Law Commons^™

Conflicts Of Interest And Corporate Governance Failures At Universal Banks During The Stock Market Boom Of The 1990s: The Cases Of Enron And Worldcom, Arthur E. Wilmarth Jr.

GW Law Faculty Publications & Other Works

The re-entry of commercial banks into the securities business transformed U.S. financial markets during the 1990s. The Gramm-Leach-Bliley Act of 1999 (GLBA) removed most of the legal barriers that had separated commercial and investment banking since 1933. GLBA allows commercial banks to become universal banks by affiliating with securities firms and insurance companies. In large part, GLBA ratified the securities underwriting powers that commercial banks gained during the 1990s, based on a series of orders issued by federal regulators and federal courts.

By 2000, the top ten global underwriters of securities included three U.S. banks, three foreign banks, and four …