Thrift Industry

Paper Summary:

Private industry, non-profit organizations and individuals each depend on the thrift industry to provide them with necessary financial resources. The thrift industry is unique in that its products provide infusions of capital to the economy. The direction that policymakers set affects not just their bank or their industry, but the economy as a whole. Because of its unusual position in the economy, this industry is subject to high levels of regulation and oversight. This research examines the United States government policy associated with the thrift industry and whether the 1989 "bail out" and policies since that time are in the public interest.

From the Paper:

"Under Glass-Steagall, banks cannot underwrite corporate debt or equity securities, or purchase such securities for their own accounts. However, they may underwrite some government securities (such as some municipal bonds), purchase investment securities and serve as an agent for customers once they have received specific instructions from the customer. In addition, Federal Reserve member banks cannot be affiliated with companies whose principal activity is within the securities market. Similarly, securities firms, cannot take deposits, and employees, directors and officers of commercial banks are prohibited from being actively involved with investment banks (and vice versa) ("Financial services," 2000, p. 23)."

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