financial services industry, and the economy. Thanks to the willingness of Congress and the White House to compromise and cooperate in producing bipartisan legislation, federal banking and securities rules will finally be updated to reflect the realities of the modern market.

The Depression-era laws defining the services that banks, securities firms, and insurance companies can provide have lagged far behind the contemporary needs of investors to take advantage of the opportunities generated by technology. Outdated federal laws have impaired the global competitiveness of financial services firms, limited the range of services that people can obtain from one financial institution, and driven up costs.

The securities industry has long advocated the overhaul of these anachronistic laws. We worked effectively with other financial services trade associations, both sides of the aisle in Congress, and the Clinton administration to help ensure adoption of this long-needed legislation.

The Financial Services Act would create a regulatory structure that enhances the competitiveness of financial services firms but is still flexible enough to accommodate the constantly evolving financial market. Securities firms, insurance companies, and banks will be able to freely affiliate with each other through a holding company. Each subsidiary financial institution within a holding company will be functionally regulated, thereby ensuring tough, consistent investor protections and fair competition.

The Securities Industry Association, throughout its advocacy of this legislation, lobbied for the inclusion of provisions that follow three key principles:

Functional regulation: One federal agency should apply the same set of rules to the same financial activity.

Two-way street: Securities firms should be permitted to fully affiliate with banks in a financial services holding company.

Competition without federal subsidies: Securities activities should be performed in separately capitalized affiliates of banks, and those affiliates should not get a competitive advantage from the insured deposits or credit power of a federally insured bank.

The final version of the bill incorporates each of these provisions.

The legislation also includes provisions that reinforce the securities industry's client privacy practices and provide the most extensive safeguards yet enacted to protect the privacy of consumers' financial information. The bill makes standard such industry practices as the posting of privacy policies and the availability of procedures by which customers can decide who can gain access to their account information.

Securities firms, as part of financial services holding companies, will be able to offer their clients one-stop shopping to meet a broad range of financial needs, from checking and savings accounts to mortgages and financial planning. Consumers will save an estimated $15 billion a year over three years, according to the Treasury Department. Increased competition will also give underserved communities, entrepreneurs, and small-business owners expanded access to a full range of financial services.

The act would give the industry the flexibility to meet the challenges of doing business and succeeding in the 21st century. It will give people virtually limitless choices in selecting the financial products that meet their needs, and it will strengthen the economy.

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