Banks and Mutual Funds: A Functional Approach to Reform

Sunday, January 1st, 1995 at 12:00 am by Jane E. Willis
Jane E. Willis, Banks and Mutual Funds: A Functional Approach to Reform, 1995 Colum. Bus. L. Rev. 221

This Article analyzes the existing regulatory structure along with current reform proposals and argues for a functional approach to bank mutual fund regulation. Part II describes the current statutory and regulatory structure governing bank mutual fund regulation. Section A describes the remaining statutory Glass-Steagall restrictions and section B discusses the responses taken by regulatory agencies to the recent increase in bank mutual fund sales.

Part III explores the rationales for the regulatory regime currently in place. Section A scrutinizes the rationale for the remaining Glass-Steagall prohibitions and section B critiques the available evidence about the dangers associated with selling mutual funds through banks. Part IV analyzes how banks have responded to the Glass-Steagall prohibition on distributing mutual funds and the additional benefits or synergies that would result from lifting the restrictions.

Part V discusses existing proposals for reform and argues for methods of reform on the agency and congressional levels that are consistent with a functional approach as opposed to an entity approach. This Part discusses agency and legislative approaches to Glass-Steagall reform and to the regulation of bank mutual fund advertising and selling practices. Finally, Part VI articulates a vision for the future of bank mutual funds that is consistent with the evolution of the financial services industry and summarizes the regulatory reform necessary to achieve this vision.

Author Information

Law Clerk to Honorable Robert E. Keeton, U.S. District Court for the District of Massachusetts