• extend the Gramm-Leach-Bliley Act (1999) to all banking institutions and remove Community Reinvestment Act compliance; • repeal the Community Reinvestment Act (1977) to allow fair and competitive lending while eliminating the unnecessary burden of paperwork imposed on banking institutions and regulatory agencies; • eliminate mandatory federal deposit insurance, allow competition, and privatize the Federal Deposit Insurance Corporation; and • enact the Bankruptcy Reform Act with stronger provisions to prevent those debtors who can repay their obligations from abusing the system.
The 106th Congress did a favor to consumers of financial services by passing the Gramm-Leach-Bliley, or Financial Modernization, Act of 1999, which repealed much of the Glass-Steagall Act (1933) and the Bank Holding Act (1956) and removed many of the artificial barriers separating insurance companies and commercial and investment banks.
Allowing firms to transform themselves into financial holding companies that can engage in a wide range of financial services will give rise to more competition, and consumers will benefit from lower prices, onestop financial services, and innovation leading to more products. U.S. firms will be better able to compete globally.
The act also lessened restrictions on merchant banking by allowing financial holding companies to make larger equity investments in nonfinancial companies without ownership limitations. However, restrictions