Class note: We are covering Chapter 14 for the final, but not Chapter 15. The bank regulation material we discussed in class still counts for the final.

Explain the three ways that the banking industry was segmented in the years leading up to the Civil War. Why were state banks more likely to fail than free banks?

Why was the Bank of the United States considered to be controversial?

What is the dual banking system? Why does it persist?

Why does the United States have so many banks?

Which government regulations restrict bank competition? How did they come about? Are they likely to continue in the future?

What law discussed today in class restricted interstate banking? Is it still in force? (Explain.) What are the costs to geographic restrictions on bank competition? To savers? To borrowers? In a banking system with banks of different sizes, which banks stand to gain from geographic restrictions? To lose?

Evaluate the following statement. A banking system with deposit insurance needs more supervision from third-party examiners than does a banking system without guarantees for depositors.

Evaluate the following statement: The United States has about 8900 banks, whereas Canada has only a few, so the U.S. banking industry must be more competitive.

Define capture theory. Explain verbally and graphically why firms have incentives to lobby the government? How (and why) to regulators become "captured" according to this theory?