Banker, Banker, Make Me a Loan
By
Whatever happened to the original rescue plan? Remember that one – the one where Treasury
was to make sure that
Hopefully, if there is one thing Congress learns from the financial disaster surrounding us, they realize the American banking system that has been created through the deregulation of the banks is the virtually, complete destruction of the local community banking concept. The great, big, national bank that now dominates every local community doesn’t really care about the local community in which it does business.
Yes, we need large banks.
However, we also need small ones.
Why in the world did we ever let banks from
Here again we are faced with the deadly two pronged results of a lack of follow up and over sight on the part of the Legislative Branch (are the rules and laws approved actually doing what was intended) and gross under funding and understaffing by the Executive Branch. What we often forget about the American system of government is that Legislative Branch is responsible for creating the laws but the Executive Branch approves them and provides a budget for them to be enforced.
Some of the arguments that were being put forth by the major financial market banks back in the 1960s and 70s had to do with not only the world financial environment but also the entry by non US based banks into American financial markets that were restricted from entry by American banks, which claimed to be losing market share to the Europeans and Japanese. Waving the flag is always a great way get Congress to do something. When nothing else works resort to patriotism.
English, French and Dutch banks had offices in
The argument that was made was based on making the system fair. The trouble was that the government’s solution had to be designed around the individual states rights legacy, as each state controlled the banking activity within its borders. There were a number of banks that had national charters but they were few and far between; the individual states controlled the banks.
The states were concerned about maintaining the integrity of their separate banking systems; they wanted to make sure the credit needs of their citizens were protected but just the opposite evolved. The most efficient way for a bank to enter a new market was to acquire an existing bank and with more than 14,000 banks in the country there were plenty of opportunities.
As the barriers began to break down so did regulation; not just the rules and administration but the structure as well. There were federal regulators and state regulators and regulators for commercial banks and for savings institutions and the banks were correct in arguing against all of this confusion and demanded less regulation.
As the dust began to settle after the Savings and Loan
collapse and the opening of the deregulation floodgates of the 1990s, the
visible face of banking had completely changed.
In many mid sized cities in
The idea that the money center banks headquartered in
So perhaps it’s a good thing that that the Treasury Department has decided to back away from their original plan – it wouldn’t have worked anyway.
(Note: Research notes, links to original documents and a listing of reference books are now available for review at www.tim-holland.com )
© 2008 Timothy Holland First
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