Reorganizing the U.S. Banking Regulatory Structure

New financial instruments, new breeds of financial institutions, and different market conditions have developed in the United States since the mid-1970s. The traditional product, geographic, and institutional boundaries of our financial industry have been questioned by advances in technology, inflation, high and varying interest rates, and an increasing demand for more and better services from financially sophisticated consumers. Several pieces of legislation have been enacted to respond to these many changes in the financial marketplace. Two pieces of legislation-the Financial Institutions Regulatory and Interest Rate Control Act and the International Banking Act, both enacted in 1978-placed domestic banks on more equal footing with foreign banks. The Depository Institutions Deregulation and Monetary Control Act of 1980 and the Garn-St Germain Act of 1982 established procedures to eliminate deposit interest rate ceilings and gave financial institutions broader product powers. Yet, even with this widesweeping deregulatory legislation, many issues in banking structure remain unresolved.