Guy Walks Into Citigroup Branch, Loses $40,000 – Bloomberg 07-18-13

Salient to Investors:

Jonathan Weil writes:

The reason it’s a good idea to separate securities firms from commercial banks is to protect consumers from brokers selling schlock investments.

There are countless tales of banks cross-selling unsuitable investments to unsophisticated customers. Many people trust the advice they get from their local bank branch, even if they normally would never set foot in a brokerage firm.

The banking industry has a long history of preying on unsuspecting depositors by selling them garbage securities without regard to suitability – a big reason Glass-Steagall was originally enacted during the Great Depression.

There were $61 billion in settlements between large banks and the SEC over sales of auction-rate securities, the market for which crashed in 2008.

The best way to keep the sharks from preying on the customers in the bank lobby is to not let them in there in the first place.

Read the full article at  http://www.bloomberg.com/news/2013-07-18/guy-walks-into-citigroup-branch-loses-40-000.html

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