Kicking down the firewall : an examination of the leadership decisions behind the Gramm-Leach-Bliley Act
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The late 1990's was a time of great wealth and prosperity in the United States. With this economic fervor came a new era of deregulation of the financial services industry. During this time, Congress passed the Financial Services Modernization Act of 1999, otherwise referred to as the Gramm-Leach-Bliley Act (GBLA). This law removed the final barrier (contained in Depression-era Glass-Steagall legislation) between mixing investment banking and commercial banking in the United States. The purpose of this report is to explain the intentions of the law's supporters and detractors, to discuss why this period was a particularly ripe time for such a policy, to examine the leadership decisions that contributed to the passage of GLBA, and to understand the motives behind a "new Glass-Steagall" bill today. This paper focuses only on the deregulatory parts of GLBA relevant to Glass-Steagall's repeal. It does not examine the privacy protections, et al. of GLBA at any length. Also contained in the analysis is a brief discussion of whether GLBA's stated intentions have been violated through the mixing of banking and commerce that has emerged in the present day. Finally, this report ends with a discussion on the fidelity of our national debate on banking regulation, and what it means for the federal government to manage risk in American financial markets in support of the public interest.