Study Of The Effect Of The Gramm-Leach-Bliley Act

The former U.S. President Clinton signed into law the Gramm-Leach-Bliley Act on November 12, 1999, which was regarded as a watershed event in the financial services industry. It repeals certain sections of the Glass-Steagall Act of 1933, which generally prohibited the commingling of the banking, securities, and insurance industries and allows them to enter into each other's businesses via the form of Financial Holding Company (FHC) , which was created by the Act. The paper first briefly reviews the corresponding changes in the financial law related to mixed operation in the U.S. and emphasizes some of the highlights of the Act, and then analyzes the extent to which FHCs are engaged in securities underwriting and dealing, insurance underwriting, insurance agency activities, and merchant banking under the Act six years after its passage. And through the analysis of the performance of FHCs, the author intends to prove that the impact of the Act is not as great as expected. For the gap between the expectation and the reality, the author tries to conduct some profound analysis from the following perspectives: the cross-industry motives of non-bank financial institutions, the supervisory mode under GLBA, the loopholes in the law preceding the enactment of GLBA, the difference in the profits among banking, securities and insurance industry, the choice between specialized and diversified operation, the privacy regulations, consumers' habits and cultural difference. Meanwhile, the author expresses her opinions on the controversy about the separate operation and mixed operation in China.