The Growth Provided Safer and More Efficient Use of Assets in Banks (Essay Sample)

The Growth Provided Safer and More Efficient Use of Assets in Banks
Question one.
The glass-Steagall act was a legislation portion of the United State’s law whose main aim was to separate investment and commercial banking in the banking systems of the U.S. A banking organization in the U.S. had to choose either investment or commercial banking (Gayer1935). The act was significant because commercial banks were from then capable of availing previously restricted insurances to depositors in case of a financial loss. The act promoted development of financial organizations like Citigroup and Bank of America. The growth provided safer and more efficient use of assets in banks (Gayer1935). The act prevented commercial banks from being speculative and taking much risk with depositors' funds. In case of a market crash, depositors' funds would be safe; this was because, upon signing of the act, the federal deposit insurance corporation (FDIC) was born. In case of a financial crash, the FDIC was tasked with protecting the depositor’s funds and paying any debt owned by creditors.
During the 2008 global financial crisis, universal banks played leading roles in the subprime. They packaged trillions of dollars of high-risk mortgage loans into mortgage-backed securities sold as false securities to investors worldwide. Another event of glass-Steagall was the big-bank lobby persuading Congress to repeal Glass-Steagall's core provisions in 1999. A group of large universal banks dominated financial markets in the US.
Question 2A
Starting a new bank is a step-by-step process that an organization undergoes over a long period with the help of organizers. Detailed information about every part of the upcoming bank has to be processed carefully by appropriate authorities (Hightower 2016). The first step will be collecting and forwarding all relevant information about finances and risk management plans to the appropriate authorities (Min 1989). Next, the organizer have to wait for approval for a federal or state charter from the office of the comptroller of the currency (OCC) or the national bank. Next, the proposed bank must obtain approval for deposit insurance from the federal deposit insurance corporation (FDIC). Additional approvals will next be required from the Federal Reserve. The organization will now control the new bank, and a state-chartered bank will become a Federal Reserve member. Rules states that a bank must show
The guidelines require a bank to demonstrate that it will have enough capital to support its risk profile, operations, and future growth, even in the event of unexpected losses. Newly established banks are generally subject to additional criteria that remain in place until the bank's operations become well-established and profitable.