Postwar Banking Era and Regulatory Response: 1945–1999

The immediate postwar years were rather quiet and stable for the national economy generally and for commercial banking specifically. However, that all changed by the middle of the 1960s and calm was replaced with volatility and uncertainty. Consequently, it may be helpful to think of this era as one in which the first 20 or so years were stable and generally uneventful followed by a rather long period characterized by volatility in real and financial markets and an unprecedented series of banking legislation. Indeed, this era in commercial banking is unlike the three previous. In the earlier banking eras, a pattern developed in which either a series of bank crises was followed with regulation or a few significant crises resulted in a regulatory response. The period between the middle of the 1960s and the end of the twentieth century did not have a defining bank crisis or singular regulatory response. Rather, moving forward from the mid-1960s, this era is one characterized by several developments: significant change in the competitive environment in banking; considerable change in the balance sheet and management of commercial banks in response to the increased competition; a landscape dotted with both large and small bank failures; a substantial crises in the savings and loan industry; and the passage of eight important federal bank regulations.1