Investment Banks and Commercial Banks Are Analogous to Oil and Water: They Just Do Not Mix
As a result of more than 9,000 banks failing during the Great Depression years of 1930-1933, bank regulation was greatly tightened in the United States. The legislature felt the unethical actions from the integration of commercial and investment banking aided in these failures for three main reasons: banks invested their own assets in risky securities, unsound loans were made to boost the price of securities of companies whom the bank had invested in, and the commercial banks interests in the price of securities tempted bank managers to pressure customers to purchase risky securities that the bank was trying to sell. As a result, President Roosevelt felt that the best remedy to the situation was to pass the Banking Act of 1933, which established two new provisions to financial regulation: deposit insurance and the separation of commercial and investment banking activities. Sections 16, 20, 21, and 32 of the act are referred to as the Glass-Steagall Act. These sections forbid deposit-taking institutions from engaging in the issuing, underwriting, selling, or distributing of securities. Since the provisions of the Glass-Steagall Act did not apply to foreign banks operating in the United States, they could engage in insurance and securities activities. This put the American banks at a disadvantage.
As a result of the pressure on the legislature and the constant talks of overturning the act, it was finally repealed. On November 12, 1999, President Clinton signed the Gramm-Leach-Bliley Financial Services Modernization Act, which repealed the Glass-Steagall Act. This allowed securities firms and insurance companies to purchase banks and commercial banks to underwrite insurance and securities. From this repeal, the financial services industry has undergone a consolidating phase of commercial banks and investment banks becoming one. However, this has not always proved beneficial for these companies. My hypothesis is that the culture clash stemming from the different risk tolerance levels between investment banks and commercial banks is the main reason why such mergers and acquisitions have not resulted in the expected synergies the financial markets were anticipating.
Investment banks, by nature, have higher risk tolerance levels than do commercial banks. The principal reason for this is that investment banks are not financial intermediaries in the sense that they take deposits and lend them out.
Consequently, the provisions to separate commercial banking from securities and investment firms were regarded as a way to diminish the risk associated with providing such deposit insurance. Although some historians argue that the depression itself is what caused the collapse of the banking system, in 1933 the general consensus was that banks had provoked the failure by engaging in shady and abusive practices with depositor’s money. Congressional hearings conducted in early 1933 seemed to indicate that bankers and brokers were guilty of “disreputable and seemingly dishonest dealings, and gross misuses of the public's trust” (“Understanding How”, 1998). The Glass Steagall act was the main legislative response of President Roosevelt’s administration to the unprecedented financial turmoil that was facing the nation in the middle of a deep depression. It was intended to regulate and stabilize the banking industry, reduce risk, and provide consumers with confidence in the financial
The US has a sophisticated banking system that does a good job of allocating resources in productive place for their customers. However, in an area such as investment banking companies can use the deposited money for risky investments such as foreign government and corporate bonds. When these banks lose money on their investments or go out of business, all of the customer 's savings would be gone. Also, in this type of system bankers are more likely to commit fraud such as opening fake accounts vis a vis Wells
The shares values had fallen and this left people panicking. Many businesses closed and several of the banks did not last because of the businesses collapsing. Many people lost their jobs because of this factor. Congress passed Roosevelt’s Emergency Banking Act, which helped reorganize the banks and closed the ones that were insolvent. Then three days later he urged Americans to put their savings back in their banks and by the end of the month basically three quarters of them reopened. Many people refer to the Banking Act as the Glass Steagall Act that ended up prohibiting commercial banks from engaging in the investment business and created the Federal Deposit Insurance Corporation. The purpose of this was to get rid of the speculations in securities making banking safer than before. The demand for goods were declining, so the value of the money was
Faria, Hugo J. 2008. "Hugo Chávez against the Backdrop of Venezuelan Economic and Political History." Independent Review 12, no. 4: 519-535. Academic Search Premier, EBSCOhost (accessed December 2, 2013).
On February 23, 1784, a small advertisement appeared in The New York Packet, one of the many New York newspapers of that era. This advertisement announced that prominent New York citizens had established a bank. The bank, established by the prominent, would not officially open for business until June 9, 1784. That bank would come to be known as the bank of New York. Alexander Hamilton, a well-known New York attorney, was asked to write the constitution of the new bank. He complied and therefore Alexander Hamilton was credited with the founding of the Bank of New York. The Bank of New York is the oldest bank in New York and along with that is one of the oldest banks in the world since banking the way we know it today began in the 18th century.
The Dodd-Frank Wall Street Reform and Consumer Protection Act brought the most significant changes to financial regulation in the United States since the reform that followed the Great Depression. It made changes in the American financial regulatory environment that affect all federal financial regulatory agencies and almost every part of the nation’s financial services industry. Like Glass-Steagall, the legislation passed after the Great Depression, it sought to regulate the financial markets and make another economic crisis less likely. Banks were deregulated in 1999 by the Gramm-Leach-Biley Act, which repealed the Glass-Steagall Act and essentially allowed for the excessive risk taken on by banks that caused the most recent financial crisis. The Financial Stability Oversight Council was established through the Dodd-Frank Wall Street Reform and Consumer Protection Act and was created to address the systemic risks in the United States financial system and to improve coordination among financial regulators.
In the documentary Killer at Large, former Surgeon General Richard Carmona remarked that “Obesity is a terror within. It’s destroying our society from within and unless we do something about it, the magnitude of the dilemma will dwarf 9/11 or any other terrorist event that you can point out…” Carmona is indeed right, with the rapid increase of obese children, America is on the fast track to producing a generation with a life expectancy shorter than their peers. One of the main factor is the media representation of obesity (Greenstreet 2008). In today’s society parents are not only worrying about televisions influence on their kid’s behavior but their weight and health, too. According to study conducted by the Kaiser Family Foundation, that researched the role of media in childhood obesity, stated the obesity increased by 2% for every hours of television in adolescent’s ages 12 to 17. The advertisement of food and beverages present a very strong influence on the children. Most of the products being advert...
In this paper, it will focus on how junk food marketing impacts childhood obesity. Childhood obesity continues to be on the rise from junk food marketing because of the schools food policies and vending machines, increased junk food available at supermarkets and advertisements in social media.
Banks all around, especially the large ones, sought to support the market before it could crash down. As the stock prices crashed, banks struggled to keep their doors open (“Economic Causes and Impacts”). Unfortunately, some banks were unsuccessful. Customers wanted their money out from their savings account before it was gone and out of reach, leaving banks insolvent (“Stock Market Crash of 1929”).
Since the fast food industry is targeting America’s youth, providing healthier options on children’s menus will reduce the rate of childhood obesity and allow for a healthy future.
Sending a child to a gender based school, is a very big decision to make. The decision is so big, that looking at what research has to say about the topic could alter one’s decision to send their child to a gender based school. “Educators must apply different approaches in teaching make, and female students” (Gurian). This is said by Gurian, because he also believes that boys and girls learn differently. “Social pressures can be gentler and your child can learn at his own pace” (Kennedy).
Consumers and health organizations have sought to acknowledge the accumulating problem of childhood obesity in the United States. This research will provide evidence that television advertisements influences food preferences, and is associated with the increased epidemic of obesity among children. I will be talking about food advertisement and its effects on children. Today food companies have make children their biggest targets. A food marketer is interested in youths as consumers because of their purchasing power and their influence over their spending habit. I will be attacking the different aspects that the food advertisements have on children, and the health effects sustaining to food advertisement. I also will be taking different measures of demonstrating different studies to support my topic. The biggest source of media message is television and parent’s best defense against poor nutrition is controlling the power of the television.
During the 1920s, approximately 20 million Americans took advantage of post-war prosperity by purchasing shares of stock in various securities exchanges. When the stock market crashed in 1929, the fortunes of many investors were lost. In addition, banks lost great sums of money in the Crash because they had invested heavily in the markets. When people feared their banks might not be able to pay back the money that depositors had in their accounts, a “run” on the banking system caused many bank failures. After the crash, public confidence in the market and the economy fell sharply. In response, Congress held hearings to identify the problems and look for solutions; the answer was found in the new SEC. The Commission was established in 1934 to enforce new securities laws that were passed with the Securities Act of 1933 and the Securities Exchange Act of 1934. The two new laws stated that “Companies publicly offering securities must tell the public the truth about their businesses, the securities they are selling and the risks involved in the investing.” Secondly, “People who sell and trade securities must treat investors fairly and honestly, putting investors’ interests first.”2
gender stereotypes. An allied benefit includes girls being able to participate more without being outshined by boys by “equaling the playing field” (Gross-Loh 2015 n.p.). Gross-Loh (2015) states that “Stereotypes work both ways. Culture… can winnow children towards certain restrictions of behavior (think a young girl who absorbs early on the idea that she must always be interested in playing with dolls, or a boy who feels uncertain and worried about his budding interest in princesses), but the wider culture is endemic with gender stereotypes that single-sex schools aim to free children of… (n.p.) ” Attending a single sex school is completely voluntary, and parents can opt out at any time (Hollingsworth & Bonner 2012).
Even though “now” banks and building societies look much alike, they used to be completely different types of financial institutions. For this reason, I will point out the differences and similarities as we go along the historical process through which these two, once utterly distinct, types of financial institutions started to look the same.