Historical review of “umbrella supervision” by the Board of Governors of the Federal Reserve System
The article reviews legislative history and supervisory practices related to bank holding companies with a view toward understanding what Congress meant by referring to the Board of Governors of the Federal Reserve System as the ?umbrella supervisor? in the Gramm-Leach-Bliley Act. The first part of the article looks at the historical development of bank holding company law and regulation, which laid the foundation for the current practice of umbrella supervision. The second part of the article provides answers to questions related to the Board?s current role as umbrella supervisor: What does ?umbrella supervision? mean, and is it different from ?consolidated supervision?? How does the GLB Act limit the Board's authority and practice and when did the Board obtain all of the legal authority to allow it to practice umbrella supervision?
AUTHORS: Greenlee, Mark B.
Recent activity resulting from the Gramm-Leach-Bliley Act
AUTHORS: Fay, Steven
The impact of the Gramm-Leach-Bliley Act on banks, community groups and consumers
Last fall Congress passed legislation that will dramatically alter the financial services industry in the United States. Carol Lewis explains how the sweeping reforms in the Gramm-Leach-Bliley Act impact bank holding companies, banks, community groups, and consumers.
AUTHORS: Lewis, Carol
Consumer financial privacy and the Gramm-Leach-Bliley Act
By requiring financial institutions to put adequate controls in place to secure consumers? confidential data and by clearly spelling out what rights consumers and financial institutions have, the 1999 Gramm-Leach-Bliley Act is a positive step toward ensuring consumer financial privacy. If there are no market imperfections, then competition may be relied on to efficiently sort out the competing interests of consumers and financial institutions. Alternatively, if there are market imperfections in the form of externalities, the Coase theorem suggests that the act, by clearly assigning property rights to the information, should facilitate an economically efficient outcome.
AUTHORS: Bauer, Paul W.
Banks as real estate brokers -- letting free enterprise work
AUTHORS: Mahalik, Robert; Moore, Robert R.; Couch, Karen
Financial market signals and banking supervision: are current practices consistent with research findings?
The trend toward incorporating information derived from financial markets into the bank supervision process has gained momentum over the past several years. This in part reflects an evolution in the thinking about how private market information can contribute to the process. In light of the evolving view of the potential contributions of market information, this paper reviews the empirical evidence relevant to the usefulness of financial market information in the bank supervision process. This paper reviews the research on what information can be gleaned from the pricing of equity and debt securities issued by banking organizations. The weight of the research leaves little room for doubt that financial market signals reflect underlying bank risk and that market evaluations of the risk of individual banking organizations are strongly correlated with supervisory findings. The evidence on the extent to which market signals can augment the information set of bank supervisors is more subtle, but overall it demonstrates that financial market signals should play a role in the bank supervision process.
AUTHORS: Williams, Robard; Furlong, Frederick T.
The separation of banking and commerce
In the wake of the passage of the Gramm-Leach-Bliley Act, the separation of banking from commercial activity is now one of the few remaining pieces of Depression-era banking law. In this article I explore the incentives that banks and commercial firms might have to affiliate. I also outline some of the reasons why legislators might be hesitant to permit such affiliations.
AUTHORS: Krainer, John
Financial modernization and banking theories
AUTHORS: Kwan, Simon H.
Sweeping legislation provides framework for financial modernization
Fed’s supervision duties face challenges as banking evolves