Engaging in securities activities has increased neither the riskiness nor the failure rate of commercial banks in the past, and it does not promise to do so in the future, a study commissioned by the ABA Securities Association found.
The study, conducted by professors from Loyola and Emory universities, found: banks involved with securities activities before the Glass-Steagall years were associated with lower rates of failure, and in subsequent years banks involved with securities activities saw little increase in risk. (Since 1987, under Section 20 of the Banking Act of 1933, also known as Glass-Steagall, separately capitalized affiliates of commercial bank holding companies have been allowed to deal in a broader range of municipal and private securities activities.)
What's more, underwriting and dealing in debt and equities overseas hasn't caused financial stress for banks. The conclusion: securities activities that would be allowed if Glass-Steagall restrictions were to be removed would not increase the risk profile of banks.
In fact, securities operations would allow banks to diversify their more effectively.