Banks as supermarkets

The Gramm-Leach-Bliley Act of 1999 blurred the distinction between banks, brokerages, and insurance companies. The law repealed major sections of the Glass-Steagall Act, a law passed in 1932 to keep financial institutions from consolidating their reach. This deregulation likely reduced the effect of the financial crisis that began in 2008 by allowing commercial banks to take over brokerages rather than allowing the brokerages to fail completely.

As a result of the 1999 law, banks may acquire, establish, or affiliate with brokerages and insurance companies to offer customers a wider range of financial services and products. In addition to loans and deposits, banks today offer brokerage accounts, insurance, annuities and other retirement investments. Because of their newfound reach, some of the largest of these institutions are referred to as bank supermarkets.

Whether your bank is one of these supermarkets or the same community bank you've been using for years, Gramm-Leach-Bliley is likely to continue to shape the landscape of banking, brokerage, and insurance for years to come.

Gramm-Leach-Bliley also took steps to protect your privacy. The law requires banks and other financial institutions to disclose clearly their privacy policies for sharing customer data. The law also requires that institutions give customers a choice to opt out of sharing personal information with other parties.

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