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The Financial Services Modernization Act, also known as the Gramm-Leach-Bliley Act (GLBA), allows financial institutions to engage in a broader range of services, effectively breaking down the barriers that separated commercial banks, investment banks, and insurance companies. This act authorized financial institutions to enter each other’s lines of business, which had been limited by the Glass-Steagall Act of 1933. The Glass-Steagall Act had established the separation of commercial banking from investment banking to reduce risks in the financial system; however, the Financial Services Modernization Act repealed portions of this act, enabling the convergence of these services under one umbrella.

This move aimed to create more competition and efficiency in the financial services industry, benefiting consumers by offering a wider variety of services from a single financial institution. Thus, the Financial Services Modernization Act plays a crucial role in shaping the structure of the modern financial services industry by allowing for greater integration among different types of financial institutions.