Abstract: Should I Stay or Should I Go? Federalism and Banking Mobility in America's Age of Finance

Sean H. Vanatta


In March 1980, Citibank announced that it would relocate its credit card operation from New York to the more favorable regulatory environment of Sioux Falls, South Dakota, eventually sparking a wave of bank relocations that effectively nullified state usury regulation across the country. South Dakota benefited from the influx of a new industry, but the process of transforming South Dakota into the frontier of modern banking was a difficult and contested one, and continued to be so over the next several decades. Relying on records from the Sioux Falls Chamber of Commerce, the South Dakota Bankers Association, and the South Dakota State Archives, this paper will explore the efforts of South Dakota's bankers and politicians to reap the benefits of the expanding financial services sector while using formal and informal regulatory channels to preserve their local spheres of economic and political authority. Yet the political structures that allowed Citi and other banks to move easily to South Dakota also enabled them to move from there, and by placing the story within the broader context of federalism, the paper will show that the threat of the industry's further relocation ultimately helped invert the power structures South Dakotans hoped to preserve.