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What did the Glass-Steagall Act of 1933 do?
Banking Act of 1933 (Glass-Steagall) June 16, 1933. The Glass-Steagall Act effectively separated commercial banking from investment banking and created the Federal Deposit Insurance Corporation, among other things.
What happened to Glass-Steagall?
But banks had been taking advantage of loopholes in Glass-Steagall. On November 12, 1999, President Clinton signed the Financial Services Modernization Act that repealed Glass-Steagall. 16 Congress had passed the so-called Gramm-Leach-Bliley Act along party lines, led by a Republican vote in the Senate. 17
How did the Glass-Steagall Act affect the banking industry?
In response to one of the worst financial crises at the time, the Glass-Steagall Act set up a regulatory firewall between commercial and investment bank activities. Banks were given a year to choose between specializing in commercial or investment banking.
Should the Glass-Steagall Act be reinstated?
Reinstating Glass-Steagall would better protect depositors. At the same time, it would disrupt the banks’ structures. Banks would no longer be too big to fail, but it could slow growth as they reorganize. Congressional efforts to reinstate Glass-Steagall have not been successful.
What is the difference between Glass Steagall and Steagall?
Steagall insisted on protecting small banks while Glass felt that small banks were the weakness to U.S. banking. Many accounts of the Act identify the Pecora Investigation as important in leading to the Act, particularly its Glass–Steagall provisions, becoming law.
Did Citibank break the Glass-Steagall Act?
Most notably, Citibank ’s 1998 affiliation with Salomon Smith Barney, one of the largest US 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”.