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16 Harv. J. L. & Pub. Pol'y 327 (1993)
Private Interbank Discipline

handle is hein.journals/hjlpp16 and id is 343 raw text is: PRIVATE INTERBANK DISCIPLINE DAVID G. OEDEL* I. INTRODUCTION ................................... 327 II. PRIVATE PAPER CURRENCY ........................ 333 III. CHECKING ....................................... 350 IV. CREDIT CARDS ................................... 360 V. ELECTRONIC FUND TRANSFERS .................... 367 VI. INTEREST RATE SWAPS ............................ 381 VII. THE SECONDARY MORTGAGE MARKET .............. 396 VIII. CONCLUSION ..................................... 402 A. What Conditions Foster Private Interbank Discipline? 402 B. Why Is Private Interbank Discipline Rare? ........ 405 C. What Are the Limits of Private Interbank Discipline? 406 D. Can Government Facilitate Private Interbank Discipline? .................................... 407 I. INTRODUCTION Banking law has long languished in a purgatory, trapped by its overseers' preoccupation with whether government should switch on or off as a classical regulator. As lawmakers have tried to strike the perfect balance in banking between public restraint and private autonomy,' banking law over the past * Assistant Professor of Law, Walter F. George School of Law, Mercer University. B.A. 1979, Haverford College;J.D. 1987, Boston University. Professor Geoff Miller of the University of Chicago and Professor Ed Rubin of the University of California at Berkeley offered insightful commentary on an earlier draft, as did my Mercer col- leagues Ted Blumoff, Hal Lewis, Jim Marshall, and Bruce Posnak. Thanks to my indus- trious and thoughtful research assistants for the last two years, Tom Best, Melisa Bodnar andJonathan Martin. Thanks also to the tireless staff of the Furman Smith Law Library at Mercer University, and to Widener Library at Harvard University for access to its collection. Research underlying this article was supported by a grant from Mercer University. 1. Concentrating almost exclusively on the extent to which governmental interven- tion in banking is, or is not, desirable, lawmakers have regularly charted and re-charted possible future directions for bank regulation. See PRESIDENT'S COUNCIL ON COMPETI- TIVENESs, THE LEGACY OF REGULATORY REFORM: RESTORING AMERICA'S COMPETITIVE- NESS (1992)(Quayle Commission report recommending narrower deposit insurance, risk-based premiums, higher capital requirements, improved supervision, and possible reliance on private insurance); U.S. DEPT. OF TREASURY, MODERNIZING THE FINANCIAL SYSTEM: RECOMMENDATIONS FOR SAFER, MORE COMPETITIVE BANKS (1991)(the so-called Treasury Proposal advocating nation-wide branching, abolition of Glass-Steagall barriers, limits on deposit insurance, activity restrictions based on capital adequacy, and establishment of a federal superagency); TASK GROUP ON REGULATION OF FINAN- CIAL SERVICES, BLUEPRINT FOR REFORM (1984)(the so-called Bush Task Force Report recommending consolidated, streamlined regulatory oversight and stiffer capital ade- quacy and reserve requirements); REPORT OF THE PRESIDENT'S COMMISSION ON FINAN-

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