Which 1933 U.S. law separated commercial and investment banking after the 1929 crash?

The Glass-Steagall Act was the 1933 U.S. law that separated commercial and investment banking after the 1929 crash.

The name commonly refers to four provisions of the Banking Act of 1933. Sponsored by Senator Carter Glass of Virginia and Representative Henry B. Steagall of Alabama, the provisions restricted commercial banks from underwriting or dealing in most non-government securities and restricted securities firms from taking deposits.

The law reflected concerns that banks had used depositors’ money, securities affiliates, and lending relationships to support speculative activity during the 1920s. It also established the Federal Deposit Insurance Corporation, although deposit insurance and bank-separation rules were distinct elements of the broader statute.

The separation weakened over decades through regulatory interpretations and financial innovation. In 1999, the Gramm-Leach-Bliley Act repealed the principal affiliation restrictions, allowing commercial banks and securities firms to join under common ownership again. A common mix-up is calling the Securities Act the separation law: that statute focused chiefly on disclosure and regulation of new securities offerings.