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Policy Watch: The Repeal of Glass-Steagall and the Advent of Broad Banking

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  • James R. Barth
  • R. Dan Brumbaugh
  • James A. Wilcox

Abstract

Enactment of the Gramm-Leach-Bliley Act (GLBA) in November 1999 effectively repealed the long-standing prohibitions on the mixing of banking with securities or insurance businesses and thus permits "broad banking." We attribute repeal of these prohibitions to the increasingly persuasive evidence from academic studies of the pre-Glass-Steagall era, the recent favorable experience in the United States following partial deregulation of banking activities, the experience of banking systems abroad with broader scopes for banking activities, and rapid technological change in telecommunications and data processing. How regulators will in practice coordinate their efforts so that the safety and soundness of the banking system is maintained efficiently remains to be seen.

Suggested Citation

  • James R. Barth & R. Dan Brumbaugh & James A. Wilcox, 2000. "Policy Watch: The Repeal of Glass-Steagall and the Advent of Broad Banking," Journal of Economic Perspectives, American Economic Association, vol. 14(2), pages 191-204, Spring.
    • Handle: RePEc:aea:jecper:v:14:y:2000:i:2:p:191-204
    Note: DOI: 10.1257/jep.14.2.191
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.14.2.191
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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