Banking Act of 1933

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Major banking legislation passed by the 73d Congress in 1933. It was sponsored by Senator Carter Glass (D-VA) and Representative Henry B. Steagall (D-AL) and so is often called the Glass-Steagall Act of 1933 (but see also Glass-Steagall Act of 1932). A separate law called the Glass-Steagall Act was passed earlier in the session and was incorporated into this legislation.

This law created the Federal Open Market Committee which gave the Federal Reserve Board of Governors effective control over U.S. monetary policy. Under an amendment sponsored by Michigan Senator Arthur H. Vandenberg, the law also created the Federal Deposit Insurance Corporation which protected individual depositors for up to $5,000. Sections 16, 20, 21, and 32 of the law were the earlier Glass-Steagall Act which forbade commercial banks from engaging in investment activities such as loans to brokerages. Sections 20 and 32 of the law (Glass-Steagall provisions) were repealed by the Gramm-Leach-Bliley Act of 1999.