| dsgrue3 said: Kasz, I don't care for anymore of your sentiments as they are quite outlandish and based upon wikipedia entries. 1) No, a couple years prior to the bill passing they allowed it because they passed other legislation allowing it. That Wells Fargo is nonsense. 2) Less Banks = more competition? What? Illogical at best. @noname Thank you. I generally confuse those two terms. Some day, perhaps I will learn. |
It's not just wikipedia... it's the truth. Is the ST Louis Federal Reserve a better source?
"Although synergies between investment banking and commercial banking appear to be larger,
many FHCs were already conducting considerable securities activities well before passage of the
GLBA, authorized by so-called Section 20 exemptions."
"Like the geographic restrictions, Glass-Steagall provisions were lifted gradually. Under
Section 20 of the Act, banks were prohibited from affiliating with other financial institutions that
were “engaged principally in the issue, floatation, underwriting, public sale, or distribution of
financial assets.” Over the years however, the term “engaged principally” became subject to reinterpretation.
Through a series of court rulings and Federal Reserve Board interpretations, the
type of securities and the proportion of assets that bank affiliates could devote to these securities
were broadened. By 1996, bank affiliates were allowed to underwrite up to 25 percent of
revenue in corporate bond and equity issues. Virtually all large bank holding companies had
subsidiaries that were termed “Section 20 Securities Affiliates.”
http://www.stlouisfed.org/banking/pdf/SPA/SPA_2004_05.pdf
1) Except for the fact that it's true... as outlined.
2) If the big banks failed, there would of been more banks. Not less... as they would of been replaced by many smaller banks. Which by the way is what should of happened even if we did bail out the banks. They should of been broken apart into regional branches like AT&T was.
Hell it's worse then just that.
In the immediate aftermath of the current financial crisis in the United States the response has been to resolve small and medium size banks, while large banks experiencing financial trouble have been given both direct and indirect government support. This, however, has resulted in a number of larger banks absorbing smaller ones, creating an even smaller number of even larger banks that dominate the financial system. This article deals first with a comparison of the problems created by “too big to fail” financial institutions. The second section deals with the possible restoration of Glass-Steagall type legislation as a means of restoring single-function financial institutions. It concludes that alternatives to separation of functions will have to be found to deal with multifunction financial institutions since most lending activity requires securities markets activities.
