type: timeline_event
President Clinton signs the Financial Services Modernization Act (Gramm-Leach-Bliley Act), officially repealing key provisions of the Glass-Steagall Act of 1933 that separated commercial and investment banking. The law retroactively legalizes the 1998 Citicorp-Travelers merger that created Citigroup, which had violated existing banking law. Top Citigroup officials were allowed to review and approve drafts of the legislation before formal introduction. Phil Gramm declared: "We are here today to repeal Glass-Steagall because we have learned that government is not the answer... freedom and competition are the answers." This deregulation enabled banks to use customer deposits for high-risk investments in derivatives, mortgage-backed securities, and credit default swaps, directly contributing to the 2008 financial crisis.