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Essay / Research Paper Abstract
This 5-page paper examines the Gramm-Leach-Bliley Act of 1999, and how it can be used to help regulate depository institutions to create an efficient and safe system. Bibliography lists 3 sources.
Page Count:
5 pages (~225 words per page)
File: D0_MTglbban.rtf
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Unformatted sample text from the term paper:
The student has been asked by the president of the Fed to research and analyze the impacts of the Gramm-Leach-Bliley Act of 1999, the results of which will be displayed
in a quarterly bulletin. More specifically, the president is interesting in knowing what should be done about regulating institutions so as to create an efficient, yet safe system.
To begin answering this question, it might be a wise idea to examine exactly what the Gramm-Leach-Bliley Act (or GLB as well refer to
it from now on) entails and how it impacts regulation. Officially named Financial Services Modernization Act, GLB basically helps blur the lines
between banks, securities firms and insurance companies, allowing these institutions to team up and offer each others products to the general market (U.S. Senate, 2003). This repeals the Glass-Steagall Act
that was passed during the Great Depression, that placed restrictions on banks affiliating with security firms (U.S. Senate, 2003). Furthermore, GLB notes that the Fed may NOT permit a company
to form a financial holding company (which would be used to bind banks and security firms) if insured depository institution subsidiaries are not well capitalized or well-managed (U.S. Senate, 2003).
In this provision, we see one answer to our question - namely, that the Fed needs to keep an eye on potential holding companies to ensure that they are highly
capitalized (in case of potential problems) and well managed (so they dont get into problems in the first place). The Act also
allows for a study of using subordinated debt to protect both the financial system and deposit funds from the so-called "too big to fail" institutions (U.S. Senate, 2003). Again, with
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