The landmark Financial Modernization Act of 1999 breaks down most of the regulatory barriers separating the banking, insurance, and investment industries. It also includes a number of financial privacy provisions that went into force in 2001. The key privacy provisions:

1. Requires clear disclosure by all financial institutions of their privacy policy regarding the sharing of non-public personal information with both affiliates and third parties.
2. Requires that institutions give customers an opportunity to "opt-out" of sharing of non-public personal information with nonaffiliated third parties, subject to certain limited exceptions. Examples in the privacy rule give consumers 30 days to respond to the opt out notice when the bank delivers the notice by mail or electronically.
3. Institutions must continue to disclose their privacy policy on an annual to ongoing customers.

The disclosure provisions are extremely comprehensive, but some privacy advocates feel the law doesn't go far enough because firms can still share customer information freely among affiliated companies. Additionally, in the new law, the banking industry failed to secure a moratorium on state financial privacy rules. As a result, many state governments are proceeding with their own additional legislation, raising the spectre of complying with multiple privacy regulations for national financial companies.

FDIC's Privacy Regulations Handbook

Financial Modernization Act text