What happened after the Glass-Steagall Act was repealed?
John Thompson
Published Mar 15, 2026
The Glass-Steagall Act was largely repealed in 1999 by the Graham-Leach-Bliley Act (GLBA), allowing commercial banks to engage in investment banking and securities trading.
Why was the Glass-Steagall Act of 1933 repealed?
The Glass-Steagall Act was repealed in 1999 amid long-standing concern that the limitations it imposed on the banking sector were unhealthy, and that allowing banks to diversify would actually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.
Who was affected by the Glass-Steagall Act?
Glass-Steagall sought to permanently end bank runs and the dangerous bank practices that created them. Congress passed Glass-Steagall to reform a system that allowed the failure of 4,000 banks during the Great Depression. It had debated the bill during 1932.
What was the Glass-Steagall Act and when was it repealed?
The Glass-Steagall Act of 1933, which has been partially repealed, prevented commercial banks from making risky investments with customer deposits.
What was the result of the Glass-Steagall Act?
June 16, 1933. The Glass-Steagall Act effectively separated commercial banking from investment banking and created the Federal Deposit Insurance Corporation, among other things. It was one of the most widely debated legislative initiatives before being signed into law by President Franklin D. Roosevelt in June 1933.
Did the Glass-Steagall Act regulate the stock market?
Conversely, Glass–Steagall prevented securities firms and investment banks from taking deposits. The law gave banks one year after the law was passed on June 16, 1933 to decide whether they would be a commercial bank or an investment bank.
Why was the repeal of the Glass-Steagall Act important?
Key Takeaways Repealing the Glass-Steagall Act, which effectively let banks become even larger, could be considered a factor of the 2008 financial crisis. However, it is only one of many factors that contributed to the meltdown in the housing market. Unscrupulous lending practices were a much larger contributor.
What was the long term goal of the Glass-Steagall Act?
| Federal Program | What was its immediate purpose? | What was its long term goal? |
|---|---|---|
| Emergency Banking Relief Act (EBRA) | Inspection of banks | Restore public confidence in banks |
| Glass-Steagall Banking Act of 1933 | Establish the FDIC (Federal Deposit Insurance Corp.) | Restore public confidence in banks |
Why did the government want to repeal Glass Steagall?
Many people in the financial industry and government believed that Glass-Steagall was too restrictive. They tried for more than 60 years to either repeal the act or at least ‘blur the lines ‘ imposed by the act. In 1999, the Gramm-Leach-Bliley Act repealed portions of Glass-Steagall, thereby allowing banks to invest again.
How did Glass Steagall affect the financial crash?
There’s not a single, solitary example that it had anything to do with the financial crash. And in fact, a study done afterward said that the unified banks were actually slightly less likely to fail than either the commercial banks that overloaded on subprime mortgages, or the investment banks, like Bear Stearns, Lehman Brothers, and others.
When was the Glass Steagall Act signed into law?
Glass-Steagall was passed by the House of Representatives on May 23, 1933. It was passed by the Senate on May 25, 1933. It was signed into law by President Roosevelt on June 16, 1933, as part of the New Deal.
How did Glass Steagall affect subprime mortgages?
Glass-Steagall applied to banks, and although many of mortgage-backed derivatives were created and sold by banks, subprime mortgages—the underlying assets of the derivatives—were originally issued by non-bank lenders, and these initial loans would not have been prevented by Glass-Steagall.
