What is interstate banking?
InterState Banking is a place where a bank based in one US state carries a business in one or more other countries. Historically, international banking was very limited by legislation. These restrictions have gradually reduced over time. At the federal level, it was based on disputes over where the Bank of the United States, which dealt with the funds of the national government. At state level, laws were often proposed to protect local banks from competition from the main banks in larger or more distinctive states. In 1956, the US Congress strengthened the rules on the Bank Holding Company Act, which effectively banned any bank to take over the bank in another state.
The first serious conversation about the release of restrictions came in the early 80s. Until this time, 15,000 banks have been in the United States - more than the rest of the world together. Federal proposals that allow banks to work outside their home states were first designed under President Jimmy Carter, but NedosThe tackles to realize, although the economic policy of the subsequent administration of President Ronald Reagan was likely to adapt.
Instead, the first main changes occurred in the mid -80s on the basis of the state. The government of six states in New England has agreed to relax, which means that every bank based in New England could operate in every state of New England. A similar regional arrangement was achieved by states in the southeast, in the Midwest and west of the country.
As these regional agreements have led to the expansion of banks, individual states began to allow banks to merge with other banks anywhere in the country. In general, this happened through new state laws that contained the date that the merger became legal. This date was often Called and "National Trigger".
Eventually interstate banking has become so common that national politicians agreed to changefederal law. The 1994 Riegle-Neal branching and effectiveness Act of 1994 allowed banks to expand to the national level. This means that the bank can take over another bank in any state, regardless of previous state laws. The law also allowed an international branch in which banks can open branches in any state. However, banks cannot simply set up a national basis and instead must take over another bank in every state where they want branches.