Glass-Steagall Act

Extracted Attributes

• Sponsors

  Senator Carter Glass, Representative Henry B. Steagall

• Common Name

  Glass-Steagall Act

• Repealed By

  Gramm-Leach-Bliley Act (GLBA) in 1999

• Official Name

  Banking Act of 1933

• Key Provision 1

  Prevented securities firms and investment banks from accepting deposits

• Key Provision 2

  Restricted commercial banks from dealing in non-governmental securities, investing in non-investment grade securities, underwriting or distributing non-governmental securities

• Key Provision 3

  Prohibited commercial banks from affiliating (or sharing employees) with companies involved in securities activities

• Key Provision 4

  Limited banks to earning 10% of their income from investments

• Primary Purpose

  Separated commercial and investment banking

• Context of Creation

  Stock Market Crash of 1929, Great Depression, lack of regulation, speculative excesses, rise of consumer credit and leverage

• Debate on 2008 Financial Crisis Impact

  Some argue repeal contributed (Joseph Stiglitz), others contend crisis activities were not prohibited by Glass-Steagall (Federal Reserve economists, Ben Bernanke)

Timeline

• General Motors pioneered Consumer Credit, contributing to a massive expansion of leverage and a shift in American attitudes towards debt, setting the stage for speculative excesses. (Source: Related Documents)

  1919

• The Stock Market Crash occurred, marking the beginning of the Great Depression and highlighting the need for banking reform. (Source: Summary)

  1929

• Over 4,000 U.S. banks shut down, resulting in nearly $400 million in losses for depositors. (Source: History.com)

  1929-1933

• Senator Carter Glass introduced several versions of a bill to regulate or prohibit the combination of commercial and investment banking. (Source: Wikipedia)

  1930-1932

• President Franklin D. Roosevelt signed the Banking Act of 1933, which included the Glass-Steagall provisions, into law. (Source: History.com)

  1933-06-16

• Federal banking regulators began to loosen interpretations of the Act, permitting commercial banks and their affiliates to engage in an expanding list and volume of securities activities. (Source: Summary)

  1960s

• Citibank's affiliation with Salomon Smith Barney, one of the largest U.S. securities firms, was permitted under the Federal Reserve Board's existing interpretation of the Glass-Steagall Act. (Source: Wikipedia)

  1998

• President Bill Clinton publicly declared that 'the Glass-Steagall law is no longer appropriate'. (Source: Wikipedia)

  1999-11

• The Gramm-Leach-Bliley Act (GLBA) repealed the two key provisions of Glass-Steagall that restricted affiliations between commercial banks and securities firms. (Source: Summary)

  1999

• The Financial Crisis occurred, leading to debate over whether the repeal of Glass-Steagall contributed to the crisis. (Source: Summary)

  2008

Glass–Steagall legislation

The Glass–Steagall legislation describes four provisions of the United States Banking Act of 1933 separating commercial and investment banking. The article 1933 Banking Act describes the entire law, including the legislative history of the provisions covered. As with the Glass–Steagall Act of 1932, the common name comes from the names of the Congressional sponsors, Senator Carter Glass and Representative Henry B. Steagall. The separation of commercial and investment banking prevented securities firms and investment banks from taking deposits and commercial Federal Reserve member banks from: dealing in non-governmental securities for customers; investing in non-investment grade securities for themselves; underwriting or distributing non-governmental securities; affiliating (or sharing employees) with companies involved in such activities. Starting in the early 1960s, federal banking regulators' interpretations of the Act permitted commercial banks, and especially commercial bank affiliates, to engage in an expanding list and volume of securities activities. Congressional efforts to "repeal the Glass–Steagall Act", referring to those four provisions (and then usually to only the two provisions that restricted affiliations between commercial banks and securities firms), culminated in the 1999 Gramm–Leach–Bliley Act (GLBA), which repealed the two provisions restricting affiliations between banks and securities firms. By that time, many commentators argued Glass–Steagall was already "dead". Most notably, Citibank's 1998 affiliation with Salomon Smith Barney, one of the largest U.S. securities firms, was permitted under the Federal Reserve Board's then existing interpretation of the Glass–Steagall Act. In November 1999, President Bill Clinton publicly declared "the Glass–Steagall law is no longer appropriate". Some commentators have stated that the GLBA's repeal of the affiliation restrictions of the Glass–Steagall Act was an important cause of the 2008 financial crisis. Nobel Memorial Prize in Economics laureate Joseph Stiglitz argued that the effect of the repeal was "indirect": "[w]hen repeal of Glass-Steagall brought investment and commercial banks together, the investment-bank culture came out on top". Economists at the Federal Reserve, such as Chairman Ben Bernanke, have argued that the activities linked to the 2008 financial crisis were not prohibited (or, in most cases, even regulated) by the Glass–Steagall Act.

Web Search Results

• Glass-Steagall Act of 1933: Definition, Effects, and Repeal

  The Glass-Steagall Act was a law passed in 1933 to prevent a repeat of the banking crisis of the 1930s. It prohibited commercial banks from doing business as investment banks: They had to choose one or the other. It was intended to prevent banks from using customer deposits to invest in risky assets. [...] The Glass-Steagall Act was passed in 1933 and separated investment and commercial banking activities in response to involvement in stock market investment. Combining commercial and investment banking was considered too risky and speculative and widely considered a culprit that led to the Great Depression. Banks were mandated to choose either commercial banking or investment banking activities. [...] The Glass-Steagall Act prevented commercial banks from speculative risk-taking to avoid repeating the financial crisis experienced during the Great Depression. Banks were limited to earning 10% of their income from investments. The regulation was met with criticism and was repealed in 1999 under President Clinton. Article Sources

• Glass-Steagall Act

  The Glass-Steagall Act, part of the Banking Act of 1933, was a landmark banking legislation that separated Wall Street from Main Street by offering protection to people who entrust their savings to commercial banks. Millions of Americans lost their jobs in the Great Depression, and one in four lost their life savings after more than 4,000 U.S. banks shut down between 1929 and 1933, leaving depositors with nearly $400 million in losses. The Glass-Steagall Act prohibited bankers from using [...] By June 16, 1933, President Franklin D. Roosevelt signed the Glass-Steagall Act into law as part of a series of measures adopted during his first 100 days to restore the country’s economy and trust in its banking systems. ## FDIC Created The Glass-Steagall Act set up a firewall between commercial banks, which accept deposits and issue loans and investment banks which negotiate the sale of bonds and stocks. [...] We strive for accuracy and fairness. But if you see something that doesn't look right, click here to contact us! HISTORY reviews and updates its content regularly to ensure it is complete and accurate. ## Citation Information Article title : Glass-Steagall Act Author : HISTORY.com Editors Website Name : History URL : Date Accessed : August 27, 2025 Publisher : A&E Television Networks Last Updated : May 27, 2025 Original Published Date : March 15, 2018

• Important Glass Steagall Act Provision Still Intact - Bank Policy Institute

  The Banking Act of 1933 (also known as the Glass-Steagall Act), among other things, created a strict (but not absolute) barrier between traditional banking and securities underwriting and dealing. It did so through four key provisions. First, sections 16 and 21, which prohibited a depository institution from engaging in securities underwriting and dealing activities and a securities firm from accepting deposits. These sections effectively separated the risk of securities activities, like

• The Glass-Steagall Act Separates US Commercial and Investment ...

  The Glass-Steagall Banking Act of 1933 called for the separation of commercial banking (issuance of credit to households and firms) and investment banking (issuance and trading of securities). The Act, which went into effect in June 1934, mandated banks belonging to the Federal Reserve System to separate from their securities affiliates. Glass-Steagall also required private and investment banks to renounce deposit banking. The Act also created the Federal Deposit Insurance Corporation (FDIC) to [...] close History # The Glass-Steagall Act Separates US Commercial and Investment Banking Activities Shareshare As part of financial reforms instituted during the Great Depression in the United States, the Glass-Steagall Banking Act of 1933 mandates the separation of commercial and investment banking, and the Securities Acts of 1933 and 1934 improve disclosure practices in the offering of securities to investors.

• Glass–Steagall legislation - Wikipedia

  | Foundations | | Banking Grift Graft | | Pecora Commission Smithsonian Agreement Glass–Steagall legislation 1933 Banking Act Bretton Woods system | | v t") e | The Glass–Steagall legislation describes four provisions of the United States Banking Act of 1933 separating commercial and investment banking. The article 1933 Banking Act describes the entire law, including the legislative history of the provisions covered. [...] Wikidata item Appearance From Wikipedia, the free encyclopedia Four provisions of the Banking Act of 1933, separating commercial and investment banking This article is about four specific provisions of the Banking Act of 1933, which is also called the Glass–Steagall Act. For the earlier piece of economic legislation, see Glass–Steagall Act of 1932. | Wall Street crash of 1929 | [...] Between 1930 and 1932, Senator Carter Glass (D-VA) introduced several versions of a bill (known in each version as the Glass bill) to regulate or prohibit the combination of commercial and investment banking and to establish other reforms (except deposit insurance) similar to the final provisions of the 1933 Banking Act. On June 16, 1933, President Roosevelt signed the bill into law. Glass originally introduced his banking reform bill in January 1932. It received extensive critiques and