Washington, D.C. — By a vote of 90-8, the U.S. Senate today rolled back Depression-era banking laws and overwhelmingly approved reform legislation that breaks down barriers between the banking, securities and insurance industries. This increased competition in the financial services industry will lead to lower costs and improved services offered to consumers. The Financial Services Modernization Act, S. 900, also includes broad privacy protections to protect the confidentiality of customers’ financial information.

U.S. Senator Chuck Hagel (R-NE), a member of the Senate Banking, Housing and Urban Affairs Committee, and a member of the Conference Committee that negotiated the final bill, strongly endorsed the legislation in a speech this morning on the Senate floor. “This legislation will lead to lower costs and higher savings for consumers. These savings would come from increased competition which, among other things, would provide incentives for firms to reduce fees,” said Hagel.

The bill contains legislation first introduced by Hagel in 1997 to reform the Federal Home Loan Bank system and help increase the capital available to small community banks. It will help level the playing field for smaller banks, which are essential to the economic growth and viability of local communities. Hagel said his provision “will help keep credit flowing to small businesses, farmers, and potential homeowners – and help our local communities prosper as we enter the 21st Century. This is especially important to my state of Nebraska, where many rural communities depend upon the local bank or thrift for their credit needs.”

For the first time, this bill sets up a framework for protecting the privacy of customers’ financial information. “Customers will be able to prohibit the sharing of their financial information with outside parties. Financial institutions would be required to disclose their privacy policies to their customers on a timely basis. If customers don’t believe that adequate protections exist at their institution, they can take their business elsewhere,” said Hagel.

“This legislation is a well-balanced approach to financial services modernization. It provides important consumer protections while expanding the choices available to consumers. The conferees worked hard to craft a bill that will guide our financial services industry into the next century, and we should be proud of their efforts,” Hagel concluded.