The question here is confusing:
Prior to the last decade, _________ prohibited banks from selling insurance.
1. Federal Laws
2. States
It said the correct answer was "States" However, it's also due to the Federal Laws (Glass Steagall Act) that barred banks from owning insurance companies and thus sell insurance products.
So, wouldn't the answer be both? Due to Federal Laws, States prohibited banks from selling insurance?
Hey Marie,
Thank you for your question. I believe that the key phrase here is
"Prior to the last decade". The federal law that has ruled through
the years is the McCarran-Ferguson Act (Public Law 15) passed in
1945. This law exempted insurance from federal antitrust laws to
the extent insurance is regulated by the states. This was a very
astute observation on your part. I believe that I will rework this
question for future students. In the meantime, the answer is still States. Thank you.
Kindest regards,
Jerry Bateman