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The rise of intermediary-less decentralized finance ("DeFi") lending has led many to wonder how it should be regulated. Although DeFi lending could potentially offer reduced risks of centralization and market frictions, investors in DeFi lending are currently exposed to centralized risks and losses in the volatile market in the absence of regulation. The SEC suggested that the agency might regulate the sector under the federal securities laws. A truly decentralized lending project, however, does not involve any centralized entity that could carry the burden of compliance with the securities laws. This Note shows that many DeFi lending projects are not truly decentralized and are in various stages of decentralization. Unlike P2P lenders and financial intermediaries that bear the costs of compliance, many DeFi developers seek to build automated lending systems and gradually relinquish their control over their creation. However, with the lack of regulation, the investors have no means to tell actors who seek to build secure decentralized systems from those who do not in the early stage of DeFi protocol development. To address the issue, this Note proposes a three-part framework that would oversee the process of decentralization for DeFi lending projects, drawing its structure from the U.S. banking regulation focused on supervision. First, the framework recognizes the value of decentralization in reducing market frictions and risks of centralization. Second, the framework establishes a federal agency that oversees the process of decentralization on the flexible safety and soundness standard of Glass-Steagall Act. Third, the framework grants enforcement powers to the federal agency to sanction DeFi platforms that do not comply with government regulations. [ABSTRACT FROM AUTHOR]

The Banking Acts of 1933 and 1935 insured deposits up to $5,000 and limited interest paid by commercial banks. This essay uses a treatment‐and‐control estimation strategy to determine how those reforms influenced depositors' reactions to information about banks' balance sheets by comparing preferred and regular depositors at New York state banks. Before deposit insurance, regular depositors reacted more to information about banks, while preferred depositors reacted less. After, this difference diminished and almost disappeared. This change indicates insurance reduced monitoring, although depositors' continued response to some information indicates that large, uninsured depositors continued to monitor banks, as the legislation intended. [ABSTRACT FROM AUTHOR]

The article discusses the role of private litigation under the Glass-Steagall Act constructed and proposed by Arthur E. Wilmarth Jr. and its implications for the potential reform of financial regulation system. Topics tackled are history of the litigation battle between banks to break down statutory limitations on their activities, problem of agency forbearance and challenges of the private litigation enforcement solution, and structure of the constitutional and statutory standing doctrine.

The text is a review of the book "The Price of Peace, Democracy, and the Life of John Maynard Keynes" written by Zachary D. Carter. It highlights the connection between Keynes and the Bloomsbury group, his confrontation with Wall Street, and his attitude towards the United States and his involvement in World War II. It emphasizes Keynes' importance in demolishing economic and ethical prejudices, his critique of classical economics, and the influence of different thinkers in the economic debate. It also discusses the criticism of Keynes' General Theory, Milton Friedman's defense of a "natural rate of unemployment," and his opposition to Keynesian policies, as well as Buckley's criticism of "socialism" and his conservative stance. It mentions the influence of Austrian economists Mises and Hayek in the critique of Keynes and the importance of philosophy in his thinking. It talks about the emergence of conservative Keynesianism in the United States, the reaction towards Keynesian economists, and the trajectory of John Kenneth Galbraith, his involvement in American politics, and his attempt to reconcile socially-oriented measures with tax reduction. It also mentions Joan Robinson's criticism of the concept of "normality" in economics and how Keynesianism was used to strengthen the military-industrial complex. On the other hand, it mentions Milton Friedman's criticism of Keynesianism and his warning about the failure of the Phillips curve. It discusses the different positions of economists like Friedman, Keynes, and Hayek regarding money and economic policy, and the influence of these positions on politics and the history of the United States, including the repeal of the Glass-Steagall Act during Bill Clinton's presidency. It highlights the importance of politics and history over economics and mentions that Keynes was an economist only by accident. It presents a series of reviews of different works, highlighting the importance of change and the hope that it brings, and mentions that in the long run, almost anything is possible. [Extracted from the article]

Regulators, much like market actors, rely on categorical distinctions. Innovations that are ambiguous to regulatory categories but not to market actors present a problem for regulators and an opportunity for innovative firms. Using a wide range of primary and secondary, qualitative and quantitative sources, we trace the history of one class of innovative financial derivatives—interest rate and foreign exchange swaps—to show how these instruments undermined the separation of commercial and investment banking established by the Glass–Steagall Act of 1933 even as overt political action failed to do so. Swaps did not fit neatly into existing product categories—futures, securities, loans—and thus evaded regulatory scrutiny for many years. The market success of swaps put commercial and investment banks into direct competition and, in so doing, undermined Glass–Steagall. Drawing on this case, we theorize that ambiguous innovations may disrupt the regulatory status quo and shift the political burden onto parties that want to maintain existing regulations. Our findings also suggest that category-spanning innovations may be more valuable to market participants if regulators find them difficult to interpret. [ABSTRACT FROM PUBLISHER]

Bank-affiliated private equity groups account for 30% of all private equity investments. Their market share is highest during peaks of the private equity market, when the parent banks arrange more debt financing for in-house transactions yet have the lowest exposure to debt. Using financing terms and ex post performance, we show overall that banks do not make superior equity investments to those of stand-alone private equity groups. Instead, they appear to expand their private equity engagement to take advantage of the credit market booms, while capturing private benefits from cross-selling of other banking services. [ABSTRACT FROM PUBLISHER]

We analyze the pre‐deposit game in a two‐depositor banking model. The Glass–Steagall bank is assumed to be restricted to holding only liquid assets. Depositors tolerate a panic‐based run if its probability of occurrence s is small. How s affects the allocation of assets depends on the incentive compatibility constraint (ICC). When the ICC is not binding, the sunspot allocation is not a mere randomization over the run and non‐run outcomes under the so‐called "optimal contract." We offer this paper as a contribution to both the literature on banking and financial fragility and also the broader literature on sunspot equilibrium. [ABSTRACT FROM AUTHOR]

The article focuses on a bank capital investment model and the effects that the U.S. Banking Acts of 1933 and 1935 have had on bank capital. It states that stock demand for capital and capital flow supply are elements that a simple version of a demand factor model is based on. It mentions that as the cost of capital a bank pays increases, the quantity of capital demanded decreases as banks can adjust to greater capital costs through increases in pecuniary rates and nonpecuniary rates that the bank pays to depositors.

The article presents a review of discussion over interest charges on bankers' balances as outlined in the U.S. Banking Act of 1933. The history of the controversy surrounding the law is outlined, citing rural and urban credit management and fund flow control after the Civil War. Problems with maintaining balance between productive loan uses and stock market speculation finance are discussed. Modeling is provided exploring the actual functioning of interest restrictions on country bank fund sources and portfolio diversification policies.

The article discusses what the author refers to as the causal relationship between changes in the financial securities markets and the law in America as of 2017, and it mentions the enactment of the U.S. Dodd–Frank Wall Street Reform and Consumer Protection Act's Volcker Rule. The repeal of America's Glass-Steagal Act is addressed, along with the country's banking laws, market deregulation, consequence-based inquiries, and the political aspects of financial market changes.

One of the main causes of the economic crisis is the "greed" manifested at the different levels of society. From a moral point of view, in all religions of the world greed is repulsive and evil. In this paper, we'll look at how the degree of greed displayed by bank directors and the unscrupulous tactics significantly contributed to the collapse of the financial system and we will focus on the consequences of repealing the Glass Steagall Act. Though, over time, both philosophers, scientists, politicians, church have tried, through their works, to influence human behavior in order to be more selfless, these actions are not enough. It requires government intervention, through strict regulations applied to institutions and individuals that lead to extreme greed and affect the population through their actions. We have to launch a strident call for a new kind of humanism to confront a world seemingly out of control! [ABSTRACT FROM AUTHOR]

The article examines financial regulations concerning the use of banking as utilities in the U.S. Topics discussed include enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act; consumers' need of understanding the terms of their agreements with financial companies; and challenges to the consumer financial protection laws.

This Article directs scholarly and regulatory attention to an overlooked subcategory within online and mobile entities that offer financial services--big data and social netbanks. Recently, big data companies like Google, Amazon, and Apple, as well as social networks like Facebook and Twitter, have been making forays into the financial services market, capitalizing on their massive troves of user data and social information. Providing the first in-depth study of big data and social netbanks, this Article analyzes these players' entry into the financial services market and surveys the current regulatory framework for those new bank-like entities. Despite the large numbers of technology companies offering financial services and their massive pool of subscribers, regulation of online nonbanks currently consists of a hodgepodge of statutes and regulations. In particular, as this Article shows, existing regulation does not differentiate between this recently emerging form of bank-like services and other online/mobile nonbanks. As big data and social netbanks increasingly eat at the edges of the traditional banking market, this Article makes a key descriptive contribution by presenting a comprehensive analysis of the new entrants. This Article also makes a significant normative contribution by listing the distinctive characteristics of big data and social netbanks and other issues that regulators should be mindful of when designing an appropriate regulatory scheme. These characteristics and issues include consumers' access to financial services, social consequences, competition in the financial market, cybersecurity, privacy, and specific consumers' rights. [ABSTRACT FROM AUTHOR]

Before the global financial crisis, the assistance of the lender of last resort was thought to be limited to commercial banks. During the crisis, however, the Federal Reserve created a number of facilities to support brokers and dealers, money market mutual funds, the commercial paper market, the mortgage-backed securities market, the triparty repo market, and so on. In this paper, we argue that the elimination of specialized banking through the eventual repeal of the Glass-Steagall Act (GSA) has played an important role in the leakage of the public subsidy intended for commercial banks to nonbank financial institutions. In a specialized financial system, which the GSA had helped to create, the use of the lender-of-last-resort safety net could be more comfortably limited to commercial banks. However, the elimination of GSA restrictions on bank-permissible activities has contributed to the rise of a financial system where the lines between regulated and protected banks and the so-called shadow banking system have become blurred. The existence of shadow banking, which is directly or indirectly guaranteed by banks, has made it practically impossible to confine the safety to the regulated banking system. In this context, reforming the lender-of-last-resort institution requires fundamental changes within the financial system itself. [ABSTRACT FROM AUTHOR]

This paper will examine the critical aspects of the Glass-Steagall Act of 1933 including a detailed analysis of the objective of the act on the banks and the economy. A further review will explore the atmosphere and psychology of the various banking practices that were implemented during the 1980's and 1990's. A chronology of pivotal events will prove that the current environment of deregulation and erosion of the distinct line between commercial and investment banks is actually attributed to monetary policies dating back to Alan Greenspan and the Federal Reserve Board actions of the 1990's. The start of the 21st century saw the rapid growth of derivative instruments that were not regulated, prompting the moral hazard which caused the mortgage banking industry collapse. A further analysis of the reckless practices will show how these lending practices caused financial chaos. The paper will conclude with an analysis of the present arguments to strengthen the core requirements for both the investment and commercial banking. [ABSTRACT FROM AUTHOR]

The conventional story is that the Gramm-Leach-Bliley Act broke down the Glass-Steagall Act's wall separating commercial and investment banking in 1999, increasing risky business activities by commercial banks and precipitating the 2007 financial crisis. But the conventional story is only one-half complete. What it omits is the effect of change in commercial bank regulation on financial firms other than the commercial banks. After all, it was the failure of Lehman Brothers--an investment bank, not a commercial bank--that sparked the meltdown. This Article provides the rest of the story. The basic premise is straightforward: By 1999, the Glass-Steagall Act's original purpose-- to protect commercial banks from the capital markets--had reversed. Instead, its main function had become protecting the capital markets from new competition by commercial banks. Once the wall came down, commercial banks gained a sizeable share of the investment banking business. To offset lost revenues, investment banks pursued riskier businesses, growing their principal investments and increasing the amounts they borrowed to finance them. In effect, they assumed the features of commercial banks--a reliance on short-term borrowing to finance longer-term (and riskier) investments. For the investment banks, combining the two was lethal and eventually triggered the financial meltdown. The divide between two sets of regulators, those regulating commercial banks and those regulating investment banks, enabled the change. The need for greater regulatory coordination has grown with convergence in the financial markets. Although new regulation has addressed some of the concern, the gap between regulators continues today--raising the risk of repeating mistakes from the past. Acknowledging the role of bank regulation (and deregulation) in reshaping the capital markets is a key step in the right direction. [ABSTRACT FROM AUTHOR]

The article reports on the credit default swaps (CDS) in the U.S. and highlights their impact on the financial crises caused by the Great Depression. It mentions the regulation of credit default swaps under the Dodd-Frank Act established to reform U.S. banking system. Topics includes market surveillance system for growth of CDS, Federal Deposit Insurance Corp. (FDIC) establishment by U.S. Congress, and the Glass-Steagall Act limiting the commercial bank from participating in investment banking.

The article discusses a legal framework for financial disintermediation in Nigeria, focusing on issues related to the nation's financial services industry, various categories of financial intermediation, and the expansion of the scope of lawful activities by banks. A universal banking policy is mentioned, along with Nigeria's Investment and Securities Act 2007 (ISA). The U.S. Glass-Steagall Act of 1933 is examined, along with the use of securities to raise capital in Nigeria.