Dallas Fed calls for a return to 'traditional' system of smaller banks

Dallas city centre

The Federal Reserve Bank of Dallas is campaigning for the return to a "traditional" banking system, with restored market discipline and smaller banks.

The Dallas Fed released a special report on January 17, which rejected the "misplaced hope" of using regulation to tame large financial institutions, and instead advocated breaking them up into smaller, more manageable organisations.

As part of the simpler system, the report envisages a more prominent role for the community banking model that was

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