Fed Proposes Ban on Merchant Banking, a Practice With Little Risk
In the study, the Fed called for Congress to ban the practice. The reason the report provided was the banal-sounding language that “the existing statutory merchant banking authority” allows for investment banks registered with the Fed as bank holding companies to “engage in activities that pose risks to the organizations’ safety and soundness.”
This is yet another step by the government to restrain big banks in their activities under the guise of tamping down risk, making the banks more like boring utilities.
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