1933 Banking Act
The Banking Act of 1933 (Pub. L. 73–66, 48 Stat. 162, enacted June 16, 1933) was a statute enacted by the United States Congress that established the Federal Deposit Insurance Corporation (FDIC) and imposed various other banking reforms. The entire law is often referred to as the Glass–Steagall Act, after its Congressional sponsors, Senator Carter Glass (D) of Virginia, and Representative Henry B. Steagall (D) of Alabama. The term "Glass–Steagall Act", however, is most often used to refer to four provisions of the Banking Act of 1933 that limited commercial bank securities activities and affiliations between commercial banks and securities firms. That limited meaning of the term is described in the article on Glass–Steagall Legislation.
| Long title | An Act to provide for the safer and more effective use of the assets of banks, to regulate interbank control, to prevent the undue diversion of funds into speculative operations, and for other purposes. |
|---|---|
| Nicknames | Banking Act of 1933; Glass–Steagall Act (especially when referring to the separation of commercial and investment banking in Sections 16, 20, 21, and 32) |
| Enacted by | the 73rd United States Congress |
| Effective | June 16, 1933 |
| Citations | |
| Public law | Pub. L. 73-66 |
| Statutes at Large | 48 Stat. 162 (1933) |
| Codification | |
| Acts amended | Federal Reserve Act National Bank Act Clayton Act |
| Legislative history | |
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| Major amendments | |
| Banking Act of 1935 Bank Holding Company Act of 1956 Depository Institutions Deregulation and Monetary Control Act of 1980 Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 Gramm–Leach–Bliley Act of 1999 Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 | |
| United States Supreme Court cases | |
| Board of Governors v. Agnew, 329 U.S. 441 (1946) Investment Company Institute v. Camp, 401 U.S. 617 (1970) Board of Governors v. Investment Company Institute, 450 U.S. 46 (1981) Securities Industry Association v. Board of Governors, 468 U.S. 207 (1984) | |
The Banking Act of 1933 (the 1933 Banking Act) joined two long-standing Congressional projects:
- A federal system of bank deposit insurance championed by Representative Steagall
- The regulation (or prohibition) of the combination of commercial and investment banking and other restrictions on "speculative" bank activities championed by Senator Glass as part of a general desire to "restore" commercial banking to the purposes envisioned by the Federal Reserve Act of 1913.
Although the 1933 Banking Act thus fulfilled Congressional designs and, at least in its deposit insurance provisions, was resisted by the Franklin Delano Roosevelt Administration, it later became considered part of the New Deal. The deposit insurance and many other provisions of the Act were criticized during Congressional consideration. The entire Act was long-criticized for limiting competition and thereby encouraging an inefficient banking industry. Supporters of the Act cite it as a central cause for an unprecedented period of stability in the U.S. banking system during the ensuing four or, in some accounts, five decades following 1933.