Jim Freis talks about financial institutions, and whether or not they can act as third party service providers to other banks and financial institutions, and therefore be subject to the same reporting and regulatory requirements.
It’s always been the case in the history of the United States banking market, as well as in many countries around the world, that individual institutions, especially smaller institutions, that provide what I’ll refer to largely retail, even if it’s with commercial customer services, will rely on wholesale financial institutions for themselves to receive financial services.
Meaning that larger and specialized financial institutions themselves may have a bank charter, and are very much providing services for smaller institutions. So they’re both a regulated financial entity, as well as a service provider.
That’s a sectoral aspect with respect to bankers’ banks, with respect to credit union service organizations, as well as what we used to refer to as money center banks that will provide even a domestic type of correspondent banking service, in addition to offering overseas correspondent banking services. Banks that provide services to other regulated financial institutions themselves may be subject to the full range of service provider requirements, as well as the regulatory expectations for risk management on them as banks.