Released in August 2002, this working paper from the Social Systems Research Institute at the University of Wisconsin provides a broad overview of the dramatic changes within the commercial banking sector of the United States during the past fifty years. Authored by Professor Emeritus Donald D. Hester of the University's economics department, the paper proceeds chronologically from the conclusion of World War II and provides some comparative insights between the banking situation of the 1920s in the United States with those of the past ten years. Throughout the work, Professor Hester focuses his attention on banking practices, portfolio composition, and the changing role of banks as financial intermediaries. In the course of his work, Professor Hester concludes that banks have been increasingly discarding their traditional mode of financing loans and investments with deposits they collect, instead becoming brokers who originate loans and then use securitization to lodge them with other investors who are likely to be less informed and correspondingly more vulnerable to losses.
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