The United States banking system can be very confusing. After the
collapse of a large bank called Silicon Valley Bank. This Bank is
responsible for most of the tech industry including many tech startups.
Many Americans might be confused on how these banks are regulated and
how the system truly works. It gets even more confusing when the
government doesn’t always enforce these rules and just up and decides not
to follow those policies and precedents in certain instances. This article will
explain a little bit about the Silicon Valley Bank’s specifics and what
happened as well as how the banks around America are regulated.
In the United States banks fall under both Federal and state
regulations. This can cause a little bit of a confusion for banks as they have
to follow rules given by two separate organizations. Some federal
regulations involve privacy, disclosure, fraud prevention, anti-money
laundering, anti-terrorism, and anti-usury lending. The regulation on privacy
involves the sharing of personal data to a third party. Under this, banks
must inform you and provide an option to opt out of sharing your
information. Anti-Money laundering and anti-terrorist regulations make
banks responsible for knowing who they are lending money too, keep
required records, and make necessary reports on their customers. There
are also regulations involving consumer protection so that these banks can
not just run off with your money.
The banking system is something that isn’t really taught in most
schools and can be very confusing to everyday americans. The United
States regulates our banks and has safety measures in place to keep them
from failing in order to protect our economy and personal money however
as we are a capitalist society we have to allow companies to take risks and
make money. On the surface level the easiest way to fix our banking issues
would be to have them all be federally controlled and owned. However this
goes against our principles as americans. If the banks were controlled
federally all money would now be completely in control of the government
and they are not always looking out for your best interests.