No sale: Despite Gramm-Leach-Bliley, there are still obstacles holding back bank and insurance company mergers. (Industry Strategies: Banks in Insurance).

Since passage of the Gramm-Leach-Bliley Financial Services Modernization Act on Nov. 12, 1999, only a handful of banks have acquired insurance companies, and those acquisitions have been relatively small deals. This lack of bank-insurance melding flies in the face of what was anticipated--a flurry of cross-industry activity to create one-stop shops like Citigroup, the icon of financial-services convergence. No one expected that Citigroup would announce the company's spinoff of Travelers Property Casualty Corp. less than two years after it acquired all shares of Travelers Property Casualty stock it did not already own.

The industry's recognition that banks and insurance companies don't necessarily make good bedfellows involves impediments in several important fronts:

Regulation. Banks and insurance companies operate within two different regulatory environments. Unlike banks, which have federal oversight by the Office of Thrift Supervision, insurance companies are state regulated. To address one aspect of state regulation, a provision of Gramm-Leach-Bliley requires U.S. jurisdictions to adopt uniform or reciprocal agent-and broker-licensing laws by November 2002 (three years from the enactment of the law) to avoid the creation of a National Association of Registered Agents…