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Excerpt from Oral History Interview with John Medlin, May 24, 1999. Interview I-0076. Southern Oral History Program Collection (#4007) See Entire Interview >>

Legislation always follows business needs too late

Legislation followed the growth of banking as Congress realized that to keep banks competitive, they had to relax interstate commerce laws. Medlin uses this example to show that politicians tended to react slowly and reluctantly to changes in the market.

Citing this Excerpt

Oral History Interview with John Medlin, May 24, 1999. Interview I-0076. Southern Oral History Program Collection (#4007) in the Southern Oral History Program Collection, Southern Historical Collection, Wilson Library, University of North Carolina at Chapel Hill.

Full Text of the Excerpt

Tell me about in your early years as President and then CEO your assessment of the regulatory environment for the banking industry and the whatever efforts and means you might have used in those years both Raleigh and other places, Washington, to have an influence there.
Well we were very much restrained geographically. You couldn't go outside of your home state except in certain exceptional things. You could go overseas with an office, but you couldn't go to Atlanta. You were restrained in the services we could offer. We were restrained in the interest rates we could pay on deposits for example. It took a lot of work in Washington on all those fronts to eventually get legislative change. But the truth is the market change took place before the legislative change. The Southeast Compact, the efforts to try to make it possible for banks among certain states to merge. There was a similar effort in New England, which really was earlier but not nearly as effective as the one in the South in bringing about national change. It was not until the early '90s, the Reigle-Neal Amendment that sanctioned and legitimized interstate banking on a national basis that this became a matter of acknowledgement by the United State's Congress. Whereas it had been done by some southern legislators and New England legislators. I think banks across the country and politicians across the country realized their banks were not going to be in the game if they didn't have broader geographic regulation. The product change, the product and services change was driven a lot by technology. Money market funds could do business all over the country by telephone, by fax, by computer, and yet banks couldn't. The market had a lot to do with the creativity of bankers and the market participants and the demands of customers really drove the change. The politicians tended to be dragged kicking and screaming into acknowledging it ultimately in many cases.