Piecemeal Geographical Deregulation: Caution vs. Economics

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Rarely a day passes without a new report of a state legislature debating a bill authorizing a regional compact or a reciprocal agreement with another state heralding the seemingly inexorable shift toward geographic deregulation.

Congress has shown little inclination to confront interstate banking so the states are developing unique solutions. It is no wonder that pundits decry the crazy patchwork quilt pattern of bank regulation.

It presently appears that the most likely form of geographical deregulation or limited de jure interstate banking is the regional compact with delayed implementation. Reciprocity agreements with a time delay allow "breathing room" for the banks within a state to map a strategy to …