The second wave of deregulatory measures that occurred in the mid and late nineties (i.e., the Riegle-Neal Act of 1994
and the Gramm-Leach Bliley Act of 1999) have also given birth to numerous studies investigating the effects of deregulation on banks' managerial compensation structures.
Effective size caps on banks were imposed by the banking reforms of the 1930s, and there was an effort to maintain such restrictions in the Riegle-Neal Act of 1994
. But all of these limitations fell by the wayside during the wholesale deregulation of the past 15 years.
In the post-1986 period, I would highlight the same two acts that Bob emphasized: the relaxation of most restrictions on interstate banking in the Riegle-Neal Act of 1994
and the repeal of the Glass-Steagall Act's restrictions on most combinations of commercial and investment banking in the Gramm-Leach-Bliley Act of 1999.
Finally, we observe that equity-based compensation is more important after the Riegle-Neal Act of 1994
By allowing the widespread establishment of interstate bank branching networks via mergers, the Riegle-Neal Act of 1994
prompted a dramatic decline in the total number of banks operating in the U.S.
The prohibitions on interstate branching in general were greatly attenuated by the Riegle-Neal Act of 1994
authorizing interstate bank mergers and permitting interstate branching on a state opt-out basis.
Moreover, the extent to which mergers can increase national concentration is limited by the provisions in the Riegle-Neal Act of 1994
, which amended the Bank Holding Company Act and established national (10 percent) and state-by-state (30 percent) deposit concentration limits for interstate bank acquisitions.
Only with the phased-in application in the late 1990s of the Riegle-Neal Act of 1994
will most (but not all!) state-inspired restrictions on interstate and intrastate branching be erased.