different standards, such as the agency in charge of supervision, the coordinates of the involved bank, the reason that lead to a FA etc. Additionally, another data set which includes the Call reports of all U.S. commercial banks and thrift institutions during the 32 quarters is also built. The merge of the above two data set facilitates us to analyze the real health condition of groups of banks categorized by agencies, and different agencies' probability of intervention with the difference in financial conditions controlled. The empirical results support the conclusion that the OCC behaved differently from the other two agencies. The probable influences of such a kind of supervisory inconsistency towards the banking sector, the financial system as well as the national economy are also discussed. Therefore, the thesis could provide some insights for the debate on reform of the U.S. bank regulatory and supervisory structure.