WSJ’s Jason Zweig is one of my favorite writers. Here is a short excerpt from his latest piece:
The U.S. has followed a similar course, with banking crises in — among other years — 1819, 1826, 1837, 1839, 1857, 1873, 1884, 1890, 1893, 1907, the early 1930s, the late 1980s and, of course, 2008-2009.
It might sound odd for banks to be deregulated now, when they are reporting record profitsand the highest rates of return since 2007, just before the last crisis.
In fact, that’s typical. “Regulation gets tighter after busts because people say, ‘We don’t want to have another financial crisis,’ and then it loosens during booms as the bankers complain that the rules are too stringent or just find ways around them,” says Richard Sylla, a financial historian at New York University’s Stern School of Business. “This has been going on in the U.S. since the very beginning.
Some countries such as Canada haven’t had a banking or financial crisis in recent memory. However not so with the US.
Question: Why is the US prone to banking crises when the industry is heavily regulated by multiple Federal regulators such as the FDIC, SEC, the Federal Reserve, The Office of the Comptroller of the Currency (OCC), etc. and by state regulators at the individual state level?