Investment Banking in America - Vincent P. Carosso

Investment Banking in USA
1. Introduction
a. Investment Banking is a different form of banking which takes care of 
a business enterprise’s major financial capital needs and requirements.
b. These capital requirements are in the form of financial support in 
releasing an “Initial Public Offering (IPO)”, “Private Placement”, 
“Bonds” and also in the “Merger and Acquisitions (M&A)” and other
service too.
2. Summary
a. An Investment bank is a fully dedicated “financial” institution which 
completely deals with assisting individuals, corporations and 
governments in raising financial capital.
b. Unlike commercial and retail banks, the investment banks do not have 
deposits. From 1933’s Glass-Steagall Act until 1999’s Gramm-Leach-

Bliley Act, the US decided to maintain a safe gap between investments
banking commercial banking.
c. An investment bank can be divided into private and public functions 
with an information barricade which does not allow the two techniques 
to collide.
3. The starting days of 20th Century
a. During the 1890-1925, the investment banking industry was revolving 
around JP Morgan & Co., Loeb & Co., Brown Brothers, etc. There was 
no legal steps to separate the commercial banks from the investment 
ones.
b. This resulted in deposits from the commercial bank’s side of business 
to get involved to fund the investment bank’s business side.
4. Reformation by the “Age of New-Deal”
a. When the 1933 began, the banking system in US has seen an explosive 
growth. The Roosevelt administration and the Congress took 
instantaneous steps to pass laws to go through the “Great Depression”.
b. A major part of the Roosevelt’s “New Deal” was the new look of the 
nationwide banking system.

5. 1933’s Glass-Steagall Act
a. This act was passed as counter-measure for the collapse of the 
American banking system in the early days of 1933. One of its steps 
mentioned were to separate the bank types according to their 
functionality.

Investment Banking in America - Vincent P. Carosso