Commercial Bank Instability -- Theories of Bank Regulation -- Antebellum Banking: 1781-1863 -- National Banking Era: 1864-1912 -- Era of Instability and Change: 1913-1944 -- Postwar Banking Era and Regulatory Response: 1945-1999 -- Banking and Crisis in the Twenty-First Century: 2000-2010 -- Lessons From the History of U.S. Banking and Regulation
Summary
Financial crises take us by surprise and make us ask how this could have happened. We also immediately try to understand how crises can be kept from reoccurring. In the United States, the response to a bank crisis has always been more regulation. This book seeks to understand the history of bank crises and to reconcile how, over the course of history, we have more regulation and heightened instability. From the antebellum era through the most recent real estate driven bank crisis, this book carefully considers the relationship between regulation and bank stability. In the end, the regulation stifles competition and inadvertently encourages banks to take on additional risk. As regulators and policymakers contemplate their response to the 2007-2009 crisis, the certain tendency will be towards more regulation. Unfortunately, this response inevitably will lead to another crisis in the future
"The historical response to bank crises has always been more regulation. A pattern emerges that some may find surprising: regulation often contributes to bank instability. It suppresses competition and effective response to market changes and encourages bankers to take on additional risk. This book offers a valuable history lesson for policy makers"-- Provided by publisher
