Gramm-Leach-Bliley Act Retroactively Legalizes Citigroup Merger, Repeals Glass-Steagall
President Clinton signs the Financial Services Modernization Act (Gramm-Leach-Bliley Act), officially repealing key provisions of the Glass-Steagall Act of 1933 that separated commercial and investment banking. The law retroactively legalizes the 1998 Citicorp-Travelers merger that created Citigroup, which had violated existing banking law. Top Citigroup officials were allowed to review and approve drafts of the legislation before formal introduction. Phil Gramm declared: “We are here today to repeal Glass-Steagall because we have learned that government is not the answer… freedom and competition are the answers.” This deregulation enabled banks to use customer deposits for high-risk investments in derivatives, mortgage-backed securities, and credit default swaps, directly contributing to the 2008 financial crisis.
Key Actors
Sources (6)
- Financial Services Modernization Act of 1999 (1999-11-12)
- Gramm-Leach-Bliley Act Analysis (1999-11-12)
- The Repeal of Glass-Steagall and the Advent of Broad Banking (2000-04-13)
- The Financial Services Modernization Act: A Legal and Policy Analysis (1999-11-12)
- Impact of the Gramm-Leach-Bliley Act on Financial Services Industry (2004)
- The Gramm-Leach-Bliley Act: A Bridge Too Far? Or Not Far Enough? (2010)
Help Improve This Timeline
Found an error or have additional information? You can help improve this event.
Edit: Opens GitHub editor to submit corrections or improvements via pull request.
Suggest: Opens a GitHub issue to propose a new event for the timeline.