Sep
13
Fed Proposes Ban on Merchant Banking, a Practice With Little Risk
By
Harry Campbell
The Federal Reserve has taken dead aim on merchant banking, proposing to ban the practice as part of a “take no risk” regulation strategy.
Merchant banking has been around for centuries. Why crack down now?
The business originated during the Italian Renaissance. Small, family-run banks would finance sea voyages and other trading missions, taking a share of the profits. This was high-risk finance. All could be lost as a result of a storm, the occasional war or even piracy. In the following centuries, merchant banking spread across Europe and then to the United States, becoming the occupation of the big banking houses like J.P. Morgan…
Fed Proposes Ban on Merchant Banking, a Practice With Little Risk
