Co-written by Derrick Cephas
Financial Services Modernization: Risks And Opportunities For Insurers Under The New Affiliation Rules
Executive Summary
The Gramm-Leach-Bliley Act (the "GLB Act") seeks to establish a cohesive legal and regulatory framework to allow insurance companies to affiliate with banks and securities companies for the first time since the enactment of the Bank Holding Company Act of 1956, as amended (the "BHC Act"). It recognizes the growing convergence of various providers of financial services, and the necessity of enabling U.S. financial service providers to compete with global financial conglomerates.
- Such affiliations are permitted only through the establishment of financial holding companies ("FHCs"), which are "bank holding companies" ("bhcs") that are subject to "umbrella" supervision by the Board of Governors of the Federal Reserve System (the "FRB").
