Domestic Banking Regulation

Bank regulation in the United States was once considered the arcane domain of specialists and policy makers in Washington DC and state capitals. During the past three decades the dismantling of geographic and product restrictions and the growth of national regulatory power has led to a massive consolidation of financial institutions. The elimination of industry boundaries, emergence of a massive so-called "shadow economy," and the dynamics of technological innovation masked at times the relevance of banks as a discreet industry. Yet the financial crisis that began in 2007 and remains unresolved has highlighted the central role played by financial institutions in the domestic and global economy, the national and international impact of regulatory policy, and the profound—indeed central—importance of a healthy banking industry for any economy

This course explores the principles underlying bank regulation, the public policy considerations surrounding the regulation of banks and the relationship of this regulation to regulation of other financial and nonfinancial institutions, and the structural and legal options for safe, sound, effective and efficient bank regulation. The approach will be to re-examine bank regulation de novo in light of the huge changes that are being made and are likely still to be made to bank regulation in the wake of the financial crisis. Extensive reference will be made to product innovation, operations and process, and the dynamics of scale, in order to give students the context within which realistic policy has to be formulated. The course will examine key legislation, regulations and judicial decisions relating to the evolution of bank regulation in the United States.

A final exam will be required for course credit.
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