Category: 

What is an Agreement Corporation?

Article Details
  • Written By: Mary McMahon
  • Edited By: C. Wilborn
  • Last Modified Date: 31 August 2016
  • Copyright Protected:
    2003-2016
    Conjecture Corporation
  • Print this Article
Free Widgets for your Site/Blog
In late 19th-century London, mail was delivered to residential addresses up to twelve times each day.   more...

September 28 ,  1924 :  Two US military planes complete the first flights around the world.  more...

An agreement corporation is a financial institution in the United States that holds a charter allowing it to provide international banking services. These companies have local branches in the United States and overseas that provide means for banking internationally. Companies that do business with an agreement corporation are thus able to access the international financial industry, including loans and other services available in foreign countries. For companies that want to trade multinationally, this is very useful.

Two different acts of legislation passed in the United States Congress pertain to agreement corporations. The first is the Agreement Corporation Act, passed in 1916 to enable American financial institutions to do business internationally. In 1919, the Edge Act was passed to further regulate international banking by firms based in the United States. Banks must comply with these regulations in order to operate as agreement corporations.

The term "agreement corporation" is a reference to the fact that the chartered institution agrees to comply with the terms of the Agreement Corporation Act and the Edge Act. As the banking industry has evolved, the regulations have shifted to accommodate changing needs and new approaches to banking regulations. Although agreement corporations are chartered by the states where they are headquartered, they are regulated by the Federal Reserve Board and must comply with Fed regulations including disclosure and inspection mandates.

Ad

At an agreement corporation, people can make deposits and the bank can accept and transfer them as needed. Agreement corporations also make loans to their customers. The lending process involves an evaluation for creditworthiness to determine how much money should be offered to the borrower. Considerations taken into account for loans also include the purpose of the loans, any offers of security, and any other issues that might have a bearing on the ability to repay the loan. Like other financial institutions, agreement corporations do not want to be left holding the bill for a defaulted loan.

Agreement corporations may also be known as Edge Act corporations in a reference to the other key piece of legislature used to regulate them. Banks must keep up with changes in the regulation, whether those changes liberalize regulations or tighten up on aspects of the regulatory process. An agreement corporation usually keeps legal advisors on staff to help it comply with the law, file mandated documents on time, and handle other legal matters that may come up in the operations of the institution.

Ad

You might also Like

Recommended

Discuss this Article

Post your comments

exception 'Exception' with message 'error writing captcha: Duplicate entry '2147483647' for key 'PRIMARY'' in /ssd/www/wisegeek/public_html/_core/classes/public/Captcha.php:44
Stack trace:
#0 /ssd/www/wisegeek/public_html/_core/controls/public/ControlDiscussionPostBox.php(324): Captcha->createCaptcha()
#1 /ssd/www/wisegeek/public_html/framework/classes/Control.php(104): ControlDiscussionPostBox->preRender(false)
#2 /ssd/www/wisegeek/public_html/framework/classes/Control.php(149): Control->render()
#3 /ssd/www/wisegeek/public_html/tpl/default-nocustom-lu/pages/public/article/article.htm(526): Control->__toString()
#4 /ssd/www/wisegeek/public_html/framework/classes/Control.php(300): require('/ssd/www/wisege...')
#5 /ssd/www/wisegeek/public_html/framework/classes/Control.php(309): Control->requireTpl('pages/public/ar...', Object(PageArticleCom), true)
#6 /ssd/www/wisegeek/public_html/framework/classes/Control.php(131): Control->renderTpl('pages/public/ar...', Object(PageArticleCom))
#7 /ssd/www/wisegeek/public_html/framework/classes/FormDataControl.php(87): Control->renderTemplate()
#8 /ssd/www/wisegeek/public_html/framework/classes/Control.php(109): FormDataControl->renderTemplate()
#9 /ssd/www/wisegeek/public_html/framework/classes/ScriptPage.php(50): Control->render(false)
#10 /ssd/www/wisegeek/public_html/framework/classes/Control.php(149): ScriptPage->render()
#11 /ssd/www/wisegeek/public_html/framework/classes/Page.php(97): Control->__toString()
#12 /ssd/www/wisegeek/public_html/_core/classes/public/PublicFrontController.php(443): Page->processRequest()
#13 /ssd/www/wisegeek/public_html/_core/classes/public/PublicFrontController.php(7): PublicFrontController->renderPage()
#14 /ssd/www/wisegeek/public_html/index.php(11): PublicFrontController::run()
#15 {main}