How do investment banks differ from traditional banks?
Most people are familiar with commercial banks, which collect deposits from clients and issue direct loans to businesses and individuals. At one point in time, banks were required to be of either the investment or commercial variety. But in 1999, the Gramm-Leach-Bliley Act allowed commercial and investment banks to consolidate. This is why JPMorgan, the nation’s third-largest commercial bank, is also able to operate as an investment bank.
