Banking legislation is one of the main themes on FRASER, with items dating all the way back to 1781. One of the more recent documents is the Financial Services Modernization Act of 1999, more commonly called the Gramm-Leach-Bliley Act. This legislation repealed parts of the Banking Act of 1933, more commonly called the Glass-Steagall Act, and the Bank Holding Company Act of 1956.

In 1933, Senators Carter Glass[1] (D-VA) and Henry Bascom Steagall[2] (D-AL) proposed the Glass-Steagall Act to separate commercial and investment banking in response to the 1929 stock market crash. The Bank Holding Company Act of 1956 was passed so that the Federal Reserve could approve and supervise bank holding companies.

More than 40 years later, U.S. Representatives Phil Gramm[3] (R-TX), Jim Leach (R-IA), and Thomas J. Bliley Jr. (R-VA) proposed the legislation that eventually took their names. The Gramm-Leach-Bliley Act, like most banking legislation, was passed in response to growth and diversification of the financial industry,[4] in this case during the 1990s. The need for modernization was emphasized in a statement to Congress by Federal Reserve Chairman Alan Greenspan nine months prior to the act’s passage.[5]

Effective November 12, 1999, the act repealed sections of the Glass-Steagall Act and introduced a new concept—financial holding company (FHC)—amending the “bank holding company” term defined in the Bank Holding Company Act. These changes allowed a single corporation to offer all the services previously provided separately by banks, securities firms, insurance companies, and other financial institutions.


Financial Services Modernization Act of 1999 (Gramm-Leach-Bliley Act)

Financial Services Modernization Act of 1999 (Gramm-Leach-Bliley Act)

To regulate these newly formed FHCs, the Gramm-Leach-Bliley Act gave the Federal Reserve new responsibilities. To be approved, a company was required to “file a written declaration with the Federal Reserve Board that it elects to be a FHC, and must also certify that it meets the requirements.”[6] Essentially, “the Fed [supervised] the consolidated organization, while primarily relying on the reports and supervision of the appropriate state and federal authorities for the FHC subsidiaries.”[7]


Financial holding company defined

The financial industry has drastically changed since the Federal Reserve’s creation in 1913,[8] and the supervisory and regulatory powers of the Fed continue to be adapted to maintain financial stability and safety.[9] The Gramm-Leach-Bliley Act “[modernized] our financial system for the twenty-first century”[10] and set the tone in banking for the next nine years until the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act.


[1] Glass had also been Secretary of the Treasury and was one of the founders of the Federal Reserve System. View the FRASER collection of his statements and speeches:

[2] Steagall was chairman of the Banking and Currency Committee from 1931-1943. View the FRASER collection of documents related to his political career:

[3] Before Phil Gramm became a member of Congress, he was professor of economics at Texas A&M University. On February 7, 1975, Gramm presented the paper “Inflation: Its Cause and Cure” at the Federal Reserve Bank of Saint Louis, available at

[4] Read about the Gramm-Leach-Bliley Act in the 2000 “Annual Report: Budget Review” from the Board of Governors:

[5] On February 23, 1999, Greenspan urged Congress to pass legislation to update the financial industry. FRASER has a copy of his statement to Congress:
Also find statements and speeches by Greenspan:

[6] Mahon, Joe. “Financial Services Modernization Act of 1999, Commonly Called Gramm-Leach-Bliley.” Federal Reserve History. November 22, 2013.

[7] Ibid.

[8] See the Federal Reserve Act of 1913:

[9] See the following Board of Governors report on its history of supervision and regulation of financial institutions:

[10] Read the remarks of Laurence H. Meyer, economist and Federal Reserve governor from June 1996-January 2002, about the Gramm-Leach-Bliley Act one year after its passage:

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