Abstract
On November 12, 1999, President Clinton signed the most significant piece of financial services regulation to be enacted since the Great Depression, at least up to that time. When the Financial Service Modernization Act of 1999, better known as the Gramm-Leach-Bliley Act (GLBA), was signed, the financial services industry faced strong pressures for deregulation of the rigid structure imposed during the Great Depression. During the 2007–2008 financial crises and ensuing debate regarding financial services regulation, the GLBA became a target as members of the financial sector, academia, and government considered possible triggers that may have precipitated the crisis.
This chapter also appeared as Networks Financial Institute Policy Brief 2010-PB-05.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Similar content being viewed by others
Notes
- 1.
Developing and promulgating new regulations dictated by Dodd-Frank is not the only obstacle. Most of the issues presented by the financial crisis are unaddressed or not fully addressed by Dodd-Frank so at least another major round in regulatory reform can be expected in the next few years in the United States. These include a large number of issues raised about fixing too-big-to-fail and how to repair critical holes in the regulation of complex financial institutions, retirement saving and credit default swaps, and other new and complex instruments, where thoughtful proposals have been developed by the Squam Lake group. See French et al. (2010).
- 2.
On the basis of a data set of 150 countries, Barth et al. (2006) conclude that regulation based upon disclosure and market-based monitoring provide superior outcomes based on a broad range of desirable regulatory outcomes. Regulations employing entry restrictions, government ownership or restrictions on banking activities, such as those arising from regulatory capture, adversely affect banking system performance.
- 3.
See VanHoose (2010), p. 198.
- 4.
- 5.
See Krugman (2009).
- 6.
See Paletta and Scannell (2009)
- 7.
See Kaufman (2010).
- 8.
See Uchitelle (2010). Volcker has argued elsewhere that financial deregulation introduced no new innovations beyond the automatic teller machine, but in this article he cites derivatives, securitizations and credit default swaps as products that did not exist before deregulation.
- 9.
See Uchitelle (2010).
- 10.
See Lawson (2009).
- 11.
See Simpson (2009).
- 12.
See Simpson (2009).
References
Barth JR, Caprio G Jr, Levine R (2006) Rethinking bank regulation: till angels govern. Cambridge University Press, New York, NY
Benston G (2000) Consumer protection as justification for regulating financial-services firms and products. J Financ Serv Res 17:277–301
Bullard J (2010) Containing risk in the new global financial landscape. In:19th Annual Hyman P. Minsky conference on the state of the U.S. and world economies, New York, 10 Apr. http://research.stlouisfed.org/econ/bullard/BullardLevyMinskyFinalApril15.pdf
French KR et al (2010) The squam lake report. Princeton University Press, Princeton, NJ
Kaufman H (2010) The road to financial reformation: warnings, consequences, reforms. Wiley, Hoboken, NJ
Krugman P (2009) The Gramm connection. Personal blog, 29 Mar
Lawson N (2009) The future of capitalism. Financial Times, 12 May
Paletta D, Scannell K (2009) The question for those fixing the financial mess. Wall Street J, March 10
Reinhart CM, Rogoff KS (2009) This time is different. Princeton University Press, Princeton, NJ
Simpson AG (2009) Would Gramm Leach Bliley pass senator Gramm’s own test? Insur J, 4 Apr. http://www.insurancejournal.com/news/national/2009/04/20/99770.htm
Uchitelle L (2010) Volcker pushes for reform, regretting past silence. New York Times, 9 July
U.S. Department of the Treasury (2009) Financial regulatory reform: a new foundation: rebuilding financial supervision and regulation, 17 June. http://www.financialstability.gov/docs/regs/FinalReport_web.pdf
U.S. Department of the Treasury (2008) Blueprint for a modernized financial regulatory structure, 31 Mar. http://www.ustreas.gov/press/releases/reports/Blueprint.pdf
VanHoose, D (2010) The industrial organization of banking. Springer, Berlin
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2011 Networks Financial Institute
About this chapter
Cite this chapter
Tatom, J.A. (2011). Financial Legislation: The Promise and Record of the Financial Modernization Act of 1999. In: Tatom, J. (eds) Financial Market Regulation. Springer, New York, NY. https://doi.org/10.1007/978-1-4419-6637-7_1
Download citation
DOI: https://doi.org/10.1007/978-1-4419-6637-7_1
Published:
Publisher Name: Springer, New York, NY
Print ISBN: 978-1-4419-6636-0
Online ISBN: 978-1-4419-6637-7
eBook Packages: Business and EconomicsEconomics and Finance (R0)