what is deregulation 
the term deregulation refers to the reduction or elimination of government power in a particular industry deregulation is usually enacted by government bodies to create more competition within an industry the struggle between proponents of regulation and those of government nonintervention has shifted market conditions some of the industries that have been deregulated in the united states include trucking railroad airline and finance understanding deregulationderegulation involves removing regulations and restrictions within an industry it reduces a lot of the bureaucracy involved which makes it cumbersome and overbearing for companies to do business this is normally done at the executive level which means legislation must be passed and signed into law by a country s leader proponents of deregulation say it but there is plenty of criticism those against deregulation say it may help create monopolies and lead to a lack of transparency on how businesses operate eliminating regulations can also have detrimental impacts on consumers without any regulatory framework in place companies are free to exploit consumers interests for instance the deregulation of the financial sector gave financial institutions the power to decide how they would use their capital and how they would charge consumers fees deregulation proponents argue that overbearing legislation reduces investment opportunity and stymies economic growth causing more harm than it helps the history of deregulation in the financial industrythe financial sector in the u s wasn t heavily regulated until the stock market crash of 1929 and the great depression that resulted franklin d roosevelt s administration responded to the financial crisis by enacting financial regulation this includes the securities exchange acts of 1933 and 1934 and the u s banking act of 1933 otherwise known as the glass steagall act 12the securities exchange acts required all public companies to disclose relevant financial information and established the securities and exchange commission sec to oversee securities markets the glass steagall act prohibited a financial institution from engaging in both commercial and investment banking this reform legislation was based on the belief that the pursuit of profit by large national banks must have spikes in place to avoid reckless and manipulative behavior that would lead financial markets in unfavorable directions in 1986 the federal reserve reinterpreted the glass steagall act and decided that 5 of a commercial bank s revenue could be from investment banking activity in 1996 that level was pushed up to 25 the following year the fed ruled that commercial banks could engage in underwriting 3 in 1994 the riegle neal interstate banking and branching efficiency act was passed amending the bank holding company act of 1956 and the federal deposit insurance act to allow interstate banking and branching 4in 1999 the financial services modernization act or gramm leach bliley act was passed under the watch of the clinton administration and overturned the glass steagall act completely 5 in 2000 the commodity futures modernization act prohibited the commodity futures trading commission from regulating credit default swaps and other over the counter otc derivative contracts 6 in 2004 the sec made changes that reduced the proportion of capital that investment banks have to hold in reserves 7this spree of deregulation came to a grinding halt following the subprime mortgage crisis of 2007 and the financial crash of 2007 2008 most notably with the passage of the dodd frank wall street reform and consumer protection act of 2010 which restricted subprime mortgage lending and derivatives trading 8however with the 2016 u s election bringing both a republican president and congress to power then president donald trump and his party set their sights on undoing dodd frank in may 2018 trump signed a bill that exempted small and regional banks from dodd frank s most stringent regulations and loosened rules put in place to prevent the sudden collapse of big banks it passed both houses of congress with bipartisan support after successful negotiations with democrats trump said that he wanted to do a big number on dodd frank possibly even repealing it completely however the bill s co sponsor and former rep barney frank d mass said of the new legislation this is not a big number on the bill it s a small number the legislation left major pieces of dodd frank s rules in place and failed to make any changes to the consumer financial protection bureau cfpb which was created by dodd frank to police its rules 9effects of deregulationthe hoped for effects of deregulation are to increase investment opportunities by eliminating restrictions for new businesses to enter markets and increase competition increasing competition encourages innovation and as companies enter markets and compete with each other consumers can enjoy lower prices lessening the need to use resources and capital to comply with regulations allows corporations to invest in research and development r d without needing to comply with mandated restrictions businesses will develop new products set competitive prices employ more labor enter foreign countries buy new assets and interact with consumers without the need to obey regulations example of deregulationwe highlighted some of the key measures taken to deregulate the financial industry above other industries experienced the removal of regulations in 1978 congress passed the airline deregulation act which gave more control to airline companies and changed the landscape of the industry by removing certain restrictions the law allowed new airlines to enter the market including smaller ones it also allowed airlines more freedom to fly to new locations increase the number of planes in the air and boost the number of passengers per flight 10