Overview
The Texas Department of Banking is a state regulatory agency that charters state banks, examines and supervises banks, and oversees certain other financial services.
Established in 1905, the department’s mission today is “to ensure Texas has a safe, sound and competitive financial services system.” It shares this responsibility with several federal regulatory bodies, including the Federal Deposit Insurance Corporation, Federal Reserve Board, and the Office of the Comptroller of the Currency.
Programs and Activities
The department’s bank inspectors examine Texas banks, focusing on banks’ overall financial health, management practices, information technology risks, and compliance with state and federal laws.
The department also licenses and regulates money services business that conduct currency exchange or money transmission activities. The department aims to protect consumers who use money services businesses, and to ensure that these companies properly monitor transactions to deter money laundering, terrorist funding, and financial crimes.
The Texas Department of Banking also supervises perpetual care cemeteries, prepaid funeral contracts, and cemetery brokers.
Structure and Oversight
The Texas Department of Banking reports to an 11-member board called the Finance Commission of Texas.1 This body is appointed by the governor and includes representatives of state banks, savings and loan associations, consumer credit institutions, and residential mortgage loan originators. The commission oversees three state agencies.2
The department itself is led by a Banking Commissioner, who is also Executive Director of the Finance Commission. He is assisted by a chief operating officer and deputy commissioner, who oversees the various programs of the department. The largest program, Bank and Trust Supervision, has four regional offices in San Antonio, Lubbock, Dallas, and Houston.3
Regulatory History
Banking in Texas began in the 1830s during the Republic of Texas era, but early efforts were plagued by instability, with many banks collapsing due to poor oversight and economic volatility. When Texas joined the United States in 1845, lawmakers began developing a more structured legal framework for banking, although public mistrust of financial institutions remained strong. The Texas Constitution of 1876 even prohibited the chartering of banks altogether, reflecting widespread skepticism about their role in the economy.
This changed in 1904, when voters approved a constitutional amendment allowing the establishment of state banks under strict regulation. In response, the Texas Legislature created the Department of Banking in 1905 to charter, regulate, and supervise these institutions. The Department’s mission was to ensure financial stability, protect depositors, and prevent the kinds of failures that had plagued the state in earlier decades. Its first bank examiner was appointed shortly thereafter, laying the groundwork for a formal system of oversight.
In 1911, the legislature passed additional laws to strengthen regulatory authority and required periodic reports from banks. During the Great Depression, the Department faced an overwhelming number of bank closures and adjusted its examination practices accordingly. The 1940s and 1950s saw modernization efforts, including stricter rules for reserves and capital requirements. In 1961, the Department’s oversight expanded to include trust companies.
Major restructuring occurred again in the 1980s during the savings and loan crisis, prompting new legislation and enforcement authority. In 1997, the Texas Finance Commission was reorganized, further formalizing the Department’s place within a consolidated regulatory structure.4
Sources and Citations
- Texas Finance Code § 11.002 ↩︎
- Texas Finance Code § 11.101—11.102 ↩︎
- “Organization Chart,” TDB website ↩︎
- “History of the Banking Industry in Texas and the Department,” TDB website ↩︎
