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Regulators told banks that they faced significant reputational risk for supporting legal but disfavored industries such as payday lending, firearms manufacturers and retailers, pawn shops, and ...
Operation Choke Point was an initiative of the United States Department of Justice beginning in 2013 [1] which investigated banks in the United States and the business they did with firearm dealers, payday lenders, and other companies that, while operating legally, were said to be at a high risk for fraud and money laundering.
Glass–Steagall insisted that investment and retail banking were performed by completely separate organisations. More recent legislation in Europe has concentrated on setting up legal barriers between different divisions of the same bank, to protect retail deposits from investment losses; Liikanen required the biggest investment divisions to hold their own capital for trading purposes.
The ratings reflect the tendencies of the bank to take on high risk endeavors, in addition to the likelihood of succeeding in such deals or initiatives. The rating agencies that banks are most strictly governed by, referred to as the "Big Three" are the Fitch Group, Standard and Poor's and Moody's. These agencies hold the most influence over ...
United States Department of the Treasury. After the freeing up of world capital markets in the 1970s and the repeal of the Glass–Steagall Act in 1999, banking practices (mostly Greenspan-inspired "self-regulation") and monetized subprime mortgages sold as low risk investments reached a critical stage during September 2008, characterized by severely contracted liquidity in the global credit ...
Industries that are sensitive to interest rates such as housing and autos could also be impacted if rates stay high. So if the economy slows, consumer discretionary could be a good place to avoid ...
Volcker argued vigorously that since a functioning commercial banking system is essential to the stability of the financial system, banks high-risk speculation created an unacceptable level of systemic risk. [14] He also argued that the vast increase in derivative use, designed to mitigate systemic risk, had produced exactly the opposite effect ...
When it comes to banking safety, look for institutions that are insured with the FDIC.The FDIC’s job is to prevent bank runs and generally ensure the safety of U.S. banks.