The Gramm-Leach-Bliley Act: Review and Recent Developments
1 March 2000
By Dr. Bernard Shull
The Gramm-Leach Bliley Act passed in November 1999 (GLB) moves financial institutions in the United States toward a system of conglomeration that has long existed in continental Europe and elsewhere in the world. Among other things, it repeals key sections of the Glass-Steagall Act that, for over 60 years, had limited the securities dealings of commercial banks and their affiliates.
In addition, it amends the Bank Holding Company Act that in 1970 established standards for bank affiliates to engage in non-traditional banking activities. It then establishes new types of permissible activities, new corporate organizational arrangements for engaging in these activities, new methods for determining additional activities, and a new regulatory framework.
This paper is, for the most part, limited to a review of the important provisions of GLB that establish the framework for affiliations among commercial banks, insurance companies and securities firms; i.e., Titles I and II. In the first section, selected provisions are briefly reviewed. In the second section, recent rules and regulations proposed by the Federal Reserve Board (FRB) and the Office of the Comptroller of the Currency (OCC) are described and some of the important issues yet to be addressed are indicated. An Appendix provides details of some of the related legislative and regulatory provisions that are incorporated in GLB.
