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1933 legislation prohibiting commercial banks to own, underwrite, or deal in corporate stock and corporate bonds. The bill was effectively repealed by the Gramm-Leach-Bliley Act, November 12, 1999.
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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 Most of the Glass-Steagal Act was repealed by the Gramm-Leach-Bliley Act in 1999. It is formally called the Banking Act of 1933.
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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 The Glass-Steagall Act was repealed in 1999.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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.