Banking and Commerce: The Next Steps
Workshop held September 29, 2006
The commingling of banking and commerce has been controversial throughout much of U.S. financial history, though the historic separation of banking and commerce has never been universal or complete. Recent developments surrounding industrial loan companies (ILCs), such as legislation to expand their powers and the application by Wal-Mart to acquire an ILC, have renewed the debate over how far to go in mixing banking and commerce. At one end of the debate are legitimate business reasons to engage in activities that have been the exclusive domain of depository institutions-such as access to the payment system-but may be only incidentally related to lending, deposit taking and risk management (core banking activities). At the other end are concerns about the competitive advantages that large nationwide retailers would have over community banks if they are allowed to own ILCs with expanded powers, and broader concerns about expanding access to the federal safety net currently provided to depository institutions, the risks that come with the associated increase in federal supervision, and the possible concentration of economic power. At the center of the debate is the fundamental issue of what set of activities constitute banking and what set of activities are only incidental to banking-or "closely related to commerce," -even though banks may have traditionally engaged in them.
The Last Frontier--The Integration of Banking and Commerce in the United States
Alan Reichert, Cleveland State University
Larry Wall, Federal Reserve Bank of Atlanta
Hsin-Yu Liang, Cleveland State University
Why Regulate Bank Holding Companies?
Rick Carnell, Fordham University
Commerce and Banking: The Twain Should Meet
Larry White, New York University
Panel Discussion: Public Policy Issues
John Boyd, University of Minnesota
Jack Reidhill, Federal Deposit Insurance Corporation
Robin Prager, Board of Governors of the Federal Reserve System
Bernard Shull, Hunter College