Although not perfect, the Gramm-Leach-Bliley Act (S. 900) would repeal provisions of the obsolete, Depression-era Glass-Steagall Act that prohibits banks and securities firms from owning each other, say Heritage Foundation analysts. Congress will soon consider the conference report on the bill developed by Senator Phil Gramm (R-Texas), and Representatives Jim Leach (R-Iowa.), Thomas Bliley (R-Va.).

• If the bill becomes law, new financial services holding companies would be allowed to own separate banking, securities, and insurance subsidiaries that could offer integrated retail services to consumers.

• In addition, some of the worst abuses of the 1977 Community Reinvestment Act (CRA) -- which requires banks to make uneconomic investments in disadvantaged neighborhoods -- would be corrected.

• Banks with under $250 million in assets that have an "outstanding" or "satisfactory" CRA rating would be examined less frequently than under current law -- significantly reducing the regulatory burden.

• And banks would be required to disclose payments to so-called community groups that challenge applications for bank mergers and can seriously delay the approval process.

However, the bill would expand CRA to cover bank affiliates of financial services holding companies.

Former Treasury Secretary Robert Rubin estimated consumers would save $15 billion a year in fees levied on financial services thanks to greater competition and a more efficient financial services system.

Source: David C. John, "Gramm-Leach-Bliley Act (S. 900): A Major Step Toward Financial Deregulation," Backgrounder No. 1338, October 28, 1999, Heritage Foundation, 214 Massachusetts Avenue, N.E., Washington, D.C. 20002, (202) 546-4400.