Should we put a wall up between retail & investment banks? (S1709)
“If commercial banks & investment banks are within the same corporate structure, investment banks are able to use some of the deposits to make their riskier bets. So they use cheap, guaranteed money to make bets on the market. When their bets collapse, as they did in the Great Recession, the depositors from the commercial side of the bank are exposed to that loss, which puts the government on the hook to pay out those deposits.”