GET WISE: Bring Back The Glass–Steagall Act Right Now

The Banking Act of 1933, Pub. L. No. 73-66, 48 Stat. 162, enacted June 16, 1933, was a law that established the Federal Deposit Insurance Corporation (FDIC) in the United States and introduced banking reforms, some of which were designed to control speculation.^[1] It is most commonly known as the Glass–Steagall Act, after its legislative sponsors, Senator Carter Glass (D—Va.) and Congressman Henry B. Steagall (D—Ala.-3). Some provisions of the Act, such as Regulation Q, which allowed the Federal Reserve to regulate interest rates in savings accounts, were repealed by the Depository Institutions Deregulation and Monetary Control Act of 1980. Provisions that prohibit a bank holding company from owning other financial companies were repealed on November 12, 1999, by the Gramm–Leach–Bliley Act, named after its co-sponsors Phil Gramm (R, Texas), Rep. Jim Leach (R, Iowa), and Rep. Thomas J. Bliley, Jr. (R, Virginia).^[2][3]

The repeal of provisions of the Glass–Steagall Act of 1933 by the Gramm–Leach–Bliley Act effectively removed the separation that previously existed between investment banking which issued securities and commercial banks which accepted deposits. The deregulation also removed conflict of interest prohibitions between investment bankers serving as officers of commercial banks. Some economists believe this repeal directly contributed to the severity of the Financial crisis of 2007–2011 by allowing Wall Street investment banking firms to gamble with their depositors’ money that was held in commercial banks owned or created by the investment firms.

1932.

Glass–Steagall Act

Full title	Banking Act of 1933
Acronym	Glass–Steagall Act
Enacted by the	73rd United States Congress
Effective	June 16, 1933
Citations
Public Law	Pub. L. 73-66
Stat.	48 Stat. 162 (1933)
Codification
Legislative history
Introduced in the House of Representatives as H.R. 5661 by Rep. Henry B. Steagall (D-Ala.) on Committee consideration by: U.S. House Committee on Banking and Currency Signed into law by President Franklin Delano Roosevelt on June 16, 1933
Major amendments
Gramm–Leach–Bliley Act, Depository Institutions Deregulation and Monetary Control Act
Relevant Supreme Court cases
None

Wikisource has original text related to this article:  Banking Act of 1933