Bank Regulation in the United States

There have been major changes in the banking system structure and several new banking laws over time that have had major impact on banks in the USA. In response to the 1980s and early 1990s crisis, and the more recent mortgage market meltdown that began in the summer of 2007, the banking industry and regulations governing banks changed profoundly and rapidly with even more changes likely to take place. It is therefore important to delineate the nature of these changes, particularly in comparison to the pre-crisis character of the US banking system and regulatory environment. In particular, this article discusses the regulatory changes that have emerged in response to the decline in the role of banks in firms’ external financing, and the rise in noninterest-generating activities; the blurring of distinctions between banks and other depository institutions, and between banking companies and other financial intermediaries; the growing complexity of banking organizations, both in a corporate hierarchy sense, and with respect to the range of activities in which they can engage; the more intense globalization of banking; and the subprime mortgage market meltdown that triggered a credit crunch and liquidity freeze that led to the worst recession in the USA since the Great Depression.