1. US Banking Regulatory Industry Brett Belcher, Chief Risk Officer & Board Member GE Money Bank, a.s. Oct 17 th, 2012

2. Typically, single bank regulatory body UK & Japan, eg, combine insurance, securities, & bank regulation into one agency Bank regulation also combined with bank supervision, like in Czech Significantly more transparent simpler than the US system In the US: Confusing, Complicated, Costly, Fragmented US Bank Regulation Landscape Many regulatory agencies… highly fragmented Regulatory agencies exist on both the federal and state level Separate bank, insurance, securities, & commodities regulation Even some US cities have enacted separate financial regulation, eg, usury laws United States G10 Nations

3. Links to other State Banking Agencies The links contained on this page will assist you in finding other state banking agencies. Conference of State Bank Supervisors (CSBS) Alabama State Banking Department Alaska Division of Banking, Securities, and Corporations Arizona State Banking Department Arkansas State Bank Department California Department of Financial Institutions Colorado Division of Banking Connecticut Department of Banking Delaware Office of the State Bank Commissioner Florida Department of Banking and Finance Georgia Department of Banking and Finance Hawaii Division of Financial Institutions Idaho Department of Finance Illinois Office of Banks and Real Estate Indiana Department of Financial Institutions Iowa Division of Banking Kansas Office of the State Bank Commissioner Kentucky Department of Financial Institutions Louisiana Office of Financial Institutions Maine Bureau of Financial Institutions Massachusetts Division of Banks Maryland Division of Financial Regulation Michigan Financial Institutions Bureau Minnesota Department of Commerce Mississippi Department of Banking and Consumer Finance Missouri Division of Finance Montana Banking and Financial Institutions Division Nebraska Department of Banking & Finance Nevada Financial Institutions Division New Hampshire Bank Commissioner's Office New Jersey Division of Banking New Mexico Financial Institutions Division New York State Banking Department North Carolina Office of the Commisioner of Banks Ohio Division of Financial Institutions Oklahoma State Banking Department Oregon Division of Finance and Corporate Securities Pennsylvania Department of Banking Rhode Island Department of Regulation South Dakota Division of Banking Tennessee Department of Financial Institutions Texas Department of Banking Utah Department of Financial Institutions Vermont Department of Banking, Insurance, Securities, and Health Care Administration Vermont Department of Banking, Insurance, Securities, and Health Care Administration Virginia State Corporation Commission/Bureau of Financial Institutions Virginia State Corporation Commission/Bureau of Financial Institutions Washington Department of Financial Institutions West Virginia Division of Banking Wisconsin Department of Financial Institutions Wyoming Banking Division

4. Primary bank regulators OTS OCC FDIC The Fed

5. The “Fed” Created in 1913 as a response to financial panics, particularly the 1907 panic Conduct monetary policy (FOMC) Supervise and regulate banks Provide financial services to depository institutions & the U.S. government Managed by Board of Governors (7) and 12 District Banks “Its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government.”

6. Created in 1933 during the depression as a means to protect bank depositors Insures deposits at 7,800 institutions, up to $250,000 Examines and supervises banks for “safety and soundness” Important during the “Thrift crisis” in the 1980’s Provides a CAMEL rating for each examined bank Manages failed banks in “Receivership” 140 banks were seized in 2009, 120 to date in 2010 The Federal Deposit Insurance Corp.

7. Established by Abraham Lincoln in 1863 to fund the American Civil war; later became a part of the Treasury Dept. Ensures the safety and soundness of the national banking system Improves the efficiency and effectiveness of OCC supervision especially to reduce regulatory burden Supervises approx 1,500 national banks Enforces anti-money laundering and anti-terrorism laws Investigates and prosecutes acts of misconduct committed by parties of national banks, including officers, directors, & employees Office of the Comptroller of the Currency

8. Created in 1989 under the Department of the Treasury Supervises Savings and Loan institutions, “Thrifts” Funded by the banks they regulate, like other regulators Regarded as a weak regulator, was also responsible for supervising AIG, Washington Mutual, & Indymac during the 2007-2010 crisis – all failures Current reform proposal call for merging OTS with OCC Office of Thrift Supervision

9. Supervises ‘Credit Unions’ Supervises the secondary mortgage market; Fannie/Freddie Supervises ‘Credit Unions’ Establishes uniform principles, standards, & reporting

10. Basel, Basel, and more Basel  Tougher capital requirements Supranational regulator? The regulatory future Dodd-Frank bill, July 2010 Agency consolidation, but some level of fragmentation to remain No more ‘Too Big to Fail’ & bailouts More consumer protection More power and authority to the Fed and FDIC  authority to “regulate” any company whose activity it believes could threaten the economy and the markets!! United States G10 Nations Quote from Brett Belcher, October 17 th, 2012 “Certainties in life: Death, Taxes, & Regulation”

11. The regulatory future – time table

12. The regulatory future – battle plan EU US Capital Requirements Capital requirement levels will be implemented as per Basel III timetable. Current draft legislation requires the European Banking Authority to publish a list of eligible instruments qualifying as Tier 1 capital Capital requirements will be implemented as per Basel III guidelines and will apply to banks with total consolidated assets of $500 million Liquidity Ratios Currently has no commitment to a binding NSFR. Suggests a binding LCR from 2018 Has yet to introduce draft rules to implement liquidity ratios Leverage RatioCurrent draft legislation mandates the European Banking Authority to determine whether a 3% ratio is appropriate by October 2016 Already had a 4% leverage ratio in place prior to the introduction of Basel III

15. US Banking Regulatory Industry Brett Belcher, Chief Risk Officer & Board Member GE Money Bank CZ Oct 17 th, 2012