Handbook for Directors of Financial Institutions

Handbook for Directors of Financial Institutions

Elgar original reference

Edited by Benton E. Gup

Offers advice from existing directors, scholars and regulators about what good directors need to know. The Handbook for Directors of Financial Institutions offers the practitioner and the scholar a comprehensive guide to what it takes to survive and thrive as a director of a financial institution. The authors comprise current directors of banks, credit unions, insurance companies and other organizations, bank regulators, lawyers and academics. They provide unique insights and advice about corporate social responsibility, legal risks, starting a new bank, D & O insurance, sub prime lending, Islamic banking, and other timely issues.

Chapter 1: Introduction to Financial Institutions

Benton E. Gup

Subjects: business and management, corporate governance, economics and finance, corporate governance, financial economics and regulation, law - academic, corporate law and governance, finance and banking law


1 Introduction to financial institutions Benton E. Gup Financial institutions defined In general terms, financial institutions are organizations whose principal function is managing the financial assets of business concerns and individuals. They bring savers and borrowers together by selling securities and services to savers, and then lending (or investing) those funds to borrowers. It is obvious that banks are financial institutions. But it is not obvious that casinos or card clubs are considered financial institutions under the Bank Secrecy Act and anti-money laundering (BSA/AML) laws in the United States.1 This book is not about money laundering, but the BSA/AML laws provide another definition of financial institutions. The term “banks” is used in the broad sense of the word. It includes commercial banks, all of the subsidiaries of Bank Holding Companies, Edge and Agreement corporations, US branches and agencies of foreign banks, savings and loan associations, and credit unions. Other types of financial institutions include, but are not limited to: ● ● ● ● ● ● ● ● All federally regulated securities brokers, dealers, and investment companies. Insurance companies offering selected products. Money service businesses (MSBs, currency dealers or exchangers; check cashers, issuers of travelers’ checks, money orders, or stored value; sellers or redeemers of travelers’ checks, money orders, or stored value; and funds transmitters), the United States Postal Service is considered an MSB because it issues money orders. Persons subject to supervision by state or federal bank supervisory authority. Casinos. Card clubs. Futures commission merchants, including brokers, commodity pool operators, and commodity trading advisers. Individuals...