Week 11 Confederation Life and RBC

Banking regulaon why does the government regulate

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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 The United States Financial Service Industry •  Glass- Steagal was par)ally repealed in 1999 and replaced with the Gramm- Leach- Bliley Act.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...
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This note was uploaded on 01/29/2014 for the course ADMS 1010 taught by Professor Jurkowski during the Fall '09 term at York University.

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