DEREGULATION


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In 1980 Ronald Reagan was elected President of the United States and once in office Reagan made wasted little time in deregulation many industries, not just the banking industry.

By 1983 the wave of deregulation was sweeping through. By this time the Garn-St Germaine act has been passed. The Garn-St Germaine act was an act of congress that deregulated the savings and loan industry as well as allowing banks to now provide adjustable rate mortgage loans. Money was flowing, business was booming and the financial industry was growing bigger and doing more business. Deregulation was transforming the face of the American financial system. The beast was out of its cage and market forces were allowed to be unchained, bursting with life and vitality. The financial services industry was being changed by the ability of market forces to assert the will of the market and regulators were not allowed to stop it.

After the Great Depression, the Glass-Steagall act was enacted. This act restricted what commercial and investment banks could do. This act was enacted in response to the lack of regulation and oversight the markets previously operated with before the stock market crash, which led to the economic collapse. This act was vital to ensuring that there were no more catastrophic stock market crashes after the great depression. Under President Clinton a law repealing the Glass-Steagall act was signed and a new law replaced it. The Graham-Leach-Bliley act of 1999 (which basically repealed the regulations that were in place for banks and financial industries under the Glass Stegall act) was enacted and the reigns that were regulating the financial services industry were effectively removed.