Technological innovations played a key role in rendering decades-old banking laws and regulations obsolete. The relaxation of these regulations has, in turn, further reduced barriers to competition and accelerated the modernization of our financial system. That evolution, however, must continue to occur in a manner that preserves the fundamental soundness of the financial system and, in particular, the nation’s banks.
History teaches us that a sound banking system, willing and able to take deposits and extend credit, is a prerequisite for the long-term health of the national economy. Securities markets alone will never be able to substitute for the extensive and detailed knowledge that bankers - especially community bankers - bring to the intermediation process.