The chapter starts by describing what the banking industry does and how it is regulated and managed. The susceptibility of banks to collapse or failure is the result of the ‘maturity mismatch’ between their borrowing and lending. The fallout from failure can have very wide systematic consequences, and efficient regulation is vital. This chapter sets out the principal features of the UK and US bank regulation. First, the UK proposals for reform and key features of the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) supervisory regime are outlined. Secondly, the US federal bank regulatory system and the impact of the Dodd-Frank Wall Street Reform and Consumer Act 2010, as well as the impact of the Act on areas of the regulatory and supervisory regime are described. The chapter examines how significant reform has improved the safety and soundness of banking and brought supervisory measures to the fore.
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