Analysis of the Deregulatory Process and its Impact on the Banking Industry
Hay, Michael A.
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Modem deregulation is a process that began in the 1950s with Citibank' s introduction of consumer time deposits. Since its inception, deregulation has dramatically changed the banking profession. This paper will exclusively focus on this revolutionary process by first examining its development through the present era. The process, by which deregulation has changed the nature of financial products and heightened competition within the banking industry, is the underlying focus of this paper. Related subjects that have arisen as a result of deregulation will also be examined, such as the Federal Deposit Insurance Corporation, Bank Insulation, the Glass-Steagall provision of the 1933 Banking Act, Regulation's purpose, and the International consequences of deregulation. The major conclusion of the paper is that the current pace of deregulation must be retarded until the financial industry's problems can be resolved. The following are three examples of such issues: the bank insurance fund's detrimental position, the uncertainty regarding bank insulation, and the possible precarious effects from the elimination of the Glass-Steagall provision. The U.S. must continue the deregulatory process at a prudent pace to maintain its global competitiveness, but not at the expense of further financial problems.