Other regulators: the Treasury and IRS, state regulators and NASAA, the Federal Reserve, SIPC and the FDIC

Match the institution to its job

The Treasury manages federal finances and borrowing, including issuing Treasury securities. The Internal Revenue Service (IRS), a bureau of the Treasury, administers and enforces federal tax law. A question about federal income tax administration points to the IRS; a question about federal debt issuance points to the Treasury.

The Federal Reserve is the central bank. Its monetary policy responsibilities include promoting maximum employment, stable prices, and moderate long-term interest rates. Monetary policy concerns money, credit, and interest-rate conditions; fiscal policy concerns government spending and taxation. The Federal Open Market Committee (FOMC) directs open-market policy. The Fed influences market interest rates; it does not dictate every rate borrowers pay.

State oversight and NASAA

State securities regulators administer state securities laws, often called blue-sky laws, and address registration and securities fraud within their authority. Federal covered securities are exempt from state securities registration or qualification requirements. That exemption does not erase state antifraud authority or automatically exempt the people selling them from registration.

The North American Securities Administrators Association (NASAA) is an association of securities regulators. It coordinates policy, investor education, and model rules. NASAA is not itself a regulator: a model rule is not automatically binding law merely because NASAA develops it.

Two different protections

The Securities Investor Protection Corporation (SIPC) is a nonprofit membership corporation, not a federal agency. When a member broker-dealer fails and customer assets are missing, SIPC helps restore customer securities and cash through the liquidation process. SIPC advances are limited to $500,000 for each customer, including at most $250,000 for cash. The cash amount is part of the overall limit, not an extra allowance. Separate legal capacities can be treated as separate customers; opening multiple accounts in the same capacity does not multiply protection.

The Federal Deposit Insurance Corporation (FDIC) insures eligible bank deposits at insured institutions and can act as receiver for a failed insured bank. Checking accounts, savings accounts, and bank certificates of deposit are deposit products; stocks, bonds, and mutual funds are securities. Selling a mutual fund through a bank does not make it an insured deposit. Neither protection turns an investment's decline in market value into a reimbursable loss: SIPC does not cover market losses, and FDIC deposit insurance does not insure securities.

On an exam, identify the event before the institution: federal borrowing, tax administration, monetary policy, state securities enforcement, missing brokerage assets, or insured bank deposits.