What is the most important piece of legislation that allows federally chartered banks to compete more directly with state-chartered banks?

when state banks were invited to join the FDIC

when all banks came under the Federal Reserve Board

when lending limits for federal banks were increased

creating a dual banking system

The most important piece of legislation that allows federally chartered banks to compete more directly with state-chartered banks was when lending limits for federal banks were increased.

Answer: Option C

Explanation:

The lending limits of the federal banks were increased by the Garn-St Germain Act, passed in the year of 1982, by which national bank lending limits were raised. Thus, these banks were capable and allowed as well to compete better and directly with state-chartered banks.

Though differences continued between them to erode in the remaining years of the decade of the 1980s, as supervisors of federal banks instituted uniform capital banks requirements.

In the year of 1991, Federal Deposit Insurances Corporation Improvements Act was passed which further narrowed down the difference between the two by limiting the investments along with other activities of state banks to those permissible for national banks.