Reference no: EM13948875

Several dominant movements in determining the structure of U.S. banking have been the spread of branch banking, the growth of bank holding companies and interstate banking which permits the geographic expansion of banking services and the ability of banking organizations to offer new and diversified product lines. In the 1970s, nonbank financial firms, such as insurance companies and stock brokers, began competing with depository institutions. Does this revitalized competition, recently characterized by the innovation of by specialized banking firms and the potential for expanded product lines, cause present prudential regulation (e.g., capital adequacy standards, examinations or asset composition constraints) and federal deposit insurance to be outmoded? In your answer, discuss the role and administration of prudential regulation when major depository institutions may be highly diversified financial service companies providing life and casualty insurance sales and underwriting, corporate securities underwriting, household and business depository services, sophisticated EFT and telecommunications services as well as traditional lending to business