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Bantle Symposium on Business-Government Relations

Dr. Paul & Natalie Strasser Legacy Room, 220 Eggers Hall

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Can the Banking System Regulate Itself?  Is Government Regulation an Improvement over Laissez Faire?

Larry White, Professor of Economics, George Mason University

Historically, banking systems have not operated purely on the basis of profit-and-loss market discipline. Where the role of market discipline was politically circumscribed, as in the United States, cooperative self-help and self-regulatory institutions evolved, particularly clearinghouse associations.  Government regulation of banks in the United States has a complex history. Before the New Deal, our banking system was weakened with geographic and other restrictions, and since then we have again weakened our banking system with privileges like (systematically underpriced) deposit guarantees and the promise of “too big to fail” rescues.  Much as we use a baseline model of free trade to understand the impact of tariffs and trade restrictions, I propose that we should begin with a baseline model of free banking to understand the impact of bank regulation.  Just as many tariffs and trade barriers can be understood as resulting from fiscal concerns combined with “rent-seeking,” so too can many contemporary banking regulations. Apparent rent-seeking actions at the Federal Reserve Bank of New York during the 2007-9 financial crisis are particularly troubling. The crisis gives us a window into the dangers of allowing discretionary rule by authorities to trump the principle of the rule of law. ​

Parking available at a reduced rate in the Irving Garage, follow directions on Campbell Website to the Maxwell School.


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Exterior of Maxwell in black and white when there was no Eggers building

We’re Turning 100!

To mark our centennial in the fall of 2024, the Maxwell School will hold special events and engagement opportunities to celebrate the many ways—across disciplines and borders—our community ever strives to, as the Oath says, “transmit this city not only not less, but greater, better and more beautiful than it was transmitted to us.”

Throughout the year leading up to the centennial, engagement opportunities will be held for our diverse, highly accomplished community that now boasts more than 38,500 alumni across the globe.