The Gramm-Leach-Bliley Act (GLBA) of 1999 sought to modernize financial services by ending regulations that prevented the merger of banks, stock brokerage companies, and insurance companies. It effectively repealed the Glass-Steagall Act. It is also known as the Financial Services Modernization Act of 1999.
The Act was introduced in the Senate by Senator Phil Gramm (R-TX) and in the House of Representatives by Representative James Leach (R-IA). It was signed into law by President Bill Clinton at the urging of Robert Rubin, then the Secretary of the Treasury.
Parts Of Act
The act includes provisions to protect consumers’ personal financial information held by financial institutions. There are three principal parts to the privacy requirements: the Financial Privacy Rule, Safeguards Rule and Pretexting provisions.
- The Financial Privacy Rule governs the collection and disclosure of customers' personal financial information by financial institutions. It also applies to companies, whether or not they are financial institutions, who receive such information.
- The Safeguards Rule requires all financial institutions to design, implement and maintain safeguards to protect customer information. The Safeguards Rule applies not only to financial institutions that collect information from their own customers, but also to financial institutions "such as credit reporting agencies" that receive customer information from other financial institutions.
- The Pretexting Provisions of the GLB Act protect consumers from individuals and companies that obtain their personal financial information under false pretenses, a practice known as "pretexting."