Glass-Steagall Act (1933)

Definition

The Glass-Steagall Act of 1933 was a law that separated commercial banking from investment banking activities in the United States. It aimed to reduce conflicts of interest and prevent another financial crisis like the Great Depression.

5 Must Know Facts For Your Next Test

1. The Glass-Steagall Act established the Federal Deposit Insurance Corporation (FDIC).
2. It prohibited commercial banks from engaging in investment banking activities.
3. The act was partially repealed in 1999 by the Gramm-Leach-Bliley Act.
4. Senator Carter Glass and Representative Henry B. Steagall sponsored the legislation.
5. Its intent was to restore public confidence in the banking system during the Great Depression.

Review Questions

• What were the primary objectives of the Glass-Steagall Act of 1933?
• Which legislation partially repealed the Glass-Steagall Act in 1999?
• Who were the main sponsors of the Glass-Steagall Act?

Related terms

Federal Deposit Insurance Corporation (FDIC): A government agency created by the Glass-Steagall Act that insures deposits at commercial banks.

Gramm-Leach-Bliley Act: The legislation that repealed parts of the Glass-Steagall Act, allowing commercial and investment banks to merge.

Commercial Banking: Banking services offered to individuals and businesses, including deposit accounts and loans.