Banking and Derivatives Transactions
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Underwriting consists of ra1smg money for clients through issuance of securities - stock and/or bonds to be sold. Prior to 1999, underwriting was the province of investment banks. That was a result of the Glass-Steagall Act of 1933, which organized the banking industry after the Great Depression created a Chinese wall between commercial and investment banks. The exclusion of commercial banks from the underwriting services was deemed necessary to avoid any conflict of interests when the same bank extended a loan to a corporation and then underwrote for the same corporation as a means of getting back its loan . The bank could then hide its risk and shift it on to the investors.
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