Glass-Steagall

Act passed in 1933 which regulated banking. Named for Sen. Carter Glass (D-VA) and Rep. Henry Steagall (D-AL 3rd). Also known as the Banking Act of 1933. Motivated by the Great Depression and one of the pillars of the New Deal. Glass-Steagall prohibited commercial banks from engaging in underwriting securities, i.e., banks that accepted deposits and loaned money at interest were not allowed to issue bonds or new public offerings of stocks. The Act also authorized the creation of deposit insurance. The Banking Act of '33 was strengthened in 1956 when bank holding companies were barred from the insurance business. Between 1982 and 1999, banks were deregulated until the same corporation could take deposits, create credit, borrow from the Federal Reserve, underwrite stocks and bonds, operate a hedge fund, and sell insurance.