Taming the Megabanks: Why We Need a New Glass-Steagall Act

Banks became major participants in U.S. securities markets twice in the past century – during the 1920s and after the mid-1990s. Both times, banks with “universal banking” powers originated risky loans and packaged them into securities that were sold to investors around the world. Both times, universal banks promoted unsustainable credit booms that led to […]

The OCC Should Withdraw Its Proposed “True Lender” Rule

The Office of the Comptroller of the Currency (OCC) recently issued a proposed “true lender” rule.[1] The proposed rule would establish a two-part test for determining whether a national bank or federal savings association “makes a loan and is the ‘true lender’ in the context of a partnership between a bank and a third party, […]

The FDIC Should Not Allow Commercial Firms to Acquire Industrial Banks

Industrial banks and industrial loan companies (collectively referred to as “ILCs”) are FDIC-insured, state-chartered depository institutions. In 1987, ILCs received a statutory exemption from the definition of “bank” under the Bank Holding Company Act (“BHC Act”). Congress did not explain the purpose of the 1987 exemption, but many have argued that the exemption allows commercial […]