Federal Reserve Board Chairman Alan Greenspan testified recently in favor of repealing the provisions of the Glass-Steagall Act that prohibit affiliations between investment banking firms and member banks. If he had stopped at that point, his testimony would have been on sound footing.

Regrettably, his testimony went on to reopen an old debate about bank holding company subsidiaries versus bank subsidiaries. Chairman Greenspan argued that the activities of securities affiliates should be required to be conducted in bank holding company subsidiaries instead of bank subsidiaries.

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