Alan Greenspan: Banking (Central Bank Articles and Speeches)

It is a pleasure to join you once again at the annual convention of the American Bankers Association. By any measure, banking in the United States today is strong, vibrant, and profitable. However, a number of times in the past half-century, many informed observers questioned the longterm viability of commercial banking. U.S. commercial banks, which began the post-World War II period as the dominant financial institution, soon faced intense competition from thrifts, from new forms of mutual funds, from customer direct financing in the securities markets, from foreign banks, and from a wide range of nondepository lenders. As the competition intensified, banks found their ability to respond increasingly constrained by rules and regulations established in the far different environment of the Great Depression of the 1930s. And banking, just like other businesses, faced the implications of immense changes in technology and of the rapid growth in globalization, which created new risks as well as new opportunities. Under the circumstances, the present health of banking is a dramatic testament to both the management skills of bankers and the ability of regulators and legislators to adapt, albeit slowly, to change.