Question

ABC Insurance Company would like to purchase a bank. For many years, ABC was not permitted under federal law to enter into banking operations. Which of the following legislative acts eliminated the prohibition that prevented banks, insurers, and investment firms from entering into one another's markets?

Answer 1

The Gramm-Leach-Bliley Act of 1999, also known as the Financial Services Modernization Act, repealed parts of the Glass-Steagall Act, allowing companies to operate in the banking, insurance, and investment sectors simultaneously.

Step-by-step explanation:

The legislative act that eliminated the prohibition preventing banks, insurers, and investment firms from entering into one another's markets is the Gramm-Leach-Bliley Act (GLBA) of 1999, also known as the Financial Services Modernization Act of 1999. Prior to GLBA, the Glass-Steagall Banking Act of 1933 established the FDIC and enforced a separation between commercial banking, investment banking, and insurance. The Glass-Steagall Act's conflict of interest provisions, which prevented a single company from offering a combination of these services, were repealed by the GLBA, thus allowing companies like ABC Insurance Company the ability to purchase a bank and expand into banking operations.