Glass-Steagall Act - Financial definition
Country
: United States of America
Concise definition of the term Glass-Steagall Act
The Glass-Steagall Act, enacted in 1933, was a U.S. law that separated commercial banking from investment banking to reduce the risk of financial speculation and protect depositors' funds.
Comprehensive definition of the term Glass-Steagall Act
The Glass-Steagall Act, officially known as the Banking Act of 1933, was introduced during the Great Depression to restore public confidence in the banking system. By prohibiting commercial banks from engaging in investment activities and vice versa, it aimed to curb the excessive risk-taking that contributed to the 1929 stock market crash.
This separation lasted until the Gramm-Leach-Bliley Act of 1999, which repealed key provisions, allowing financial institutions to consolidate services once again. An example of its impact is the creation of FDIC insurance to safeguard depositor funds, which fundamentally changed the banking landscape and practices.