Banking Regulation: Its History and Future

By Jerry W. Markham +
North Carolina Banking Institute | April 2000

+ Professor of Law, University of North Carolina at Chapel Hill

LENGTH: 25926 words

SUMMARY: … The current regulatory structure for banking services in the United States is not the result of any grand design or reasoned blueprint. … Another regulatory issue affecting banking was restrictions on branch banking. … Charles G. Dawes, Comptroller of the Currency, was among those who had come to oppose branch banking. … Between 1900 and 1902, several branch banking bills were introduced in Congress. … Opposition to branch banking was at first scattered but was growing after the twentieth century began. The American Bankers Association was a firm opponent of branch banking. … Even then, the trend was to prohibit or tightly restrict branch banking. … He declared a national bank holiday on March 6, 1933, and new legislation was enacted to strengthen the banking system. … Credit “crunches” were occurring in which loan demand was out stripping the amount of funds banks had available to lend. … Another aspect of this regulation would involve protection of customer funds that are on deposit with a retail financial services firm. … The growth of financial service offerings on the Internet will only accentuate the diffusion of those services. …


n233. See Penny Lunt, How Are Mutual Funds Changing Banks?, A.B.A. Banking J., June 1, 1993, available in 1993 WL 3004317. In 1993, Concord Holding Corp, which had been created in 1987, was administering and distributing mutual funds for banks. At that time, it was handling over $ 36 billion in assets. There were some 16 similar firms that were operating mutual funds for banks in order to avoid Glass-Steagall prohibitions on banks underwriting activities. See Alyssa A. Lappen, Fund Follies, Institutional Investor, Oct. 1, 1993, available in 1993 WL 12229261. Mellon Bank acquired Dreyfus and became the largest bank manager of mutual funds. It was also the second largest asset manager in the United States. See Spiegel, Gart & Gart, supra note 177, at 300. For descriptions of other bank mutual fund arrangements, see Marcia Parker, Crains New York Business, 1993 WL 2989529 (Apr. 19, 1993); Stan Hinden, Banks Picking Mutual Funds Face Questions on Disclosure of Risks, Washington Post, Mar. 24, 1993, at F3.

First Union bought Lieber & Co. in 1993. It was the manager of $ 2.2 billion dollars of Evergreen Mutual Funds. See Jane Bennett, Banks Using Mutual Funds to Keep Customers, The Jacksonville Business Journal, Dec. 31, 1993, available in 1993 WL 3026956. First Union announced in 1996 that it was seeking to have $ 100 billion in mutual fund asset sales by the year 2000. See Introduction, 1 N.C. Banking Inst. xiii, xix (1997). First Union had earlier announced that it was training 2,600 employees to sell mutual funds including 12 of its own funds by the end of 1994. In the following year, NationsBank added 11 mutual funds to its 28 mutual funds that were already under its management. See Rick Brooks, Banks Rush to Offer Blitz of Mutual Funds, Charlotte Business Journal, July 12, 1993, available in 1993 WL 2988430. Citibank was selling a family of mutual funds, after regulatory changes allowed the banks to use their names in selling such securities. See Julie Creswell, Citibank Fund Group to Get a Change of Name, But Will It Help Returns?, Wall St. J., Feb. 17, 1998, at 8B.

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Alyssa A. Lappen is a U.S.-based investigative journalist. She is the former Managing Editor at the Leeb Group (2012-2017); a former Senior Fellow of the American Center for Democracy (2005-2008); and a former Senior Editor of Institutional Investor (1993-1999), Working Woman (1991-1993) and Corporate Finance (1991). She served six of her 12 years at Forbes (1978-1990) as an Associate Editor. Ms. Lappen was also a staff reporter at The New Haven Register (1975-1977). During a decade as a freelance, her work appeared in Big Peace, Pajamas Media, Front Page Magazine, American Thinker, Right Side News, Family Security Matters, the Washington Times and many other Internet and print journals. Ms. Lappen also contributed to the Terror Finance Blog, among others. She supports the right of journalists worldwide to write without fear or restriction on politics, governments, international affairs, terrorism, terror financing and religious support for terrorism, among other subjects. Ms. Lappen is also an accomplished poet. Her first full-length collection, The Minstrel's Song, was published by Cross-Cultural Communications in April 2015. Her poems have been published in the 2nd 2007 edition of Blood to Remember: American Poets on the Holocaust and both 2007 issues of Wales' award-winning Seventh Quarry: Swansea Poetry Magazine. Dozens of her poems have appeared in print and online literary journals and books. She won the 2000 annual Ruah: A Journal of Spiritual Poetry chapbook award and has received a Harvard Summer Poetry Prize and several honorable mentions.

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