—Ronald Reagan, 19811 On June 3, 2003, the Treasury Department’s James Gilleran brought a chainsaw to a photo op. While speaking to reporters, he promised to cut up piles of paper representing regulations of the financial sector. Joining him were representatives of four other US regulatory agencies in charge of overseeing finance, armed with less formidable (but still sharp) gardening shears. The message was clear: The Bush administration was tearing down the final pieces of the New Deal regulatory wall.2 With the financial panics and stock manias of previous decades in mind, the architects of the New Deal created a regulated financial system in the United States that established a firewall between investment bankers on the one hand and savings banks and savings and loans on the other. For five decades, the United States was free from the bank panics that had plagued the economy before the New Deal. By the 1970s, however, the lessons of the 1920s had been forgotten. Influenced by contributions from the financial industry, the US Congress under Democratic and Republican presidents alike dismantled the system the New Deal had built to stabilize American finance.
