To read the name of the Act 12 years later you clearly know the outcome. The “Financial Services Modernization Act” of 1999 did exactly what we didn’t need to do…. “modernize” financial services.
By 2007 the financial system was crumbling, and it famously collapsed in 2008.
This article dated November 1, 1999 describes “probably the most heavily lobbied, most expensive issue in a generation”.
The same article has a paragraph titled “Threat to financial stability” which includes this sentence “Even more significant is its impact on the overall stability of US and world capitalism. The bill ties the banking system and the insurance industry even more directly to the volatile US stock market, virtually guaranteeing that any significant plunge on Wall Street will have an immediate and catastrophic impact throughout the US financial system.” In other words the financial crisis was predicted in 1999.
The article goes on to talk about gradual erosion of banking regulation “over the past 20 years” presumably dating back to the “Depository Institutions Deregulation and Monetary Control Act of 1980”.
“Modernization” of the financial services industry destroyed the safe guards imposed on the system after the last great financial crisis. Will we ever learn?