And let’s guess which Administration allowed this to happen:
- Pass a law that allows out-of-state bank holding companies to acquire banks in any state
- Pass a law allowing banks to branch across state lines, and legally allow them to consolidate holding companies into one (in order to save on legal and regulatory costs)
- Allows individual states to opt out of such a policy (of course, this was not followed through in the courts, Texas lost a case when it tried to keep Bank of America from consolidating its operations there)
I happen to think of these as positive changes. But if you wish to point the finger at wild free market deregulation, you cannot conveniently ignore things like this. Such a law has allowed US banking institutions to grow dramatically in size compared to the period before this. And you should know that there are advantages to large banks – empirically they are less likely to fail, though they do not seem to be more profitable than their smaller competitors.
Oh, here is the law.
