Here2Learn:What is seen and what is unseen. What are we losing out on die to these regualtions? Maybe better services at lower cost or maybe a different type of money storage scheme that would be better overall than what we have now
Government regulation of banking and insurance has been beneficial for these industries and their customers alike because it has produced a stable, predictable system. When you deposit money in any bank in this country you don't give it a second thought. You know it is safe. When you purchase a life insurance policy you are assured that your family will recieve the proceeds in the event of your death. It's essentially a worry free system.
Without oversight, you can bet banks and insurance companies would engage in all sorts of corner cutting when it came to reserves on loans and underwriting. They would because their only concern is the current bottom line. Banks are required to maintain a minimum reserve of cash on deposit as a ratio to outstanding loans. In turn you, as a depositor, are assured that your money is safe; it hasn't been loaned out on some shaky deal to a borrower who will likely default. Without oversight, banks would loan out 100% of their depositor's money to high risk borrowers at the highest interest rates possible; after all it isn't their money. The result would be chaos.
Insurance companies likewise, although they are state regulated. I once heard that to qualify as an insurance company in Texas, all you needed was $25,000 in assets, and that could be in the form of a Cadillac!! I think things have changed, and for good reason.
We have come a long way from the days of the Robbers Barons and J.P. Morgan, when the average American earned only $500/yr. Government regulation historically has been in response to abuses by industry, who have proven that when unrestrained, know no limits to exploitation.