Editing Gramm–Leach–Bliley Act (section)

==Changes caused by the Act==
Many of the largest banks, brokerages, and insurance companies desired the Act at the time. The justification was that individuals usually put more money into investments when the economy is doing well, but they put most of their money into [[savings account]]s when the economy turns bad. With the new Act, they would be able to do both 'savings' and 'investment' at the same financial institution, which would be able to do well in both good and bad economic times.

Prior to the Act, most financial services companies were already offering both saving and investment opportunities to their customers. On the retail/consumer side, a bank called [[Norwest Corporation]], which would later merge with [[Wells Fargo Bank]], led the charge in offering all types of financial services products in 1986. [[American Express]] attempted to own participants in almost every field of financial business (although there was little [[corporate synergy|synergy]] among them). Things culminated in 1998 when Citibank merged with [[The Travelers Companies]], creating [[Citigroup]]. The merger violated the [[Bank Holding Company Act]] (BHCA), but Citibank was given a two-year forbearance that was based on an assumption that they would be able to force a change in the law. The Gramm–Leach–Bliley Act passed in November 1999, repealing portions of the BHCA and the Glass–Steagall Act, allowing banks, brokerages, and insurance companies to merge, thus making the CitiCorp/Travelers Group merger legal.

Also prior to the passage of the Act, there were many relaxations to the ''Glass–Steagall Act''. For example, a few years earlier, commercial Banks were allowed to pursue investment banking, and before that banks were also allowed to begin stock and insurance brokerage. Insurance underwriting was the only main operation they weren't allowed to do, something rarely done by banks even after the passage of the Act. The Act further enacted three provisions that allow for bank holding companies to engage in physical commodity activities. Prior to the enactment of the Act those activities were limited to those that were so closely related to banking to be considered incidental to it. Under GLBA depending on the provision the institution falls into, bank holding companies can engage in physical commodity trading, energy tolling, energy management services, and merchant banking activities.<ref>{{cite web|url= http://www.pwc.com/en_US/us/financial-services/regulatory-services/publications/assets/fs-reg-brief-frb-physical-commodities-anpr.pdf|title= Physical commodity activities: Too risky for banking organizations?|website=PwC|publisher= PwC Financial Services Regulatory Practice, January, 2014|url-status= live|archive-url= https://web.archive.org/web/20140224040118/http://www.pwc.com/en_US/us/financial-services/regulatory-services/publications/assets/fs-reg-brief-frb-physical-commodities-anpr.pdf|archive-date= 2014-02-24}}</ref>

Much consolidation occurred in the financial services industry since, but not at the scale some had expected. Retail banks, for example, do not tend to buy insurance underwriters, as they seek to engage in a more profitable business of insurance brokerage by selling products of other insurance companies. Other retail banks were slow to market investments and insurance products and package those products in a convincing way. Brokerage companies had a hard time getting into banking, because they do not have a large branch and [[backshop]] footprint. Banks have recently tended to buy other banks, such as the 2004 [[Bank of America]] and [[Fleet Boston]] merger, yet they have had less success integrating with investment and insurance companies. Many banks have expanded into [[investment banking]], but have found it hard to package it with their banking services, without resorting to questionable tie-ins which caused scandals at [[Smith Barney]].