Academic journal article ABA Banking Journal

Financial Modernization: 20 Years in the Making

Academic journal article ABA Banking Journal

Financial Modernization: 20 Years in the Making

Article excerpt

A Message To Bankers

"Only one thing is really clear about American regulation of banking," the Washington Post once wrote in an editorial, "the present rules urgently need fundamental reform.... Congress is going to have to act, and soon."

Congress did act, of course, but not soon. That Post editorial appeared more than 12 years ago, in early 1987. Ronald Reagan was President, Robert Clarke was Comptroller of the Currency, William Seidman was at the FDIC, and the New York Mets were baseball's World Champions.

It was a very long time ago. Just ask the Mets.

In fact, financial modernization was already an ancient topic when I arrived at the ABA in 1985. We had long since accepted that Carter Glass and Henry Steagall went too far in separating commercial banking, investment banking, and insurance. We knew that bankers urgently needed new competitive tools to serve their customers. We knew what had to be done. We believed we could do it. We had no idea it would take so long.

What made it happen this time around? One key factor is that all the major industry players--banks, insurance companies, and securities firms--greed to agree on the major components of financial modernization. Another key factor is that Republicans and Democrats, Congress and the White House, were able to put partisanship aside in the interest of getting this bill passed. The most important ingredient in moving this bill to passage, however, was the deliberate actions of many bankers asking their members of Congress to take action now. …

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