The Regulation and Deregulation of Corporate Banking

The Regulation and Deregulation of Corporate Banking

The Regulation and Deregulation of Corporate Banking
Corporate banking is a division of retail banking that focuses on meeting the needs of business customers. Corporate banking has largely been considered distinct from investment banking following the passage of the Glass-Steagall Act in the mid-1930s during the Great Depression.
In addition to establishing the Federal Deposit Insurance Corporation in the United States of America, the Glass-Steagall Act also established the principle that investment banks were limited to only capital market activities. Commercial banks were allowed to handle only corporate banking, individual banking, and retail banking.
The restrictions imposed to regulate corporate banking and retail banking were largely repealed through the Gramm-Leach-Bliley Act, the Depository Institutions Deregulation and Monetary Control Act, and American Homeownership and Economic Opportunity Act, which stripped away many of the regulations on corporate banking off of the books.
After these regulations were relaxed, corporation bank recruitment increased to find new employees in anticipation of an increased demand for their clients. These corporation bank recruitment efforts proved well planned since the demand for corporate banking increased after the regulations were relaxed.
However, the deregulation of corporate banking and investment banking, and the subsequent blurring of the lines between the two are suspected to have contributed to economic problems in the early 21st Century, leading some to support the resumption of tighter regulation of corporate banking. Some of these new regulations include the Volcker Rule and the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was signed into law by President Barack Obama on July 21, 2010.




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