Effects of Pooled Funds on Financial Intermediation This

This paper will discuss pooled funds and their effects on financial intermediation in the United States. The first part of the paper will provide some background concerning financial intermediation, describing the benefits of intermediaries in the market. The second part of the paper will discuss the use of pooled funds by intermediaries. Included in this discussion will be a description of some of the more common types of pooled funds, especially mutual funds. This part of the paper will also examine how these funds are used by different types of intermediaries, especially commercial banks and investment banks. The third part of the paper will discuss the regulation of pooled funds, concentrating upon the Glass-Steagall Act and the Investment Company Act. This section will include an examination of the inefficiencies which result from the present state of regulation, especially regarding the institutional approach of regulation. The fourth part of the paper will discuss the policy concerns of pooled funds, focusing upon the potential effects of the increased volatility of the market.

Financial intermediation generally means the linking up of capital providers and capital users. Capital providers have an income which is superior to that of the amount of capital required to generate that income. This excess income becomes capital available for income generation. The important objective is to allocate this new

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uity contracts and variable life insurance policies. Employee benefit plans subject to the Employee Retirement Income Security Act (ERISA) are literally a type of investment company, with many organized as trusts. However, they are excluded from the definition of investment company because of the assumption that the "investors" in a plan are free to deal directly with and supervise the manager of the plan. Moreover, there is no public offering creating ownership interests in employee benefit plans. As a result, employee benefit plans are exempt from regulation under the Investment Company Act. Instead, they are regulated by ERISA to protect the interests of participants. Commodity Pools are collections of funds used to trade in commodities futures contracts. These investments are highly speculative and the activities of commodity pool operators are strictly regulated by the Commodity Futures Trading Commission. Although mutual funds can invest in commodity futures contracts, such investments are limited in order to avoid classification and regulation as commodity pool operators. Pooled income funds collectively invest funds which have been irrevocably donated to certain qualified charitable organizations and struc
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Some common words found in the essay are:
Pooled Funds, Policy Concerns, Glass-Steagall Act, Background Financial, Guarantee Corporation, Reserve Board, Effects Regulation, Trading Commission, Act ERISA, Company Act, mutual funds, pooled funds, financial intermediaries, investment company, glass-steagall act, mutual fund, financial intermediation, investment company act, institutional approach, insurance companies, financial institutions, allocate capital efficient, bank common trust, types pooled funds, institutional approach regulation,
Approximate Word count = 4252
Approximate Pages = 17 (250 words per page)