Glass-Steagall Act

The Glass-Steagall Act of 1933 was passed in the aftermath of the crash of 1929. The following provisions were enacted:

• Separated the activities of banks and securities firms (prohibited commercial banks from owning brokerages)
• Introduced FDIC insurance
• Regulation Q which placed a cap on interest paid on savings accounts

The bill was named for Democratic Senator Carter Glass of Virginia, a former Secretary of the Treasury, and Democratic Congressman Henry B. Steagall of Alabama, Chairman of the House Committee on Banking and Currency.

On November 12, 1999, President Clinton signed into law the Gramm-Leach-Bliley Act, which repealed the Glass-Steagall Act.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

See also: Financial supervision, Financial institutions, Disintermediation, Eurodollars