Banking Department

The banking department is a state-specific regulatory body that oversees the operations of financial institutions within its jurisdiction. The primary responsibility of the banking department is to ensure that the financial system is accessible, stable and safe for all consumers. Types of financial institutions that fall under the supervision of the banking department include commercial banks, credit unions, money transmitters and nonbank mortgage lenders.

Not all banks operating in a state fall within that state's jurisdiction. State-chartered banks and some non-bank affiliates of federally-chartered banks may fall within the jurisdiction of that state’s banking regulatory authority, while some federally-chartered banks may fall within the jurisdiction of the Federal Reserve System or the Federal Deposit Insurance Corporation (FDIC).

Many banks may fall within the jurisdictions of both state and federal banking regulatory authorities. A state-chartered bank that is a member of the Federal Reserve system will fall under the oversight of both that state’s banking department and the Federal Reserve, while state-chartered banks that are not a part of the Federal Reserve System will fall under the oversight of both that state’s banking department and the FDIC. In this manner, most banks are regulated by both state and federal regulatory agencies. Depending on a bank’s organizational structure and the type of charter it has, it can be subject to a number of federal and state regulations, many of them somewhat redundant. The combination of federal and state oversight of banks is known as the dual banking system.

State banking departments evolved out of a need for bank chartering agencies in the early days of the United States, at a time when there was no strong federal banking system or national bank. State banking departments were the first entities authorized to charter banks, and they continue to charter banks today. The dual banking system as it is known today formed in the late 19th century, after the passage of the National Bank Act of 1863, which formed the Office of the Comptroller of the Currency (OCC) and authorized the OCC to charter national banks.

The state banking department is where many consumers go to file a complaint against a financial institution that is within the banking department's jurisdiction. The Consumer Financial Protection Bureau (CFPB) maintains a database of state banking department contact information. The Office of the Comptroller of the Currency also helps to direct consumer complaints to the appropriate banking regulatory agency, whether that be a state banking department or a federal agency.