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EXPLORING 21st CENTURY SKILLS AND ISSUES
Together Again! Then Not. In 1993, in response to the Great Depression, Congress enacted the Glass- Steagall Act (GSA) prohibiting banks from performing both “investment banking” and “commercial banking” activities within the same company. After all, lots of innocent people had lost their money when banks used customers’ deposits to make risky investments. The history of GSA is long and complicated, but in the 1990s it was repealed. Once again banks could engage in both types of operations. Sure enough, banks soon began making risky investments. That (and many other problems) lead to the near collapse of the global economy in 2008. So, in 2010, many of the prohibitions against banks making risky investments ware reinstated by the Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) . That Act, specifically the part called the Volker Rule which requires separation of investment and commercial banks, continues to be hotly debated by bankers, economists, and politicians. Dodd-Frank is frequently mentioned in the financial news, so you should know a little about it. 1. Kelly Cupcake has a successful bakery in town. She wants to upgrade her baking equipment so she can expand her product line to include quiche. Where can she get the funds? a. Commercial Bank Circle one: retail (consumer) or business division b. Investment Bank 2. Lester the investor needs to polish his image with a new car. Where can he get a car loan? a. Commercial Bank Circle one: retail (consumer) or business division b. Investment Bank 3. The expansion of Kelly’s Cupcakes to Kelly’s Cupcakes and Quiche, has been a huge success. Her company has begun selling to major grocery store chains. Kelly is looking to expand her business again. She wants to merge her business with a restaurant chain. Where should she go for advice and help finding a suitable merger match? a. Commercial Bank Circle one: retail (consumer) or business division b. Investment Bank 4. Paula and Paolo work at Kelly’s Cupcakes and Quiche. They fell in love frosting cupcakes together. They just got married and are buying their very first home. They have no idea where to get a home loan. Where should they go? a. Commercial Bank Circle one: retail (consumer) or business division b. Investment Bank 5. Yummy Cafes is a nationwide restaurant chain hoping to shore up its coffee and baked goods menu. It’s looking to acquire partner with this expertise. Where should they go? a. Commercial Bank Circle one: retail (consumer) or business division b. Investment Bank PRODUCT PREVIEW Your job: Get these people to the right bank for their needs!
Lesson 6 | Crusaders, Unpleasant Peasants & Mobsters 106
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