What has happened in the financial sector since the 1970s isn't exactly deregulation. Banks have remained as closely supervised as ever. But new institutions that grant mortgages, lend money, fund deals businesses once monopolized by banks have been allowed to grow with little oversight. Lawmakers and regulators responded in the 1990s not by setting parameters for these new players investment banks, hedge funds, private-equity funds, etc. but by giving bank-holding companies more freedom to enter underregulated lines of business. The perverse result was that the new and untested gained an unfair advantage over the tried and true.
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