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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.

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