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Investment banks gain access to more stable source of funds

Combining commerical and investment banks enables the investment banking arms to fund operations using comparatively stable deposits rather than the more volatile money markets.

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The Global Financial Crisis
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Long-term causes of the financial crisis?
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Unintended consequences of earlier public policy choices
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Investment banks incentivised to move into riskier activities
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How were investment banks incentivised to increase risk?
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Allowing mixing of commercial and investment banking in 1990s
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Enabled commerical and investment banking conglomeration
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Investment banks gain access to more stable source of funds
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Advantages seen in Bank of America acquisition of Merrill Lynch
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Model proven in Europe
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Risks increase while logic of conglomeration unfolds
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Conglomeration enables diversification
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