Glass-Steagall Act (redirected from Glass-Steagall Banking Act)

Glass-Steagall Act

1933 legislation prohibiting commercial banks to own, underwrite, or deal in corporate stock and corporate bonds.

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Glass-Steagall Act

A 1933 act that prohibited commercial banks from undertaking investment banking activities such as underwriting the securities of private corporations. The legislation was passed to keep banks from entering into nonfinancial businesses (for example, owning corporate stock) and more risky activities. The Glass-Steagall Act was repealed in 1999. Also called Banking Act of 1933.

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Glass-Steagall Act

Legislation in the United States, enacted in 1933, intended to restore confidence in the banking system. Among its most important provisions was the creation the FDIC, which provided insurance on bank deposits up to a certain amount. The act also prohibited bank holding companies from owning brokerages or certain securities. This provision was designed to prevent banks from engaging in most investment activities and thereby to reduce the risk they carried. Most of the Glass-Steagal Act was repealed by the Gramm-Leach-Bliley Act in 1999.

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Glass-Steagall Act

What Does Glass-Steagall Act Mean?

An act passed by Congress in 1933 that prohibited commercial banks from collaborating with full-service brokerage firms or participating in investment banking activities.

Investopedia explains Glass-Steagall Act

The Glass-Steagall Act was enacted during the Great Depression to help protect depositors from the additional risks associated with security transactions. The act was dismantled in 1999. Consequently, the distinction between commercial banks and brokerage firms has blurred. Today, for better or worse, many banks own brokerage firms and provide investment services.

Related Terms:
• Bear Market
• Broker-Dealer
• Common Stock
• Investment Bank
• Underwriting