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Full-Text Articles in Law
The Reasons For The Gramm-Leach-Bliley Act, Raymond Natter
The Reasons For The Gramm-Leach-Bliley Act, Raymond Natter
Raymond Natter
One of the most repeated allegations about the financial crisis is that the passage of the Gramm-Leach-Bliley Act (GLBA) that repealed two sections of the Glass-Steagall Act in 1999 was a significant contributing factor in the subprime mortgage meltdown. However, these allegations never specify the exact link between GLBA and the crisis. The reason is that there is no readily apparent link between the two events. Simply put, the provisions of the Glass-Steagall Act that were repealed by GLBA did not prohibit the origination of subprime mortgage loans, to the securitization of mortgage loans, or to the purchase of mortgage-backed …
A Return To Old-Time Religion? The Glass-Steagall Act, The Volcker Rule, Limits On Proprietary Trading, And Sustainability, Douglas M. Branson
A Return To Old-Time Religion? The Glass-Steagall Act, The Volcker Rule, Limits On Proprietary Trading, And Sustainability, Douglas M. Branson
Articles
Pursuant to directions contained in the Dodd-Frank Act (2010), five federal agencies collaborated to produce a 983 page rule limiting proprietary trading by financial institutions (the Volcker Rule, which becomes effective in summer, 2015). The Volcker Rule limits proprietary trading to no more than 3 percent of “Tier One” assets. The hoped for effects are that financial institutions will be strictly limited in trading for their own accounts. Some say, propelled by unbridled greed, U.S. financial institutions borrowed excessive amounts of money, inflating leverage ratios as high as 36 or 40 to 1, using the borrowed funds to engage in …
Narrow Banking As A Structural Remedy For The Problem Of Systemic Risk: A Comment On Professor Schwarcz's Ring-Fencing, Arthur E. Wilmarth Jr.
Narrow Banking As A Structural Remedy For The Problem Of Systemic Risk: A Comment On Professor Schwarcz's Ring-Fencing, Arthur E. Wilmarth Jr.
GW Law Faculty Publications & Other Works
In a recent article, Professor Steven Schwarcz describes the concept of "ring-fencing" as a "potential regulatory solution to problems in banking, finance, public utilities, and insurance." Ring-fencing has gained particular prominence in recent years as a strategy for limiting the systemic risk of large financial conglomerates (also known as "universal banks"). Professor Schwarcz’s article describes several ring-fencing plans that have been adopted or proposed in the United States, the United Kingdom, and the European Union.
This Comment argues that "narrow banking" is a highly promising ring-fencing remedy for the risks created by universal banks. As the Comment explains, narrow banking …