Glass-Steagall Act: Commercial vs. Investment Banking

Description:

This report discusses debate over reform of the Nation's financial structure in the 100th Congress includes re-examination of "the separation of banking and commerce." This separation was mandated by the Glass-Steagall Act (part
of the Banking Act of 1933); and was carried forward into the Bank Holding Company Act of 1956, as amended in 1970 and thereafter. The resulting isolation of banking from securities was designed to (1) maintain the integrity of the banking system; (2) prevent self-dealing and other financial abuses; and (3) limit stock market speculation. By half a century later, the "wall" it created seemed to be crumbling, as bankers created new financial products resembling securities, and securities firms innovated new financial products resembling loans and deposits. The ongoing process of "financial deregulation" has evoked calls for Congress to give depository institutions new powers, especially in the securities field. Financial deregulation in the United Kingdom, Canada, and Japan has put additional pressure on Congress to re-examine this Act. Concerns over a seemingly fragile system of depository institutions persist, however, tending to place counter-pressure on Congress to maintain the Act.

Creator(s): Jackson, William D.
Location(s): United States
Creation Date: June 29, 1987
Partner(s):
UNT Libraries Government Documents Department
Collection(s):
Congressional Research Service Reports
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Past 30 days: 29
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Creator (Author):
Jackson, William D.

Economics Division

Publisher Info:
Place of Publication: Washington D.C.
Date(s):
  • Creation: June 29, 1987
Coverage:
Place
United States
Description:

This report discusses debate over reform of the Nation's financial structure in the 100th Congress includes re-examination of "the separation of banking and commerce." This separation was mandated by the Glass-Steagall Act (part
of the Banking Act of 1933); and was carried forward into the Bank Holding Company Act of 1956, as amended in 1970 and thereafter. The resulting isolation of banking from securities was designed to (1) maintain the integrity of the banking system; (2) prevent self-dealing and other financial abuses; and (3) limit stock market speculation. By half a century later, the "wall" it created seemed to be crumbling, as bankers created new financial products resembling securities, and securities firms innovated new financial products resembling loans and deposits. The ongoing process of "financial deregulation" has evoked calls for Congress to give depository institutions new powers, especially in the securities field. Financial deregulation in the United Kingdom, Canada, and Japan has put additional pressure on Congress to re-examine this Act. Concerns over a seemingly fragile system of depository institutions persist, however, tending to place counter-pressure on Congress to maintain the Act.

Physical Description:

7 Pages.

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Subject(s):
Partner:
UNT Libraries Government Documents Department
Collection:
Congressional Research Service Reports
Identifier:
Resource Type: Report
Format: Text