GLASS-STEAGALL ACT

Two separate United States laws are known as the 'Glass-Steagall Act'. The Acts (Glass & Steagall) were both reactions of the U.S. government to cope with the economic problems which followed the Stock Market Crash of 1929.
Both bills were sponsored by Democratic Senator Carter Glass of Lynchburg, Virginia, a former Secretary of the Treasury, and Democratic Congressman Henry B. Steagall of Alabama, Chairman of the House Committee on Banking and Currency.

Contents

First Glass Steagall Act of February 1932

Second Glass-Steagall Act (officially called: Banking Act of 1933) (June 16, 1933)

Repeal of the Acts

Emergency Banking Relief Act of 1933

External links

First Glass Steagall Act of February 1932

This act allowed that government obligations as well as commercial paper can be used as reserve in banks. Due to the reserve ratio system, banks were able to increase credit, and more money was in circulation. It was signed into law by President Herbert Hoover.

Second Glass-Steagall Act (officially called: Banking Act of 1933) (June 16, 1933)

This act introduced the separation of bank types according to their business (commercial and investment banking), and it founded the Federal Deposit Insurance Company for insuring bank deposits.
Literature in economics usually refers to this Glass Steagall Act, since it had a stronger impact on US banking regulation.

Repeal of the Acts

On November 12, 1999, President Bill Clinton signed into law the Gramm-Leach-Bliley Act, which repealed the Glass-Steagall Act of 1933. One impact of this repeal is that certain advisory activities of the banks are now regulated by the Investment Advisers Act of 1940.

Emergency Banking Relief Act of 1933

The Emergency Banking Relief Act of 1933 is often confused with the Glass-Steagall Acts, however it was a separate and independent bill.
Signed into law by President Franklin D. Roosevelt on March 9, 1933, the Act's primary function was to prohibit the hoarding of gold coins, and did so by authorizing the United States Treasury to request all people and companies of the U.S. to send in their gold reserves.
In addition, it ordered that all banks stopped doing business until the Comptroller of the Currency had examined the soundness of such banks and had approved reopening.

External links

★ On the systematic dismemberment of the Act from PBS Frontline

★ Back to the Twenties Through the Looking Glass - Steagall Hour long Wizards of Money MP3 explaining the Glass-Steagall Act, background to it and impact of it.