TUI
FIN 503
Module 3 Case
Banking Deregulation
Don Jones
BANKING DEREGULATION
As a proponent of free market principles and Supply Side economic theory, I have never been a believer in government regulation. However, after researching the banking industry for this case assignment my thinking has evolved and I do in fact believe there is definite need for regulation in the banking industry. Before delving into the specifics of my stance I will give some background on the following: the purposes of banking regulation; current banking crises and the impact of increased regulation.
Bank regulations are a form of laws promulgated by governments that require banks to meet certain guidelines, disclosures, restrictions, policies, standards and policies. The structure of these regulations is done to create a certain transparency between banks, individuals and corporations whom conduct business. The rationale for imposing regulation and exercising supervision of banking institutions, all over the world, is based on the notion that the banks are "too big to fail". The origins of this mindset stem from the fact that banks hold tremendous influence and control over economies throughout the world, particularly in industrialized nations. Therefore the belief is that if not regulated, there exists a risk of banking institutions becoming unstable, which would cause widespread panic among depositors and in turn creating a crippling effect on an economy. Banks hold enormous influence over an economy because they are unique institutions. First and foremost they are a vital link for monetary transmission, meaning they accept monetary deposits without providing collateral. They also form a crucial connection between a nations money supply and credit thorough a combination of lending and deposit transactions. In my opinion banks form the cornerstone of the financial system, therefore it is imperative that financial regulation ensure the safety and soundness...