Explain Why Some Economists Recommend a “Wall” Between Commercial Banking...

Explain why some economists recommend a border between commercial banking and investiture banking. How could such a rampart look like? Most industrialized countries have embarked on measures to liberalize finance over the last decades; it is long ag unitary the time when U.S. Congress passed a piece of legislation know as the Glass-Steagall Act in 1933 with the intention of separate investment banks and commercial banking. The intent of the bill was to prevent another pecuniary crisis of the same magnitude as the Great Depression by regulate the fiscal arranging, since it was believed that unsafe banking practices involving the stock market invest off this Crisis. The reason behind this is the idea that large banks pose greedy and took on too much risk. Their goals and objectives were convoluted because banks busy both in the issuing of securities and selling those securities to investors. The GSA aimed to change this by separating investment banks from commercial banks. Nevertheless the liberalization of regulated financial systems become apparent since the 1980s Conservative Revolution with Thatcher in U.K. and Reagan in the U.S., the deregulation wave during this decade, reaching its higher bill with the Gramm-Leach-Bliley Act, which repealed part of the Glass-Steagall Act .

However, with current financial crisis, financial repossess also means regulatory reform, such as the Volcker Plan. wherefore designing new rules to reduce systemic risks without stifling economical growth is a top priority. When analyzing the deregulated financial system one can understand the main arguments against it. For instance in this system non-bank financial institutions such as investment banks acquire change magnitude importance, however this institutions usually work with high leverage and deep down speculative activities with own funds and from the commercial banking system for diverse investments in- and outside the financial markets. Thus the commercial banks became automatically... If you want to gain a full essay, order it on our website: Orderessay

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