Why is loophole mining so prevalent in banking?

Answer 1

Competition for profits drives banks to look for ways to skirt regulations, known as loophole mining. Loophole mining is also prevalent because the US regulatory system is permissive. In the 1970s banks found loopholes in the regulation restricting interest rates for checking accounts by creating sweep accounts, a financial innovation where left over funds from checking accounts were "sweeped" into another account overnight that paid market interest rates.