Glass-Steagall Act


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Glass-Steagall Act

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 The bill was effectively repealed by the Gramm-Leach-Bliley Act, November 12, 1999.

Glass-Steagal 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 Most of the Glass-Steagal Act was repealed by the Gramm-Leach-Bliley Act in 1999. It is formally called the Banking Act of 1933.

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 The Glass-Steagall Act was repealed in 1999.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.
References in periodicals archive ?
The 21st Century Glass-Steagall Act will "rebuild the wall between commercial and investment banking and make our financial system more stable and secure."
The Board has determined that, subject to the framework of prudential limitations established in previous decisions to address the potential for conflicts of interests, unsound banking practices, or other adverse effects, underwriting and dealing in bank-ineligible securities is so closely related to banking as to be a proper incident thereto within the meaning of section 4(c)(8) of the BHC Act.(4) The Board also has determined that underwriting and dealing in bank-ineligible securities is consistent with section 20 of the Glass-Steagall Act (12 U.S.C.
Banks won clearance from Congress to acquire insurers in 1999 with the repeal of the Glass-Steagall Act.
It replaces the 1933 Glass-Steagall Act, which prohibited banks from underwriting stocks and bonds, and the 1956 Bank Holding Company Act, which imposed more restrictions on banking activities.
I will also discuss the final changes the Board made last year to the revenue test that the Board uses to determine compliance with section 20 of the Glass-Steagall Act and to firewalls regarding cross-marketing between a bank and a securities affiliate, and officer, director, and employee interlocks between two such companies.
Rubin, secretary of the Treasury, recommended that Congress pass legislation to reform or repeal the Glass-Steagall Act of 1933 to modernize the country's financial system.
One such step that should be given high priority by the president is reform of the Glass-Steagall Act and other laws and regulations that govern our financial services industry, so that commercial banks may be owned in common with securities firms and other financial services providers.
Repeal of the Glass-Steagall Act's separations of commercial and investment banking and authorization of insurance activities for banking organizations are the most important changes being considered by the Congress.
As just noted, banking organizations underwrite and deal in securities abroad, and since 1987, banking organizations with the necessary infrastructure may apply for authority to engage in limited underwriting and dealing of securities through special bank holding company subsidiaries under a Federal Reserve Board interpretation of section 20 of the Glass-Steagall Act.
To address this problem, the Board advocates not only burden relief of the type provided by S.650 but also reform of anachronistic statutes such as the Glass-Steagall Act, which needlessly and significantly hinders the ability of U.S.
In 1991, the Board testified in support of a Treasury Department legislative proposal that would have repealed the Glass-Steagall Act restrictions on the securities activities of banking organizations and, as an integral part of that reform modified the blanket execptions for banks from broker-dealer regulation.
Glass-Steagall Act was also part of Banking Act of 1933 which separated Wall Street from Main Street by offering protection to people's savings in commercial banks by prohibiting bankers from using depositors' money in stocks.