Preview 229

Historical Development of the Banking System 229

Multiple Regulatory Agencies 231

Financial Innovation and the Evolution of the Banking Industry 232

Responses to Changes in Demand Conditions: Interest Rate Volatility 233

Responses to Changes in Supply Conditions: Information Technology 234

Box 1 E-Finance: Will "Clicks" Dominate "Bricks" in the Banking Industry? . . . .236

Avoidance of Existing Regulations 237

Financial Innovation and the Decline of Traditional Banking 239

Structure of the U.S. Commercial Banking Industry 243

Restrictions on Branching 244

Response to Branching Restrictions 245

Bank Consolidation and Nationwide Banking 245

Box 2 E-Finance: Information Technology and Bank Consolidation 247

The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 248

What Will the Structure of the U.S. Banking Industry Look Like in the Future? 248

Box 3 Global: Comparison of Banking Structure in the United States and Abroad 249

Are Bank Consolidation and Nationwide Banking Good Things? 249

Separation of the Banking and Other Financial Service Industries 250

Erosion of Glass-Steagall 250

The Gramm-Leach-Bliley Financial Services Modernization Act of 1999:

Repeal of Glass-Steagall 251

Implications for Financial Consolidation 251

Separation of Banking and Other Financial Services Industries Throughout the World . . .251

Thrift Industry: Regulation and Structure 252

Savings and Loan Associations 252

Mutual Savings Banks 253

Credit Unions 253

International Banking 253

Eurodollar Market 254

Box 4 Global: Ironic Birth of the Eurodollar Market 255

Structure of U.S. Banking Overseas 255

Foreign Banks in the United States 256

Summary, Key Terms, Questions and Problems, and Web Exercises 257

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