In fact, he showed that banks directly or indirectly involved in the securities business did much better during this period than banks who were not involved in securities. Kroszner and Rajan showed that the securities underwritten by banks or securities affiliates of banks were actually of a higher grade than those underwritten by non-banks. To me, the significance of this work goes far beyond securities and banking issues. Even more important is that it demonstrates how policy makers with the best of intentions can be misled by relying on commonly held views rather than careful scholarship and analysis. Fortunately, many unnecessarily restrictive laws and regulations are now being modified or eliminated.
Some banks operating in the U.S. are well on their way to establishing nationwide branch networks.
As a result, banks can now sell a wide variety of securities and insurance products, although the insurance agents still appear to be fighting a rear guard action to limit competition from banks in this area. The good news is that both Congress and the regulators agree fully that the future strength of the U.S. banking industry depends on its ability to provide competitive products and services. Surely one critical aspect of financial modernization is the development of electronic banking and electronic money. My own view is that some system of e-money, whether over the Internet or in the form of stored value cards, will be relatively robust within the next three to five years. We heard from a variety of speakers representing consumers and industry, as well as from European and U.S. government representatives.