Gramm Leach Bliley Modernization Act of 1999 Free Essays

Gramm Leach Bliley Modernization Act of 1999 History of the GLBA The Gramm Leach Bliley Modernization Act of 1999 is a regulation that Congress passed on November 12, 1999, which attempts to update and modernize the  financial industry. The main function of the Act was to repeal the Glass-Steagall Act that said banks and  other financial institutions were not allowed to offer financial services,  like  investments and insurance-related  services, as part of normal operations. The act is also known as the Financial Services  Modernization Act. We will write a custom essay sample on Gramm Leach Bliley Modernization Act of 1999 or any similar topic only for you Order Now The Gramm-Leach-Bliley Act (GLBA), which is also known as the Financial Services Modernization Act of 1999, provides limited privacy protections against the sale of your private financial information. Additionally, the GLBA codifies protections against pretexting, the practice of obtaining personal information through false pretenses. (EPIC. org) Senator William Gramm Senator William Philip Gramm, also known as Phil, is a Representative and Senator from Texas. From 1978 to 1983, he served as a Democratic Congressman. Then from 1983 to 1985, Senator Gramm served as a Republican Congressman.Most recently, from 1985-2002, he served as a Republican Senator. After graduating from the University of Georgia in 1964, he continued at U of G to receive his doctorate in 1967. William Gramm was a professor of economics from 1967-1978. During this period, from 1971-1978, he also founded an economic consulting firm by the name of Gramm amp; Associates. In 1981, he co-sponsored the  Gramm-Latta Budget  which implemented  President  Ronald Reagan’s economic program, increased  military spending, cut other spending, and mandated the  Economic Recovery Tax Act of 1981.Just days after being reelected in 1982, Gramm was thrown off the  House Budget Committee  for supporting Reagan’s tax cuts. In response, Gramm resigned his House seat on January 5, 1983. He then ran as a Republican for his own spot in a February 12, 1983 special election, and won. He became the first Republican to represent the district since its creation. Glass Steagall Act Due to the horrific losses incurred as a result of  1929’s Black Tuesday and Thursday,  the Glass-Steagall act was  created originally during the 1930s in order to prevent bank depositors  from  additional exposure to  risk associated with  stock market issues.As a result, for many years, banks were not legally allowed to  act as  brokers. Since many regulations  have been  instituted  since the 1930s to protect bank depositors,  GLBA was created to  allow the financial industry to offer more services. Current Events related to GLBA Due to the recent financial crisis and with concerns about the country’s economic status on the rise, GLBA has attracted its share of criticism. In an earlier statement, President Obama was quoted in the Wall Street Journal as saying that the GLBA helped create the 2007 subprime crisis. Nobel prize recipients Joseph Stiglitz and Paul Krugman have also criticized the Act.In fact, Paul Krugman referred to the co-author, former Senator Phil Gramm, as the â€Å"Father of the Financial Crisis. † Although GLBA is receiving the bulk of the outrage, the true â€Å"monsters† in this financial crisis have come from the unregulated brokerage industry and investment banks. Recent Proposals Although it seems to have fallen from new legislation, The Volcker Rule   is a pr oposal   to restrict banks from making certain kinds of speculative investments if they are not strictly on behalf of their customers. Volcker has argued that such speculative activity played a key role in the  current financial crisis.The Volcker Rule was first publicly endorsed by President Obama on January 21, 2010. The proposal specifically prohibits a bank or institution that owns a bank from engaging in  proprietary trading that isn’t strictly on behalf of its clients, and from owning or investing in a hedge fund or private equity fund, as well as limiting the liabilities that the largest banks could hold. As of February 23, 2010, Congress began to consider a different bill allowing federal regulators to restrict proprietary trading and hedge fund ownership by banks, but not prohibiting these activities altogether. Paul Volcker was earlier appointed as the chair of President  Obama’s  Economic Recovery Advisory Board, which was created on February 6, 2009.Works Cited†Biographical Directory of the United States Congress†. June 30, 2010 http://bioguide. congress. gov/scripts/bio display. pl? index=g000365.†Information Regarding the Gramm-Leach-Bliley Act of 1999†³. U. S. Senate Commitee on Banking, Housing, and Urban Affairs. June 30, 2010 http://banking. senate. gov/conf/.†The Gramm-Leach-Bliley Act†. Electronic Privacy Information Center. June 30, 2010 ;lt;http://epic. org/privacy/glba/;gt;. How to cite Gramm Leach Bliley Modernization Act of 1999, Papers