True
The Glass-Steagall Act was passed in 1933 and separated investment and commercial banking activities in response to the commercial bank involvement in stock market investment.
What Is the Glass-Steagall Act?
commercial banks to The Glass-Steagall Act, passed in 1933, forced refrain from investment banking activities in order to protect depositors from potential losses caused by bank speculation in stocks. Glass-Steagall was largely repealed in 1999 although some parts of it remain, including the Federal Deposit Insurance Corp., which guarantees bank depositors against losses.
Glass-Steagall was a reform measure aimed at preventing a repeat of the 1929 stock market crash and the wave of commercial bank failures that followed.
At the time, the overzealous involvement of commercial banks in the stock markets was seen as the main culprit of the financial crash. It was believed that commercial banks took on too much risk with depositors' money.
The Gramm-Leach-Bliley Act eliminated the Glass-Steagall Act's restrictions against affiliations between commercial and investment banks in 1999, which some argue set up the 2008 financial crisis.
What Was the Purpose of the Glass-Steagall Act?
The Glass-Steagall Act was intended to separate investment and commercial banking activities. It was established in the wake of the 1929 stock market crash.
Is the Glass-Steagall Act Still in Effect?
No. It was repealed in 1999, during the Clinton Administration.
Why Was the Glass-Steagall Act Repealed?
The Glass-Steagall Act was repealed in 1999 amid long-standing concern that the limitations it imposed on the banking sector were unhealthy and that allowing banks to diversify would actually reduce risk. At the time, the overzealous involvement of commercial banks in the stock markets was seen as the main culprit of the financial crash. It was believed that commercial banks took on too much risk with depositors' money
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