Define: Glass-Steagall Act

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Definition: Glass-Steagall Act



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Full Definition of Glass-Steagall Act


The Glass-Steagall Act is a landmark bill in Federal banking and securities law. Passed in 1933, in the middle of the Great Depression, the Glass-Steagall Act was aimed at restoring confidence in the banking system. Notably, the Glass-Steagall Act established the Federal Deposit Insurance Corporation, which insures customer deposits. But the Glass-Steagall Act is probably better known for prohibiting banks from participating in both commercial banking and investment-banking activities. Specifically, under the Glass-Steagall Act, banks could not both accept deposits and underwrite securities. Moreover, the Glass-Steagall Act provided that commercial banks could receive no more than 10% of their income from securities markets. Under the Glass-Steagall Act, financial institutions were given one year to decide if they would become commercial or investment banks. Whether these provisions of the Glass-Steagall Act made good economic sense or were an overreaction to the Crash of 1929 remain topics of debate. In 1999, the provisions of the Glass-Steagall Act that segregated commercial and investment banking were effectively repealed with the passage of the Gramm-Leach-Bliley Act.


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Definition Sources


Definitions for Glass-Steagall Act are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 9th February, 2020