| Because of the financial industry's important role in the national economy, the importance of financial regulation is rarely questioned, even in the stage when government control was controversial. Most countries pay attention to the management of the financial industry. The United States is well-konwn in the world for its strict financial regulation.Many investigations indicate that financial regulation is associated with the financial crisis. The generation and development process of U.S. financial regulation system reflects the strong crisis associated character. After each crisis, the government would set up some corresponding organizations to strengthen financial regulation. For example, the several crisis in the late 19th century led to the establishment of the Federal Reserve System and the great depression of the 1930s led to the foundation of the Federal Deposit Insurance Corporation. In the practice of continually overcoming crisis the United States has gradually developed a diversified financial regulation system. Meanwhile, financial regulation had also a dynamic process of development. Its regulatory focus, scope, as well as the means must be constantly adjusted with the changes of economic and financial situation. Therefore we can say that the reason why the United States used different financial regulation system at different periods was decided by its social, political, economic and other factors in the different times.After founding, the United States had two distinct conception of development focusing on how to develop the economy and enhance national strength. The faction led by Hamilton argued for the manufacturing sector as the lead and take the road of industrialization. While Jefferson led the party to the vision of "Agriculture ideal society." In monetary banking sector, the former advocated the establishment of the National Bank, and they insisted that the federal government must shoulder the heavy responsibility of managing the national currency system. On the contrary, the latter was fiercely opposed to government intervention in the currency area, because at that time the United States was still a country that agricultural population made the absolute majority, and farmers and plantation owners thought that they did not need banks and bank notes.Several ups and downs the first and the second bank of the United States experienced were due to the contradictions between the two concepts of monetary banking. In fact, these two attempt the United States made during early financial management were very successful. In particular the second bank of the United States effectively prevented excessive currency issue of state bank to ensure the unified currency, promoted all legitimate transactions, and effectively promoted economic prosperity and expansion.Chaos induced by the free bank system caused tremendous impact to the national economy. Faceing the grim facts, Jeffersonist also recognized the need of the single currency management, and in 1864 the national banking system was founded. However, because of the long-term impact of the Jeffersonist's civilians ideology, the founders of the national banking system had to consider a compromise solution in order to found a Monetary and Banking System which can not only to a certain extent restore the federal authority and the currency of unified value, but also avoid the over-concentration of the financial power.However, due to the lacking of a unified financial institutions to implement national monetary policy and unified clearing function, series banking crises continued to happen, and the real sense of the financial regulation system had not yet been established. Similarly, the establishment of the Federal Reserve System in 1913 was also the reconciling product of the contradictions between the two concepts of monetary banking. In charged by government officers and appointees of the president, the Federal Reserve Board completely ruled out the involvement of the private bankers. The Federal Reserve System is a combination of centralization and decentralization, and its power of financial decision-making and management were dispersed in 12 federal reserve banks. All of these reflected the civilian concept of the monetary and banking. Further more, initially the Federal Reserve Board seriously attached to the Ministry of Finance, and it did not truly independent shoulder the heavy responsibility of the management of the monetary system, so it could not coordinate the financial policies and management between the various reserve banks, the result is that it could not prevent the 1930s depression.In the 1930s depression, the United States is the worst affected country. The stock market tumbled. The public completely lost confidence in the banking. Runs frequently happened, and a lot of banks experienced bankruptcy. In such situation that the market collapsed and a number of social and political pressure upsurged, the financial reform as a part of Roosevelt's New Deal quickly progressed in a series of new legal framework. The attitude of the government to the financial industry had changed from less intervention to comprehensive direct regulation. Through a series of legislation, the rather loosely financial regulation system of the United States was substantial reformed from different aspects. Several new financial regulation agencies were founded, so the major turning point in the financial regulation history of the United States was formed. From the 1940s to the late 1970s, the U.S. government had adopted a series of laws to consolidate and perfect the 1930s established regulatory principles and monitoring modes.Although this institutional change was induced by the financial crisis, the role of the government is irreplaceable. Using its advantageous position in the political power and the authority of allocation of resources, the federal government established the overall blueprint for the system innovation in the framework of the Constitution in accordance with the objective function and constraint Conditions and thus develop specific operational rules, so the government is the dominant force to decide the direction,the forms,the process and the strategy of the supply system. Specifically, useing the violence role of the state machinery, the federal government passed a number of laws and completed the process of changing the system in a short time, so to the greatest extent reduced the costs of the system changes. Therefore, the changes of the financial regulation of the United States from free to control more reflected mandatory institutional changes led by the government.The financial regulation system established in the 1930s was very effective. The stable operation of the financial industry brought about rapid economic development of the United States. However, from the beginning of the late 1960s, the domestic and international economic environment had undergone tremendous changes. Many policies and restraints aimed at restricting competition to maintain the financial security which were established based on the 1930s economic background had not been fully accepted by the financial institutions. On the one hand, the collapse of the Bretton Woods System brought a huge impact to the financial industry of the United States and the United States had gradually lost its leading position in the international financial sector; On the other hand, the high domestic interest rates and the high domestic inflation rate had brought a heavy blow to the banking industry. To get rid of the"disintermediation"credit crisis, the banking industry introduced a series of innovative financial tools, so part of the original regulation measures lost effectiveness. Meanwhile, the theoretical circles also strongly urged deregulation, and the deregulation started here. During this period the basic point of a series of financial legislations were deregulation, removal of barriers to banking mergers and encouraging the orderly market competition of the banking sector. These measures changed the basic force regulating financial markets from the government regulation to the market mechanism, there after the original restrictive financial system began moving into the new competitive system.During this institutional change, the US government not only created a more relaxed system environment for financial innovation, but also conformed to the changing situation, commitmented to reform and accelerate the pace of institutional change and social progress. Therefore, the financial reform the U.S. government made in the 1980s to adapt the needs of the situation was demanding induced institutional change. Namely, under the constraint of the given system, individual actors pursuitting of profit maximization seeked to determine the most favorable institutional arrangements for them and promote the original institutional arrangements to be replaced by the new institutional arrangements, in order that the country finally established the institutional arrangements and property rights rules favorable to the dominant actors and thus completed the institutional changes.Deregulation brought the U.S. financial industry unprecedented vigor and vitality, but it also brought a series of serious financial crisis and forced the regulation authorities to re-examine the process of deregulation. Although the real prudential regulation was developed extensively in the 1990s, the reflection to deregulation had began since the end of the 1980s. There after, the U.S. financial regulation had entered a period of rational reforms, and the regulatory philosophy, focus and ways experienced major adjustment. The financial regulation this period were characterized by prudential regulation and anticipatory, and its main features were encouraging financial institutions to competition, focusing on improving the efficiency of the financial system, strengthening the risk management of the financial activities, more emphasizing on incentive compatibility in regulation manner and focusing on the self-restraint and management of the financial institutions. Especially from the beginning of October 2001, a series of corporate financial scandals continually happened in the United States which shocked the global financial market, and to a certain extent shook the confidence in the U.S. economy of the the world, therefore produced the biggest blow to the confidence of the investors in the United States since the depression. The U.S. stocks index had fell to the lowest point ever. To restore the investor's confidence and combat corporate accounting fraud, the United States Congress adopted a series of policies and measures. President and the SEC also issued warnings to punish counterfeiters, and congress enacted and amended part of the act. Through these means, the U.S. regulation was further strengthened.As with the previous institutional changes, the reform since the 1990s was also induced by the financial crisis. The U.S. government has played a very important role in the system design and system supply. On the one hand, through system innovation it could supplement the shortcomings of the spontaneously institutional changes, accelerate the supply of the new system and promote the achievement of a balanced system. On the other hand, when the design of the system faced multiple balances, it can prudent use the corresponding historical experience to determine historical, political and social factors which played a key role in the specific economic, and elected from many balances a balance which will be able to increase the overall social welfare. Moreover, in the face of enormous changes in the external environment, the United States government decisively made a fundamental reform and as far as possible got rid of the path dependence in the institutional changes, in order to adapt the request of the continually changing economic environment, and achieve greater gains of institutional changes.From the process of historical evolution of the United States financial regulation system, we can see that the validity of any system are conditional and it had to be Constrainted by the environmental factors producing this system. When the environment changes, the effectiveness of the system will change. Therefore, it has not always effective system in the world, and the system must be constantly adjusted with the change of the objective conditions.
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