(November 15 – 09:00 ET) – President Clinton finally pulled the plug on Glass-Steagall – ending 66 years of restricted competition in the financial services business in the U.S.

Last week the U.S. Congress passed the Financial Services Modernization Act with strong majority votes in favour of the bipartisan compromise.

Clinton sealed the deal when he signed off on the bill. The White House had been threatening to veto anything that came through Congress, but it was apparently satisfied with the ultimate compromise.

The bill repeals Glass-Steagall, allowing mergers and cross-selling between banks, insurers and securities firms. However any proposed deals will have to approved by both the U.S. Federal Reserve Board and the U.S. Treasury department. This is the most actively anticipated provision in the new bill – expected to bring sweeping changes to the U.S. industry, and therefore the global financial business, by accelerating consolidation.

The new bill also preserves the wall between banking and commerce. Firms in non-financial businesses are not allowed to own banks or thrifts. So Wal-Mart or Microsoft can’t buy their own banks.

For more on the changes expected after the repeal of Glass-Steagall, check out the mid-November issue of Investment Executive.

-IE Staff