Structure And Structure Of The Federal Reserve System

Individuals utilize a bank, or have at some point in their life. They may get their paychecks directly deposited, or go into the bank to deposit it themselves. Some may have mortgages, loans, and credit cards through their financial institutions. Most people use their debit cards daily for purchases, whether it be in person or online. Retail banking plays a large role in many people's lives, but behind the scenes, there are federal regulations and rules that need to be followed, as well as associated risks ("What Is Retail Banking").

What is Retail Banking? Retail banking, also known as consumer banking, refers to the services that banks provide to individual customers. In the banking world, people also refer to banks as "financial institutions".

It performs five functions to promote the effective operation of the U.S. economy, and the public interest. The Federal Reserve: “conducts the nation’s monetary policy, promotes the stability of the financial system, promotes the safety and soundness of individual financial institutions, fosters payment and settlement system safety and efficiency, and promotes the consumer protection and community development” (“Structure of the Federal Reserve System”). There are twelve Federal Reserve Banks throughout the country, ranging from Boston, all the way across the country to San Francisco. While deposit institutions offer checking accounts to the public, they may have and maintain accounts of their own at the Federal Reserve Banks. Deposit institutions are required to meet reserve requirements; this means that they need to keep a certain amount of cash on hand, or in an account at a Reserve Bank, based on the total balances in the checking accounts that they hold ("Structure of the Federal Reserve

Most of the compliance issues when opening new accounts is during the disclosure process; it is important that employees go over the papers that are provided to the customer at the time of account opening, because the chances of the customer intently reading them on their own is low, and they might miss out on something important. If the disclosures and paperwork do not match the calculations in the computer system, that could end up resulting in an issue down the line. It is crucial to go over everything with the customer to prevent these specific types of issues (Deutsch, 2011). When a new account is created for a customer, they are generally issued a debit/ATM card. If the customer is not made aware of the regulations of the debit/ATM card, it could cause a plethora of problems when they go to use it. It is also important that Reg CC is explained to customers; this is in regard to funds availability. Checks are held for a number of days when new accounts are opened. After the probation period, checks that are of larger amounts are only affected by Reg CC, unless the customer has the funds to cover the check if it bounces (Deutsch,