Market Rules

In Market Rules Mark H. Rose provides an intricate political history of the regulation of commercial banking in the United States from 1961 through the early months of 2017. He makes a number of interrelated cogent points. The central institutional innovation in commercial banking since the 1960s has been the development of “supermarket” banking (p. 3). The adoption of supportive banking regulations was crucial to the emergence and expansion of these nationwide banks. A handful of powerful networks and individuals, including U.S. presidents (all of them), federal regulators, and banking executives, played central roles in crafting these regulations. Free-market ideology had little to do with the motivations of these regulatory reformers, but their desires to promote commercial banking as an engine of economic growth were relentless and powerful. However, none of these reformers—even the bankers—sought to remove commercial banking from the ambit of federal regulation. The process of reform always faced significant resistance, especially from other banking sectors and financial industries. Success in negotiating the “grinding” politics thus required accepting highly contingent outcomes, relentless compromises, and a fragmented regulatory system (p. 10). Various rule revisions and the passage of the Gramm-Leach-Bliley Act (1999) repealed most of the central features of the 1933 Banking Act (Glass-Steagall) and restored “the commercial bank and commercial bankers to a center place in American financial affairs” (p. 129

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