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Essay / Inefficiency - 658
Banks exist all over the world and are generally heavily regulated by the government in order to prevent corruption and protect the money of the general public. Banking is a huge business and financial sector that has been around for thousands of years. The banking sector plays an important role in financial transactions and is a popular way to invest, borrow and sort money. Deregulation is one solution to the problem of corruption in the banking sector, but it has not proven to be as effective. Corruption is defined as the misuse of entrusted power for private gain, such as embezzlement and other white-collar crimes. The banking industry has seen many ups and downs over the years. According to the article by Ron Paul (2010), the Framers were the founders of the first bank and wanted to create an institution modeled on the Bank of England (Paul, 2010, pp. 465-467). The Bank of North America was granted a monopoly privilege and no other banks were allowed to operate in the country. Thomas Jefferson understood this banking system as a system of organized corruption aimed at expanding the size and scope of the state beyond what the Constitution allows (Dilorenzo, 2011, p. 79). Needless to say, the central banking system was short-lived in the United States, as many Americans at this particular time in history were very distrustful of central banks, viewing them as a source of official corruption. Banking deregulation has to be one of the most important events. in the history of the banking sector. Deregulation is defined as the reduction or removal of government in a particular sector. Toe Koechilin in his article (2013) describes deregulation as the "reduction of business activities... middle of paper... with some government regulation." They say banks are too big to fail, but in reality, they are too big to be jailed. Until there is some government interference in the banking sector, the banking sector can do no wrong. Works Cited Baradaran, M. (2013). How the poor were excluded from the banking sector. Emory Law Journal, 62(3), 483-548. Beck, T., Levine, R. and Levkov, A. (2010). Big bad banks? The winners and losers of banking deregulation in the United States. Journal of Finance, 65(5), 1637-1667. doi:10.1111/j.1540-6261.2010.01589.xDilorenzo, T.J. (2011). A note on the Machiavellian origins of central banks in America. Quarterly Journal of Austrian Economics, 14(1), 78-87. Koechilin, T. (2013). The rich get richer. Challenge(05775132), 56(2), 5-30. Paul, R. (2010). Banks against the Constitution. Harvard Journal of Law and Public Policy, 33(2), 465-473.