2-76 One of the primary reasons that investment banks were allowed to convert to bank holding companies during the recent financial crisis was recognition that

Question

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Investment banks were allowed to convert to bank holding companies during the financial crisis because their operating activities were deemed too risky and they needed the cushion of bank deposits to mitigate funding risks. By becoming a bank holding company, they were able to take advantage of the safety net provided by access to the Federal Reserve's discount window, which provided them with a stable source of funding.

2-76 One of the Primary Reasons That Investment Banks Were