Chapter 3. The American Banking System

R. PHILIP GILES, PhD

Adjunct Professor of Finance and Economics, Columbia University Graduate School of Business and President, CBT Worldwide, Inc.

Abstract: After a 50-year hiatus, the American banking system is currently evolving from one characterized by severe geographic and product limitations into one with nationwide branching with banks offering a virtually complete array of financial services. This transformation was ushered in by a 10-year period of extensive deregulation at the state and federal levels, caused by a variety of external and technological factors. But although the banking system has been transformed, the complex web of overlapping banking regulatory authorities has not. Over the past two decades there has been substantial consolidation in the number of banking charters—with the number of banks falling by over half. However, we expect the dual banking system to survive, with a large number of individual banks compared to any other country in the world. One unanswered question at this time is whether the historic depository-nonfinancial business separation will continue.

Keywords: American banking system, structural transformation, post-Depression banking system, global banking constants, depository institutions, private bank, private banking, depository-nonfinancial separation, industrial loan companies, regulatory authorities, payments system, dual banking, Office of the Comptroller of the Currency (OCC), Federal Reserve ...

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