{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Week 11 Confederation Life and RBC

Banking regulaon why does the government regulate

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: em. The United States Financial Service Industry •  By comparison, the US financial services industry accounts for 8.4% of their GDP. •  The US banking system has $13.3 trillion in assets at the end of 2010. •  The insurance industry accounted for an addi)onal $934 billion. The United States Financial Service Industry •  The Banking Act of 1933 (commonly known as the Glass- Steagall Act) introduced banking reforms aimed at curbing specula)on. •  Remember, the US had smaller regional banks, many that failed. Canada had large banks with mul)ple branches, making them more secure. •  The Glass- Steagall Act was aimed at fixing issues that directly helped cause the Great Depression. The United States Financial Service Industry •  Glass- Steagall separated commercial banking from investment banking. •  This prevented banks and insurance firms from entering into each other’s purview. •  This kept the individual businesses rela)vely small, since they could only grow in one area. The United States Financial Service Industry •  Glass- Steagal was par)ally repealed in 1999 and replaced with the Gramm- Leach- Bliley Act. •  The GLB allowed the various companies to merge. •  The banking industry had lobbied heavily to allow these types of mergers to happen. •  The GLB was in part brought about by the merger of Ci)corp (bank) and Travelers (insurance company) which was deemed to be in viola)on of Glass- Steagal. The United States Financial Service Industry •  These types of mergers were now allowed. •  Directors and other bank employees could now also hold posi)ons at more than one financial ins)tu)on. •  Banks could s)ll not own other non- financial service companies, nor could other companies start banks (WalMart wanted to start up a commercial bank). •  The amount of equity that a bank was required to hold under the frac)onal reserve banking was downgraded. •  General oversight of the financial services sector lessened. Many point to the GLB Ac...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online