Commercial banks are stock corporations that make loans to businesses and offer checking and other deposit accounts. Basically, banks receive deposits, and hold them in a variety of different accounts, extend credit through loans and other instruments and facilitate the movement of funds. While commercial banks generally specialize in short-term business credit, they also make consumer loans and mortgages, and have a broad range of financial powers. Their corporate charters and the powers granted to them under state and federal law determine the range of their activities.
States and the federal government each issue bank charters. State-chartered banks operate under state supervision, and if they fail, are closed under the provisions of state law. National banks are chartered and regulated by the Office of the Comptroller of the Currency, a division of the U.S. Treasury Department. Banks can choose between a state and a federal charter when starting their business, and can also convert from one charter to another. Commercial banks receive deposit insurance from the Federal Deposit Insurance Corporation’s Bank Insurance Fund (BIF). All national banks, and some state-chartered banks, are members of the Federal Reserve System. Commercial banks maintain a preeminent role in the U.S. financial system. Today, there are 7,524 state-chartered and 3,191 federally-chartered commercial banks. Commercial banks hold approximately $3.9 trillion in assets, and approximately $2.8 trillion in deposits.