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Behavioral economics may also change the prevailing wisdom about deregulation, a process that began under President Jimmy Carter in the late 1970's, when the airlines were freed and interest rate ceilings were lifted.
The same interest rate ceilings that drove bankers to hand out pens also benefited "Mad Men," the advertising executives hired to develop costly campaigns to prove that one bank was better than another offering identical interest rates.
Deposit interest rate ceilings for commercial banks and rural credit cooperatives have been removed, as a key move towards interest-rate liberalization.
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After 10 years, the interest rate ceiling would rise to 10percentt.
FDIC: "The law is a Carter administrative initiative aimed at eliminating many of the distinctions among the different types of depository institutions and ultimately removing interest rate ceiling on deposit accounts...Deposit insurance limit raised to $100,000 from $40,000".
Interest-rate ceilings were also imposed that year.
All the other Maastricht conditions have been met from public debt to inflation, from exchange-rate stability to interest-rate ceilings.
Interest-rate ceilings, government-directed lending and insider relationships between banks and borrowers have all served to channel credit without regard for rates of return.
Instead heavy-handed regulations (such as interest-rate ceilings that made it unattractive to leave short-term deposits in America) drove international finance out of Wall Street.
But it was also, the authors note, the first major credit expansion in Fed history when supervisory guidance was not backed up by direct actions such as tighter monetary policy, interest-rate ceilings or credit controls.Although such controls are popular elsewhere, there is little talk of bringing them back.
Broadly, the macroprudential controls aimed either to regulate the supply of credit or the demand for it.Supervisory pressure, reserve requirements and interest-rate ceilings have all been used to control the supply of credit, but success at suppressing bank lending often merely led other lenders to fill the void.
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