Number: RS21134
Title: Merchant Banking: Mixed Banking and Commerce Under the Gramm-Leach-Bliley Act
Authors: William D. Jackson and Gary W. Shorter, Government and Finance Division 
Abstract: A power Congress granted to banking (financial holding) companies in the Gramm-Leach-Bliley Act is merchant banking. It allows them to invest in nonfinancial businesses for a share of the profits. Other countries widely practice merchant banking. Its implementing agency, the Federal Reserve, has seen limited activity under its implementing regulation. Congress has paid attention to these investments because this application of the law, allowing merchant banking, has been controversial. The entire question of the separation of banking and commerce, of which merchant banking forms one part, has come under scrutiny in congressional hearings.
Pages: 6
Date: October 22, 2004