Legislation that would make it easier for banks, brokerage firms and insurance companies to merge and cross-sell products and which consumer groups attacked as anti-competitive and a major threat to privacy, will not be passed this year. But, the Financial Services Modernization Act, which the Senate was expected not to act on before Congress adjourned, is likely to be revived next year.
"The new financial modernization legislation ... demolishes the wall that separates banks from securities and insurance, setting up the industry to get access to greater sources of fees and, at the same time, exposes taxpayers to more risk," the U.S. Public Interest Research Group, Ralph Nader, the Consumers Union and the Consumer Federation of America said in a recent joint statement. Consumer groups also say the consolidation of banks, insurers and securities firms would invite the sharing of information and leave few details of a consumer's life protected from the scrutiny of a conglomerate. They say huge financial services firms could share and sell information without a customer's knowledge or consent -- and possibly gain leverage over financially-strapped consumers.