McFadden Act

(redirected from McFadden Act of 1927)
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McFadden Act

Legislation in the United States, passed in 1927, that prohibited federally-chartered banks from operating in multiple states except to the extent permitted by state law. The McFadden Act was largely repealed by the Riegle-Neal Act.
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In a study of the congressional vote on the McFadden Act of 1927, which sought to boost competition in lending, Rodney Ramcharan of the US Federal Reserve and I found that legislators from districts with a highly unequal distribution of land holdings - farming was the primary source of income in many districts then - tended to vote against the act.
Until the 1980s, banks were limited to "traditional" banking operations due to restrictions dating to the McFadden Act of 1927 (prohibitions on interstate banking) and the Glass-Steagall Act of 1933 (investment/ commercial banking restrictions).
In the McFadden Act of 1927, the Congress showed its agreement with Wilson's position by extending the Reserve Banks' charter indefinitely.