This Article asserts that there are three major tenets of the social contract: (1) safety and soundness, (2) consumer protection, and (3) access to credit. Regulators can and should require banks to meet standards in these areas to benefit society even if these measures reasonably reduce bank profits. Implicit in the social contract is the idea that each party must give up something in the exchange. This Article provides policymakers not only the appropriate narrative and justifications needed to frame their regulatory philosophy, but it also provides important textual support from the most prominent acts of banking legislation to give regulators the authority and charge to ensure that banks fulfill the public’s needs.

In Part I, this Article provides a historical background of the social contract and demonstrates that the social contract between banks and the government has existed since the inception of banking in this country and has changed several times to meet changing circumstances and needs. In Part II, the Article describes the various governmental measures that protect banks and essentially serve as a safety net and why this government support justifies imposing public obligations on banks. Part III defines the critical elements of any social contract going forward, such as safety and soundness, consumer protection, and access to credit. Part IV demonstrates how regulators can build on existing language and tests in banking legislation to recognize and enforce banking’s social contract.



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