Omni College Plus Up to October 2019

an on interstate banking, which they saw as responsible for the economic problems suffered by
their respective constituencies. Finally, in 1994, the Riegle-Neal Act was passed, and banks were
no longer prohibited from operating in multiple states (Epstein 2019).
Analysis
In this context, two questions arise: How did McFadden affect Banks? And how did it
affect the economy as a whole? It may well be that McFadden made banking less profitable than
it would otherwise be, but that by itself gives us no information as to how McFadden affected the
economy as a whole? So what was that effect? And what about Riegle-Neal? What were the
macroeconomic consequences of these acts?
Judging by the USA’s GDP over the last 100 years, the answer seems to be---none.
Figure 1 American GDP 1929-2011
Fernald, J., & Li, H. (2019). Is slow still the new normal for GDP growth?. FRBSF Economic
Letter, 17.
During the last century, American macroeconomic growth has been steady. There have
been a few dips and a few spikes---but nothing that can be correlated either with McFadden or
with Riegle-Neal. Those who lobbied for the removal of McFadden put forth the usual