Unit 2 - Financial Services Modernization Act

Unit 2 - Financial Services Modernization Act

by Marie Tan -
Number of replies: 1

The question here is confusing:

Prior to the last decade, _________ prohibited banks from selling insurance.

1. Federal Laws

2. States

It said the correct answer was "States"  However, it's also due to the Federal Laws (Glass Steagall Act) that barred banks from owning insurance companies and thus sell insurance products.

So, wouldn't the answer be both? Due to Federal Laws, States prohibited banks from selling insurance?

 

 

 

 

 

 

In reply to Marie Tan

Re: Unit 2 - Financial Services Modernization Act

by Jerry Bateman - -

Hey Marie,

Thank you for your question.  I believe that the key phrase here is "Prior to the last decade".  The federal law that has ruled through the years is the McCarran-Ferguson Act (Public Law 15) passed in 1945.  This law exempted insurance from federal antitrust laws to the extent insurance is regulated by the states.  This was a very astute observation on your part.  I believe that I will rework this question for future students.  In the meantime, the answer is still States.  Thank you.

Kindest regards,

Jerry Bateman