notion that bank supervision should be divided by business activity. Thus, banks involved in selling or underwriting securities would have these activities reviewed by the Securities and Exchange Commission, and not by the Federal Reserve or other banking supervisor. The SEC is involved as a banking regulator by reviewing financial reporting and investments of many companies, including bank holding companies.
Enactment of the gramm-leach-bliley act of 1999 signaled a significant shift in the supervision of bank holding companies, financial holding companies, and their subsidiaries and affiliates. The act provides that, where, specialized functional regulators already oversee permissible activities, these same regulatory agencies will continue to have primary supervisory responsibility. Thus, the Securities and Exchange Commission will review a broker- dealer operating subsidiary, and state insurance commissioners will bear responsibility for supervising insurance marketing activities.
