Bank Risk from Nonbank Activities
Banking organizations are permitted to engage in more than 50 nonbank activities, including commercial and consumer finance, mortgage banking and leasing. However, they are precluded from engaging in some other financial activities. These include insurance, securities underwriting and real estate, which many believe are essential to banking firms if they are to compete effectively in the financial services industry. However, it is feared that the removal of the legal barriers that prevent the entry of banks and bank holding companies will increase bank risk.