09/15/2008

Hello:

Today we bid a fond farewell to Merrill Lynch, whose "Bullish on America" ads were some of the best remembered. Merrill Lynch is being purchased in a stock deal by Bank of America -- so should we now be bullish on Bank of America?

One by one, the investment banks, such as Merrill Lynch, Bear Stearns, etc. are being acquired by commercial banks such as Bank of America and JP Morgan Chase. What does this mean in terms of securities regulations?

The Glass-Steagall Act was legislation passed by Congress in 1933 authorizing deposit insurance (FDIC) and prohibiting commercial banks from owning investment banks. The law was designed to insulate bank depositors from the risk involved in underwriting securities (IPO's) and from the risk involved in brokerage investments. The thought was that the division of commercial banking from investment banking would help avoid runs on banks such as what was experienced in the Great Depression.

Ever since the 1980's banks and brokerage houses have been blurring the line between investment and commercial activities. The Financial Modernization Act of 1999 knocked down even more barriers. With today's news, it appears that the line has been erased. Perhaps this will help our banking firms become even more competitive in the global arena.

Your cash balances are covered by FDIC through our Insured Cash Account (ICA) program.

Terri G. Millson, CIMA, CIMC President

Ray Dicius, CSA, GEPC LPL Branch Manager