NCJ Number
130006
Journal
State Legislatures Volume: 17 Issue: 4 Dated: (April 1991) Pages: 24-26,28-29
Date Published
1991
Length
5 pages
Annotation
The current crisis in the banking system has raised fundamental questions about the structure of the banking system and will require States to show that they can regulate banks for safety and soundness and that the dual system of banking presents advantages in the economic development of communities, States, and the country.
Abstract
The States can expect the Federal government to blame the crisis on State regulation and to attempt a massive preemption of State regulatory authority. Consolidating the financial system and centralizing the regulatory structure has been a longstanding goal of Federal officials and Wall Street financiers. However, changes in Federal laws are partly responsible for the crisis. In addition, national bank failures have been more costly than those of State banks. Furthermore, many State-authorized powers present no substantial risk to the solvency of institutions. However, Federal proposals would reduce State authority in many areas. Therefore, State regulation must justify itself, and States must prove the reliability of their regulatory systems and the benefits of the Federal-State banking system. Nevertheless, the crisis in banks and savings and loan institutions will slow economic development and produce massive shifts in wealth.