Academic journal article ABA Banking Journal

A New Beginning for a New Century

Academic journal article ABA Banking Journal

A New Beginning for a New Century

Article excerpt

We made it! is history. We made it through the calendar change, and it's now time to direct our attention to the next set of challenges. In Y2K, the banking industry took on one of its biggest technology challenges ever. And now we're really ready for the Year 2000 and beyond.

A new century and a new era have dawned, and Congress has given the banking industry sweeping new financial modernization legislation to help us begin the new century. The Gramm-Leach-Bliley Act (Public Law No. 106-102) is one of the most important financial laws ever enacted. It is a big, complex, many-faceted bill. At the core of this new blueprint for banking and financial services lies the chance for every single banking institution in the country to prosper and profit anew. Now we will all be able to offer the financial products and services our customers want. It really is the beginning of a new era.

The Gramm-Leach-Bliley Act is the culmination of long, hard-fought battles stretching over many years. Now that we have the new law, what will we do with it? What will we do with the new tools it gives us? How will we use them to adapt to a new financial-services environment?

To begin that process, we should each understand what is in the new law. ABA has mailed a summary of the new legislation, prepared by the law firm of Covington & Burling, to every ABA member-bank CEO. We have also posted the full Covington & Burling summary on ABA's website, at www.aba.com. If you work for an ABA member bank, you can sign on to the members-only section of the site and view the entire document without charge. You can read it online or print it for later use.

I urge you to examine the new law closely. In our extensive summary you will read that we successfully addressed the unitary thrift issue, thereby preventing the wholesale integration of banking and commerce. Community banks now also have better access to funding through the Federal Home Loan Bank system. These were both top priorities for ABA.

Overall, the act achieves three fundamental goals of modernization. It repeals a number of key provisions contained in the Glass-Steagall Act so that commercial banks can affiliate with investment banks in the future.

The act modifies the Bank Holding Company Act of 1956 to permit companies that own commercial banks to engage in any type of financial activity. …

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