As bank profits slumped in recent years, industry leaders have searched for ways to expand into new lines of business. Last week the Federal Reserve Board granted J.P. Morgan & Co., the parent of the giant bank Morgan Guaranty Trust, the right to underwrite stocks through a separate subsidiary. The decision marked the widest breach yet in the 1933 Glass-Steagall Act, which has barred banking firms from buying and selling stock. On Wall Street securities firms charged that bankers might funnel federally insured deposits into risky stock deals. But regulations bar bank holding companies from shifting funds from a bank to...
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