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CTP Exam Review Chapter 2 Financial Regulatory Environment Texpo 2011 Fort Worth, Texas Chris Zieber, CTP, SVP – Bank o

CTP Exam Review Chapter 2 Financial Regulatory Environment Texpo 2011 Fort Worth, Texas Chris Zieber, CTP, SVP – Bank of Texas. 1. CTP Tract. Local TMA organizations AFP – Essentials of Treasury Management Certified Treasury Professional (CTP)

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CTP Exam Review Chapter 2 Financial Regulatory Environment Texpo 2011 Fort Worth, Texas Chris Zieber, CTP, SVP – Bank o

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  1. CTP Exam ReviewChapter 2Financial Regulatory Environment Texpo 2011Fort Worth, TexasChris Zieber, CTP, SVP – Bank of Texas 1

  2. CTP Tract • Local TMA organizations • AFP – Essentials of Treasury Management • Certified Treasury Professional (CTP) • CTP and CPE credit sheets – registration desk • READ THE BOOK!!!

  3. Some CTP Test Preparation Resources Study Groups Practice CTP Exams AFP CTP Exam Preparation Guide: http://www.afponline.org/pub/pdf/CTP-10_Exam_Prep_Guide2.pdf AFP’s CTP Review and Essentials of Treasury Management Courses Web Sites (i.e. AFPOnline.org) CTP Exam Q&A (CTP Hotline) at AFPOnline 3

  4. Chapter 2 Financial Regulatory Environment 4

  5. Purpose • Is to provide an overview of the financial environment, regulatory issues and key participants in the financial world. • As key treasury professionals, it is imperative you understand the economic environment, the financial structures, as well as laws and regulations under which the financial world operates.

  6. General Regulatory Environment • Role: • FI’s primary role is to provide a mechanism for savers of capital to transfer this capital to those who might best us it. • Examples: • Could be consumer savings helping other consumers to purchase a house or a car. • Could be pension savings of workers being used to provide equity capital for a company expansion. 6 6

  7. Types of Financial Institutions Commercial Banks Investment Banks Credit Unions Mutual Fund Companies Thrift Institutions Other

  8. Financial Institution Regulations • Monitoring and managing the overall safety and soundness of the banking system. • Setting and implementing monetary policy • Determining guidelines for the chartering of banks and other depository FI’s. • Allocating credit toward certain sectors of the economy and protecting consumers. • Protecting investors purchasing securities through FI’s.

  9. Question??? What is the most common type of FI?

  10. Answer Commercial Banks

  11. U.S. Regulatory Environment US Department of Treasury Regulatory Agencies Financial Stability Oversight Council (FSOC) *Newly created under Dodd-Frank Act 2010 Federal Reserve System

  12. U.S. Department of Treasury Collect Taxes Managing Federal Finances Overseeing production of coin and currency Manage gov’t accounts and the public debt Enforcing tax laws Investigating and prospecting tax evaders, counterfeiters and forgers 12

  13. U.S. Regulatory Agencies Federal Reserve System (1913) Office of the Comptroller of the Currency (1863) Federal Deposit Insurance Corporation (1933) Office of Thrift Supervision (1989) 13

  14. Financial Stability Oversight Council (FSOC) Monitor Financial Institutions Size Regulate nonbank financial companies Provide technical Manage gov’t accounts and the public debt Enforcing tax laws Investigating and prospecting tax evaders, counterfeiters and forgers 14

  15. Question?? ? What 3 primary components is the Fed organized into?

  16. Answer • The Board of Governors • Federal Open Market Committee • 12 Banks and 25 Branches of the Fed

  17. Federal Legislation Governing: Regulation Types of Services Offered Geographic Boundaries Payment Systems Operations Consumer Protection Federal Reserve Regulations

  18. Selected Bank Legislation • Bank Secrecy Act (1970) and Money Laundering Control Act (1986) • USA Patriot Act (2001) • Sarbanes-Oxley Act (SOX) (2002) • Check Clearing for the 21st Century Act (Check 21) (2003) • Dodd- Frank Wall Street Reform and Consumer Protection Act (2010)

  19. Bank Legislation Defined Bank Secrecy Act (1970) and Money Laundering Control Act (1986) Purpose: To control the flow of illegal money, tax evasion or terrorist activity.

  20. Bank Legislation Defined USA Patriot Act (2001) Purpose: In response to September 11, 2001 attacks on the US, Congress passed wide ranging legislation to improve overall security and grant the FBI & DOJ increased latitude in intelligence gathering.

  21. Bank Legislation Defined Sarbanes-Oxley Act (SOX) (2002) Purpose: To improve disclosure and financial reporting in the wake of a series of dramatic financial scandals between the years 2000 and 2002.

  22. Bank Legislation Defined Check Clearing for the 21st Century Act (Check 21) (2003) Purpose: Enhanced payment systems efficiencies in the US by reducing the legal impediments to check truncation.

  23. Bank Legislation Defined Dodd- Frank Wall Street Reform and Consumer Protection Act (2010) Purpose: Was enacted in response to the near failure of the US banking system as a result of the Great Recession.

  24. Federal Reserve Regulations(Implementation by the Fed) • Regulation D – reserve requirements • Regulation E – EFTs and consumer protection when using ATMs and cards • Regulation J – Check collection and settlement • Regulation Q – Prohibits Interest on demand accounts of C & S Corps. • Regulation Z – Promoting informed us of Credit Cards • Regulation BB – implements the CRA provisions • Regulation CC – implements rules related to returned items

  25. Uniform Commercial Code Article 3 – Negotiable Instruments Article 4 – Bank Deposits and Collections Article 4A – Funds Transfers Article 5 - Letters of Credit Article 9 – Secured Transactions

  26. Question?? ? List the key features of the Dodd-Frank ACT?

  27. Answer • End too big to fail bailouts. • Provide advanced warning systems for risk • Increase transparency & accountability for exotic instruments. • Provide shareholders with the ability to provide input on pay and corp affairs. • Provides new rules for transparency & accountability of the credit rating agencies to protect investors and business. • Enforces regulations on the books.

  28. Question?? ? What is the purpose of the Check 21 Act?

  29. Answer • Facilitates check truncation, in which paper is converted into a substitute check that can be process electronically. • Foster innovation in the check-payment system without mandating the receipt of checks in electronic format. • Improve the payment system overall • Create a negotiable instrument called a substitute check or image replacement document.

  30. END & GENERAL QUESTIONS

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