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Board of Governors of the Federal Reserve System
The Federal Reserve, the central bank of the United States, provides the nation with a
safe, flexible, and stable monetary and financial system.

Joint Press Release
September 24, 2007

Statement by Governor Randall S. Kroszner

Thank you, Mr. Chairman. I am delighted to bring to the Board for consideration today final rules to implement
the so-called securities "push-out" provisions of the 1999 Gramm-Leach-Bliley Act (GLB Act). The rules are
identical to the ones approved by the Securities and Exchange Commission (SEC) last Wednesday and would
be jointly issued as a "single set" of rules by both the Board and SEC.
The rules pave the way for the GLB Act's "broker" exceptions for banks to become effective after many years of
hard work. In enacting these exceptions, Congress recognized that banks had been providing securities
services to their customers for decades without significant securities-related concerns. In fact, the Board and
the other federal banking agencies have a long history of effectively supervising the securities functions of
banks through regular on-site examinations, regulations, and supervisory guidance.
I'm pleased that the rules are expressly designed to ensure that banks may continue to conduct securities
transactions for customers as part of their banking activities. In this way, the rules help achieve the goals of the
landmark GLB Act by promoting competition, efficiency, and consumer choice in the markets for financial
services while recognizing--and building on--the existing functional supervisory and regulatory structures in
place for banks.   
It has been a long, but fruitful, road to this stage. Beginning in 2006, both principals and staff of the Board,
SEC, and the other federal banking agencies began holding a series of high level meetings to discuss new
approaches to implementing the important "broker" exceptions for banks in the GLB Act. Former Federal
Reserve Board Governor Susan Bies and SEC Chairman Christopher Cox played a key role in initiating this
process, and I was pleased to work with Chairman Cox and the staffs at the SEC and Federal Reserve to take
seriously comments on and criticisms of earlier proposals to develop a final rule and, finally, to move this over
the finish line.
Working collaboratively on both a principal and staff level, our agencies were able to develop new approaches
to many of the significant issues that had delayed full implementation of the 1999 GLB Act's bank exceptions
until now. Overall, these proposed rules were received much more warmly than earlier proposals. For
example, many commenters praised the agencies for working together to develop more workable ways of

implementing the important exceptions for the trust, fiduciary, custodial, and networking activities of banks.
Many commenters also indicated that the rules would be consistent with Congress' intent to protect the ability
of banks to provide securities services to their customers in connection with their trust, fiduciary, custodial, and
other banking functions.
I believe that the final rules achieve the goal of providing a clear, workable, and flexible framework for banks to
continue to serve the demands of their customers for banking services that include securities products while
ensuring consumer protection.   In addition, I feel that it is important to reduce administrative burdens and
promote competition while protecting consumers. The final rules also contain several important improvements
that are designed to achieve this end. By reducing uncertainty and creating a streamlined regulatory
framework, we can foster healthy competition that will benefit customers. Importantly, the rules also give banks
a lengthy transition period--until January 1, 2009, for most banks--before they must start complying with these
new broker exceptions and the final rules.
Before turning the floor over to the staff to describe the final rules, I'd like to personally thank Chairman Cox for
his leadership and involvement in the process. We are able to turn this page in the legacy of the GLB Act
today due in no small part to his efforts. I'd also like to thank Commissioner Nazareth and the SEC staff,
including Erik Sirri, Bob Colby, Caite McGuire, and Linda Sundberg, as well as so many on the Federal
Reserve staff including Scott Alvarez, Kieran Fallon, and Andrea Tokheim, for their hard work and cooperation
in bringing this joint rulemaking to a prompt and, I believe, successful conclusion.

Agencies issue final rules on "broker" provisions under Gramm-Leach-Bliley

Last Update: May 08, 2017

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