Which 1930s U.S. banking legislation separated commercial banking from investment banking?
Answer
Glass–Steagall Act
The Glass–Steagall Act separated commercial banking from investment banking in the United States during the 1930s.
The term usually refers to provisions of the U.S. Banking Act of 1933, named after Senator Carter Glass and Representative Henry B. Steagall. The law followed widespread bank failures during the Great Depression and aimed to reduce conflicts of interest and speculative risks.
It also established federal deposit insurance through the Federal Deposit Insurance Corporation. The strict separation between commercial and investment banking was gradually weakened and was repealed in large part by the Gramm–Leach–Bliley Act of 1999.
The Securities Act of 1933 addressed securities disclosure rather than creating the banking separation, while Dodd–Frank was enacted after the 2008 financial crisis.