Lessons from the History of U.S. Banking and Regulation

Since inception, commercial banking in the United States has been regulated. It began at the state level, progressively moved to the national level and then to increasing amounts of regulation at both the state and national level. Along with a steady growth in regulation has been the steady growth in the federal safety net. Yet, as this book clearly illustrates, banking has also become increasingly unstable over time. Indeed, perhaps the most stable time in banking history was the minimally regulated antebellum era; there were far fewer failures and crises were not systemic but, rather, largely isolated. Certainly, the world we live in today is much different from the antebellum era but we still must reconcile how banking has become both more regulated and more unstable. This chapter attempts to offer an explanation through the lens of history.