What Is Banking Deregulation?

Updated July 19, 2017

Banking deregulation is the removal of regulations governing the banking system. Banking deregulation reversed laws that were set up in the 1930s, taking away much of the federal control that was put into place as part of the New Deal.

Bank Regulation

In 1933, the Glass-Steagall Act was passed, establishing the Federal Deposit Insurance Corporation (FDIC) and creating banking reforms and regulations which governed financial institutions in the United States, covering issues from interest rates to speculation.

First Act of Deregulation

In 1980, the Depository Institutions Deregulation and Monetary Control Act was passed, eliminating the regulation of interest rates in savings accounts, among other things.

Eliminating Separation

In 1999 the Financial Services Modernization Act was passed eliminating regulations that created a separation among different branches of finance, like banks, mortgage companies, insurance companies and commercial banking institutions.

Results of Deregulation

Deregulation led to finance companies taking over other companies. Big banks bought up one, two, three, and more smaller banks. Financial institutions also became mega institutions which covered private banking, investing, mortgages and insurance.


Banking deregulation is a complex issue that many blame for today's suffering economy, demonstrating the fine line between government involvement and government interference.

Banking Deregulation

Banking deregulation is the elimination of regulations in the finance industry, opening the doors to larger financial institutions capable of handling more than just one facet of the finance industry.

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About the Author

Jennie Fancher received a Bachelor of Science in English literature from Northeastern University in Boston, Massachusetts in 1992, before attending a publishing program at Rice University in Houston Texas. Currently a writer living in Avon, Colorado, her writing has covered everything from arts and entertainment in the Greater Boston area to real estate in Austin, Texas.