A Look at Corporate and Business Banking

Business banking and commercial banking are identical concepts, and are also related to the idea of corporate banking. Following the weakening of the Glass-Stegall Act, a law passed during the midst of the Great Depression which separated the ability of a bank to make investments from the ability of a bank to supply financial services to a business, the distinction between a business bank and an investment bank has become nearly insignificant. The Gramm-Leach-Bliley Act, the Depository Institutions Deregulation and Monetary Control Act, and the American Homeownership and Economic Opportunity Act have removed much of the regulations that limit a business bank. Commercial banking deregulation has been discouraged since the lifting of restrictions on the practice of a business bank has been suspected of leading to the decline in the financial market. Business banking has been brought under greater scrutiny following the collapse of the housing market and the suspect investment practices employed by big banks such as Lehman Brothers, Bear-Stearns, AIG, and other large investment firms, which also weakened business banking companies because banks were permitted to invest their customers’ funds in investment banks. Laws such as the Dodd-Frank Wall Street Reform and Consumer Protection Act have sought to reinstate many of the provisions of the Glass-Stegall Act, which were used to regulate commercial and business banking practices.