Deregulation (3)
August 25, 2009 – 1:37 amTIPS & TECHNIQUES—Cash Management and Interstate Banking
The advent of interstate banking will present treasury managers with many cash management benefits. The total number of banks can be reduced and integrated, and uniform banking platforms will provide more efficient collections, concentration, and disbursement of funds. It is possible to envisage that pooling opportunities (see Chapter 7) will be available in the future. Today, companies with an extensive regional business may already benefit by consolidating their business with one of the super-regional banks that has extensive retail and commercial presence in a number of contiguous states.
Gramm-Leach-Bliley Act (GLB) of 1999. The Glass-Steagall Act of 1933 (also known as the Banking Act of 1933) was another measure introduced to protect the economy from future market crashes by separating commercial banking from investment banking and eliminating conflicts of interest. The act shaped the development of the banking industry and the structure of financial institutions for the next 60 years, until fully repealed in 1999 by GLB. The 1999 Act creates a new financial holding company; and while there are certain restrictions on the nonfinancial activities in which the new company can engage, they are authorized to:
Engage in underwriting and selling insurance and securities
Conduct both commercial and merchant banking
Invest in and develop real estate and other “complementary activities”
GLB also allows national banks to underwrite municipal bonds, and introduces significant consumer protection provisions, preventing the unauthorized disclosure of nonpublic information to unaffiliated third parties.
Taken From : Essentials of Managing Corporate Cash
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