Bank Regulation in the United States: Understanding the Lessons of the 1980s and 1990s

Abstract

Despite two decades of extensive deregulation, banks in the United States remain among the most heavily regulated entities in the U.S. economy. Partly, banks remain a prominent target for American populism and its political manifestations; but also important is the general recognition that one specific category of bank regulation safety-and-soundness (prudential) regulation is a crucial element in preserving the stability of the banking system and contributing to the health of the U.S. economy. This paper expands on that theme and discusses the important lessons and insights that can be gained from the experiences of the banking sector and of safety-and-soundness regulation during the past two decades.