Washington, D.C. - U.S. Senate Banking Committee member Sen. Mike Enzi, R-Wyo., took to the Senate floor today to argue in favor of legislation he said would open a new world of financial opportunities to Americans.
The Gramm-Leach-Bliley Act (S. 900), which some have called the "most important piece of legislation this session," passed the Senate 90-8 with one senator voting present. The bill would break down the barriers between banks, insurance agencies and securities firms to affiliate with and engage in each other's activities.
Enzi said this will provide a variety of services available to the average consumer.
Financial services modernization will allow one-stop shopping for consumers wanting a variety of financial services -- banking, insurance and securities. This will increase efficiency and competition, which translates into more choices and lower prices for American consumers," he said.
Enzi also stressed the benefit to smaller banks, "the heart of Wyoming's financial system."
"This bill requires the federal banking agencies to use plain language in their rule making. The plain language provision was included to ensure that small banks will not have to hire several lawyers to interpret the new rules resulting from this legislation. This is a significant development," said Enzi. "The Gramm-Leach-Bliley Act also allows small banks to access advances from the Federal Home Loan Bank System. These advances could be used for small business and small farm lending, in addition to housing. This will enable small banks to serve
their communities comprehensively and provides them the liquidity they need to remain competitive."
Enzi used his position on the Senate Banking Committee to ensure the bill preserved the state banking system, which is essential for a state's economic development. Under the state banking system in our country, state legislatures determine the powers allowed to their state institutions. These powers are tailored to meet the economic needs of the individual states.
Consumer Privacy
The bill provides the strongest privacy protections ever for Americans. It requires financial institutions to clearly disclose privacy policies to their customers. The bill also requires that any bank considering sharing financial information with a third party to notify the customer.
"Customers have the final say in what their bank is doing with their personal information," Enzi said. "Americans are guaranteed the right to privacy through this legislation."
Banks benefit from the legislation's regulatory relief provisions, as well. More than 80 percent of banks will receive a dramatic reduction of the regulatory burden from audits.
Financial History
Enzi said today's globalization of financial services, developments in technology and changes in the capital markets demand a change in the obsolete existing laws. Our out-of-date system stems from the 1933 Glass-Steagall Act (which required the separation of commercial banking and investment banking) and the 1956 Bank Holding Company Act (which required the separation of banking and insurance). Originally intended to protect the financial system by insulating commercial banking from other forms of risk, these laws now hamper the ability of financial institutions to diversify their products.
"This legislation eliminates these artificial barriers just in time for the beginning of the 21st century," Enzi said.
The financial services modernization conference report must still be passed by the House, after which it will be sent to the president for his signature. The White House has indicated its support for the legislation.
