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Publication Date

5-1998

Document Type

Special Contribution

Abstract

The subject today is financial modernization, and .I will address in particular the proposal that we in the Treasury Department of the Clinton administration put forth last year, in 1997, relating to the modernization of rules governing financial services. especially wish to share with you the thinking that underlies our legislative proposal. I will not try to get embroiled in the details, because I think the broad principles are, in many ways, more interesting.

The first objective was to try to get rid of the rules that serve-and in fact were intended to serve-to limit competition between different providers of financial services. Such laws as the Glass-Steagall Act of 1933 and the Bank Holding Company Act of 1956, especially as amended in 1970, have served principally to divide markets among politically influential segments of the financial services industry. To the extent that those laws prevent affiliation among firms engaged in the securities, insurance, and depository businesses, while limiting providers of certain of those products from offering a full line of financial products and services in the format that best meets their business needs, we think they should be repealed.

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