The Birth and Evolution of the Financial Subsystem: A Historical Overview, 1865–1935
This chapter discusses a brief glimpse of the primary financial intermediaries—commercial banks, thrifts, credit unions—and their regulatory counterparts. Financial regulation has been a hot topic of debate since the mid-1980s. A series of problems plaguing the thrift industry, together with related difficulties in commercial banking, have forced the financial industry, financial regulators, and select legislators into the limelight. The dual-banking system offers most financial intermediaries a choice of state or national chartering and regulatory authorities. Historically, the periods of greatest debate concerning reform of the financial reg־ ulatory structure occur during the various instances of panic and failure that reg־ ularly plague banking in the United States. The New York Clearing House Committee served as a “central bank” for New York City financial institutions, informally setting interest rates, and policing the competition among banks in the city. Forces within and outside the financial community worked in combination to force the issue of a central bank back on the agenda.