Nov. 12, 2009 will commemorate the 10-year anniversary of the most significant piece of financial services regulation to be enacted since the Great Depression. When President Clinton signed the Gramm-Leach-Bliley Act (GLB) into law, the financial services industry faced strong pressures for deregulation of the rigid structure imposed during the Great Depression. Amidst today's financial crisis and resulting debate regarding financial services regulation, GLB has become a target. Some critics, including such influential voices as Joseph Stiglitz and Paul Krugman, both Nobel Laureates, have argued that the "modern" regulation contributed to the crisis by encouraging more risk, ultimately leading to the bailout of some of the nation's largest financial institutions. We would argue, though, that GLB has done just what it was intended to do: enhance competition, encourage product innovation, improve customer service and make banks more efficient.

The technologies that automated many banking services and reduced the importance of a bank's geographic location in serving its customers were not imagined when the Glass-Steagall Act of 1933 was enacted. By repealing Glass-Steagall, Congress sought to break down barriers that limited financial institutions' activities to specific functions or product lines, and to improve the efficiency of how financial products were delivered. GLB allowed U.S. financial institutions to provide the seamless "one-stop shop" for their customers, a service that European banks were already offering through their "universal banking" services.

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