Re: Re: [Pen-l] the era of free banking

["Jim Devine" <jdevine03@xxxxxxxxx>]

David B. Shemano wrote:
> ... The thesis of the thesis, written in 1987, was that Congress (specifically the banking comittees) hated dealing with banking regulatory policy because the very competitive nature of the industry (big banks vs. small banks vs. S&Ls vs. securities industry, etc.)  made policy-making  low benefit/high cost and was very happy to leave regulation to the regulatory agencies, while the committees could focus on housing policy, development banks and other high benefit/low cost activities.  Congressional action re regulation only happened in response to crises that forced action, which explained why the deregulation of the S&Ls (and effective elimination of distinction between banks and S&Ls) occurred in 1982 as opposed to the mid-70s when first proposed by a national commission in 1971 (the crises was high interest rates that effectively put the S&Ls out of business in 1981).
>
> Conclusion from the thesis:
>
> But I am convinced that eventually interstate banking, bank involvement in securities, and overall further deregulation is an inevitability, possibly by the end of the decade.  The technological revolution the agencies faced in the Sixties and Seventies and found impossible to keep up with, are finally reaching the consciousness of Congress.  The evolution of Sears into a financial shopping market will not be reversed, but could lead to a clamor of other financial service companies for equal rights so they can be competitive.  Issues like bank safety and insider trading will be favored as topics of discussion, but they will not interfere with the steady march towards financial deregulation.<

this seems valid, but I'd add that the "financial services industry"
lobbied hard for deregulation. Both GOP and DP pols received generous
donations from the S&L folks, for example.
-- 
Jim Devine /  "Nobody told me there'd be days like these / Strange
days indeed -- most peculiar, mama." -- JL.
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