Why have some states placed restrictions on intrastate and interstate branches? What historical laws gave this right to states? What law changed these restrictions?

The wave of bank failures in the 1920s threatened to undermine political support for banks. Eight states located in the east and south allowed the opening of branches without restrictions. Another 13 states allowed the opening of branches with strong restrictions to protect competition from bankers in rural areas.

Explanation:

The Grass-Steagall Act of 1933 was used to support unit banks and preserve their income by isolating them from competition. This law was designed to hinder the chains and groups of unit banks to organize themselves in a farm. This law discouraged bank consolidation by limiting operations when subscribing securities by banks. The ban on paying interest on demand deposits affected banks even more.

The reforms of the 1930s not only managed to limit mortgage loans, but also established certain specific restrictions to attract agricultural interests affected government subsidies.

A major blow to these laws that prohibited the opening of interstate branches came in 1982, when the Bank Holdings Act of 1956 was amended by Congress to allow bankrupt banks to get acquired by any bank holding.

The final blow to the unit banks came in 1994, when Congress reached the Riegle-Neal Law on interstate banking and branch efficiency. With this law, banks have branches both inside and outside the borders.