An act passed by the U.S. Congress in 1999, which allows convergence among the traditionally separate components of the financial services industry—banks, securities firms, and insurance companies. The GLB Act permits financial institutions to affiliate in new ways and expands the ability of national banks to market insurance products. Also known as Financial Services Modernization Act.
Banking legislation enacted in 1999 that set forth the following: (1) Banks with less than $500 million in assets may use long-term advances for loans to small businesses, small farms and small agri-businesses. (2) A new, permanent capital structure for the Federal Home Loan Banks is established. Two classes of stock are authorized, redeemable on 6-months and 5-years notice. Federal Home Loan Banks must meet a 5% leverage minimum tied to total capital and a risk-based requirement tied to permanent capital. (3) Equalizes the stock purchase requirement for banks and thrifts. (4) Voluntary membership for Federal savings associations takes effect six months after enactment. (5) The current annual $300 million funding formula for REFCORP obligations of the Federal Home Loan Banks is changed to 20% of annual net earnings. (6) Governance of the Federal Home Loan Banks is decentralized from the Federal Housing Finance Board to the individual Federal Home Loan Banks. Changes include the election of a chairperson and vice chairperson of each Federal Home Loan Bank by its directors rather than the Finance Board, and a statutory limit on Federal Home Loan Bank directors' compensation.
A federal law enacted in 1999 that repealed many of the provisions of the Glass-Steagall Act. Among other things, the act permits banks, securities firms and insurance companies to become affiliated through financial holding companies. The act also permits dealer banks to engage in a broader range of municipal securities activities than under the Glass-Steagall Act. See: GLASS-STEAGALL ACT.