Dealer Bank

In the not-too-distant past of 2007, the iPhone was only available for AT&T (Cingular), who had an exclusive right to sell 'em.

When it comes to selling US treasury and municipal bonds, only a dealer bank, which is a commercial bank registered with the MSRB (Municipal Securities Rulemaking Board), is authorized to sell them as a principal. Same idea as T and the iPhone. Any other investment bank or financial institution is obtaining them to sell as a broker and purchasing them from a dealer bank for resale.

This trading plate is a key source of revenue for JP Morgan Chase, Bank of America, and other commercial banks. Of course, when the dealing banks who were making money hand over fist in FNMA and FDMC subprime mortgage bonds got hit with the collapse of that market, they made money on top by acquiring established brokerages such as Bear Stearns, Merrill Lynch, and Lehman Bros for pennies on the dollar.

Moral of the tale: It pays off to be in bed with the government. Careful...they hog the covers.