WASHINGTON - To any critics who are champing at the bit to start revising the Gramm-Leach-Bliley Act of 1999, former House Commerce Committee chairman Thomas J. Bliley Jr. has this bit of advice: Give it some time.
"It's a little early to start talking about any major change," Mr. Bliley said in a mid-November interview, the last in a series asking the authors of Gramm-Leach-Bliley to assess their handiwork's successes and shortcomings so far.
The congressman-turned-public-policy-adviser said that although regulators could be working a little faster clarifying certain provisions, the law already "puts our financial institutions in a much better competitive position" compared with "their global competitors."
"You're already seeing a great number of things happen," he said, rattling off the recent marriages of Chase Manhattan Corp. and J.P. Morgan & Co.; Credit Suisse Group and Donaldson Lufkin & Jenrette Inc.; Charles Schwab Corp. and U.S. Trust Corp.; UBS AG and Paine Webber Group Inc.; and Wachovia Corp. and First Union Corp.
"How many more are there going to be? We'll just have to wait and see," Mr. Bliley said. He added that he believes the viability of mergers and acquisitions is affected more by the economic downturn than other factors such as regulatory indecision over merchant banking capital requirements and whether banks should be allowed into the real estate brokerage business.
Though the Gramm-Leach-Bliley troika certainly had its differences as the law was being drafted, two years later the three were unanimous in emphasizing that making way for mergers was not the intent - and that the absence of a cross-industry merger frenzy should not be read as a sign that the law failed.
Some academics and lobbyists have said recently that banking, securities, and insurance companies have found it difficult to intermingle. Though banks are deepening their involvement in the securities and insurance businesses, few securities houses and insurers have formed financial holding companies and entered the banking business. They have shown a reluctance to become regulated by the Federal Reserve Board, as well as a concern that the central bank has been slow to define the business lines a financial holding company can engage in.
"Being frank with you, I didn't anticipate" a merger rush, Mr. Bliley said. "What we set up was a broad framework where people who had ideas would be able to carry them out and wouldn't have some artificial barrier to prevent them from doing so. We wanted everybody to know what the rules were and have everybody playing by the same rules."
The Virginia Republican retired from Congress last year upon reaching the six-year limit Republicans impose on their members serving as committee chairmen. He's now a senior public policy and government relations adviser at the Washington law firm of Collier Shannon Scott, known for its regulatory and antitrust work.
Despite his recommendation against major change, the ex-lawmaker second-guessed a key privacy provision and lamented a couple key defeats.
Mr. Bliley predicted that some lawmakers and consumer groups will renew their efforts to toughen the law's consumer privacy protections, but he said these protections are "certainly adequate for the time being."
The law required financial companies to establish a detailed customer data-sharing policy, tell customers annually what that policy is, and give them an opportunity to block their information from being shared outside of the corporation. It also expressly invited states to enact their own privacy laws, which many have unsuccessfully attempted to do.
The only change he would advocate is withdrawing the federal invitation to states to pass their own privacy laws. "As more and more of these mergers happen - and they're going to happen - involving multistate operations, it makes all the sense in the world to have a preemption."
His biggest regret, he said, was his unsuccessful fight against a provision preventing any more commercial firms from entering the banking business by merging with a thrift.
"To me that was downgrading a person's investment. I didn't think you should do that, but I didn't prevail."
He also said in a recent speech at an American Council of Life Insurers conference that he wished community reinvestment requirements for banks and financial holding companies could have been eliminated. "I would have knocked out" the Community Reinvestment Act "altogether if I could have."
He also warned the group to beware of Democrats trying to attach CRA-related, privacy, and redlining provisions to legislation aimed at creating an optional federal charter.
Mr. Bliley said that while many see a federal insurance charter as a natural outgrowth of Gramm-Leach-Bliley, the real impetus is the debate over how to insure businesses for terrorist strikes.
There "will be hearings and perhaps legislation to deal with a federal charter for insurance," he said. In light of the Sept. 11 terrorist attacks, "I think you'll get renewed discussion. Whether it will pass, I don't know. But I'm sure you will have hearings on it."
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