Gramm-Leach-Bliley Act Definition
The Gramm-Leach-Bliley Financial Services Modernization Act of 1999 repealed the Glass-Steagall Act opening up competition among banks, securities companies and insurance companies. The Glass-Steagall Act prohibited a bank from offering investment, commercial banking, and insurance services. The Gramm-Leach-Bliley Act allowed investment and commercial banks to consolidate, for example Citigroup and Salomon. The combined industry is known as the financial services industry.
This act was desired by most of the largest banks, brokerages, and insurance companies in the country at the time. The justification was that people usually put more money in investments in a good economy, but when it turns bad, they put their money into savings accounts. With the new act, they would do both with the same company, so the company would be doing well in all economic times. This has to some extent proven out.