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Palgrave Macmillan

The Changing Face of American Banking

Deregulation, Reregulation, and the Global Financial System

ISBN 9781137365811
Publication Date August 2014
Formats Hardcover Ebook (PDF) Ebook (EPUB) 
Publisher Palgrave Macmillan

With almost 6,300 commercial banks, significantly more than in any other country, the world of US banking is unique, fascinating, and always in flux. Two principal pieces of legislation have shaped the banking structure in this country: The McFadden Act of 1927, which prohibited banks from branching into other states, and The Glass-Steagall Act of 1933, which separated commercial and investment banking activities. The repeal of the Glass-Steagall Act in 1999 was one of the main contributing factors behind the global financial crisis of 2008. This measure resulted in the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which once again prohibited commercial banks from making certain types of speculative investments.

The Changing Face of American Banking analyzes the impact of both these acts - as well as that of their subsequent repeal - in depth, examining the real effects of government regulations on the US commercial banking sector. Ray Chaudhuri pinpoints the evolving nature of US commercial banks and banking regulations and explores their impact on the economy. Instead of just focusing on banks and regulations, this work considers the correlations and causality between banking performance and economic growth and productivity. It also brings the banking literature up to date with the 2008-2009 financial crisis and its aftermath, including the passage of the Dodd-Frank Act of 2010 and its effect on American banking.

Ranajoy Ray Chaudhuri received his PhD in Economics from The Ohio State University in 2012. His research focuses on the interlinkage between finance and growth, with a specific emphasis on the growth effects of commercial bank branching regulations in the US. He is also interested in how institutions evolve over time and impact on short-term growth and long-term development.

Table of Contents
1. A Brief Chronology of U.S. Banking Regulations
1.1. The European Origins of Banking
1.2. The Evolution of the American Banking System: A Timeline
2. The Free Banking Era
2.1. The Origins of Free Banking
2.2. The American Free Banking Experience
2.3. Central Banking Activities in the Free Banking Era
2.4. The End of Free Banking
2.5. The Contemporary International Financial System
3. The Big Markets: New York and California
3.1. The Growth of New York
3.2. The Early Days of Banking in New York
3.3. The California Gold Rush
3.4. The Early Days of Banking in California
4. The Little Markets: The Story of Unit Banks
4.1. The Growth of Unit Banks
4.2. The Effect of the Banking Act of 1935
4.3. The Economics of Unit Banking
4.3.1. Bank Size and Bank Profitability
4.3.2. Bank Size and Bank Cost
4.3.3. The Impact of Bank Size on Other Banking Indicators
5. The Early Days of the Federal Reserve
5.1. The Pioneers: Central Banking in Europe
5.2. Central Banking in the pre-Federal Reserve Era
5.3. The Panic of 1907 and the National Banking Commission
5.4. The Federal Reserve Act and the Federal Reserve System
5.5. Structure of the Federal Reserve System
5.5.1. The Federal Reserve Banks
5.5.2. The Board of Governors
5.5.3. The Federal Open Market Committee
5.6. The Evolution of the Federal Reserve System
5.6.1. The Early Years
5.6.2. The Discovery of Open Market Operations
5.6.3. The Great Depression
5.6.4. The Accord of 1951
5.6.5. Monetary Policy Targets
5.6.6. The Evolution of the Federal Reserve's Macro Models
6. The Great Depression & the Glass-Steagall Act
6.1. The International Economy following the First World War
6.2. The Causes of the Great Depression
6.3. The Response of the Federal Reserve
6.4. The Banking Acts of 1933 and 1935
6.5. Fiscal Policy Measures for ending the Depression
7. The Stable Years
7.1. The International Economy following the Second World War
7.2. Banking Policy during the Period
7.2.1. The 3-6-3 Rule
7.2.2. Bank Holding Company Act of 1956
7.2.3. Other Banking Acts of the Time
7.3. Fiscal Measures during the Period
7.3.1. Fair Deal
7.3.2. The Eisenhower Administration
7.3.3. New Frontier
7.3.4. Great Society
7.3.5. The U.S. as the Leading Global Creditor
7.4. The Demise of the Bretton Woods System
8. The Housing Market and the Savings & Loan Associations Crisis: The 1980s
8.1. The European Origins of Savings & Loan Associations
8.2. The History of Savings & Loan Associations in America
8.3. The Causes of the Crisis
8.4. A Timeline of the Savings & Loan Crisis
8.5. Subsequent Developments
9. Deregulation and the Great Recession: The 1990s and the 2000s
9.1. The Economic Policies of the Clinton Administration
9.1.1. A Federal Budget Surplus!
9.1.2. The National Debt
9.1.3. The Deficit Reduction Act
9.1.4. The Taxpayer Relief Act of 1997
9.1.5. The Balanced Budget Act of 1997
9.2. Legislation Regarding the Banking Industry
9.2.1. The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
9.2.2. The Gramm-Leach-Bliley Act of 1999
9.2.3. The Commodity Futures Modernization Act of 2000
9.3. Other Deregulatory Measures during the Clinton Years
9.4. The Economy during the George W. Bush Years
9.4.1. The Dot-Com Bubble
9.4.2. The September 11 Attacks
9.4.3. The Tax Cuts of 2001
9.4.4. The Tax Cuts of 2003
9.5. The Financial Sector under the Bush Presidency
9.5.1. The Legacy of the Commodity Futures Modernization Act
9.5.2. The Sarbanes-Oxley Act of 2002
9.5.3. The Fair and Accurate Credit Transactions Act of 2003
9.5.4. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
9.6. The Causes of the Financial Crisis of 2007-2008
9.6.1. The Housing Sector
9.6.2. The Availability of Cheap Credit
9.6.3. The Rise in Interest Rates
9.6.4. The Growth of Subprime Lending
9.6.5. Securitization
9.6.6. Faulty Credit Ratings
9.6.7. The Rise in Oil Prices
9.6.8. A Global Contagion
9.7. A Timeline of the Crisis
9.7.1. The Unfolding of the Crisis
9.7.2. The Emergency Economic Stabilization Act and TARP
9.7.3. The American Recovery & Reinvestment Act
9.7.4. The Response of the Federal Reserve
10. Reregulation: The Response to the Financial Crisis
10.1. The Backdrop to the Dodd-Frank Act
10.2. President Obama's Initial Proposals
10.3. Legislation in Other Countries
10.4. The Meat and Bones of the Wall Street Reform and Consumer Protection Act of 2009
10.4.1. Title I
10.4.2. Title II
10.4.3. Title III
10.4.4. Title IV
10.4.5. Title V
10.4.6. Title VI
10.4.7. Title VII
10.4.8. Title VIII
10.4.9. Title IX
10.4.10. Title X
10.4.11. Title XI
10.4.12. Title XII
10.4.13. Title XIII
10.4.14. Title XIV
10.4.15. Title XV
10.4.16. Title XVI
10.5. The Dodd-Frank Act and Basel III
11. Wall Street and Main Street: Banking Regulations and the Real Economy
11.1. Financial Intermediation and Growth: The Theoretical Foundations
11.2. Empirical Literature Documenting a Positive Finance-Growth Nexus
11.3. Empirical Literature Documenting Alternative Finance-Growth Relationships
11.4. Literature on Banking Deregulation and Growth
11.5. The Relationship between Finance and Growth in the United States
11.6. Literature on Regulatory Changes in Banking and Growth in the United States
11.7. Impact of Regulatory Changes on Different Industrial Sectors
12. U.S. Banks and the Global Financial System
12.1. The Causes of Internationalization of the American Financial System
12.2. The Positive Effects of Globalization
12.2.1. Beneficial Effects on the Macro Indicators
12.2.2. Beneficial Effects on the Financial Institutions
12.2.3. Evolution of Legal Systems
12.3. The Downsides of Globalization
12.3.1. Linguistic and Cultural Barriers
12.3.2. Impact on Lending to Small Businesses
12.3.3. Expanding Market Power and Systemic Risk
12.3.4. Financial Contagion
13. The Road Ahead
13.1. The Future of Commercial Banking
13.2. The Future of the Federal Reserve
13.3. The Future of the Dollar

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