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Unitary thrifts: a performance analysis


  • James B. Thomson


Title IV of the Gramm-Leach-Bliley Act of 1999 closed the unitary thrift holding company loophole, which allowed a limited commingling of banking and commerce. This article examines whether eliminating this loophole was beneficial by empirically comparing the performance of thrifts in holding companies owned by nondepository institutions (UTHC thrifts) with other thrifts. Important differences between these two types of thrifts are found. UTHC thrifts tend to outperform the others during the period studied and appear to be less risky-possibly because UTHC thrifts seem to have more diversified revenue streams, loan and asset portfolios, and funding sources than do other thrifts. No evidence is found to suggest that limited commingling of banking and commerce, in the form of the UTHC loophole, poses undue risks to the federal financial safety net.

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  • James B. Thomson, 2001. "Unitary thrifts: a performance analysis," Economic Review, Federal Reserve Bank of Cleveland, issue Q II, pages 2-14.
  • Handle: RePEc:fip:fedcer:y:2001:i:qii:p:2-14

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    References listed on IDEAS

    1. Kane, Edward J, 1970. "Short-Changing the Small Saver: Federal Government Discrimination against the Small Saver During the Vietnam War," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 2(4), pages 513-522, November.
    2. John H. Boyd & Chun Chang & Bruce D. Smith, 1998. "Moral hazard under commercial and universal banking," Proceedings, Federal Reserve Bank of Cleveland, issue Aug, pages 426-471.
    3. anonymous, 1999. "Using subordinated debt as an instrument of market discipline," Staff Studies 172, Board of Governors of the Federal Reserve System (U.S.).
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