McFadden Act

Banks fall under a complex web of regulation. Many banks (especially these days) are giant, nation-wide behemoths. Others just have a few branches scattered across a limited geographic area.

As such, there has always been tension over national vs. state control when it comes to banks. (For you history buffs, we'll just name-check McCulloch v. Maryland and Andrew Jackson's bank war.)

The McFadden Act fits into this theme. The federal law, passed in 1927, gave states the ability to govern bank branches located within the state. So even if a bank has a national presence, the individual branches located in a state would fall under state jurisdiction.

It may sound like the McFadden Act was an attack on national banks, adding another regulatory headache that would impede their growth. But it was actually passed as a way to boost the ability of national banks to expand.

McFadden made it easier for national banks to open branches (because there was now a clear regulatory framework), helping these companies compete with state-based rivals.