The Glass-Steagall Act was passed by the U.S. Congress in as the Banking Act, which prohibited commercial banks from participating in. The case for reviving the Glass-Steagall Act has surprising support across the political spectrum. Here’s why we should listen. The Glass-Steagall Act effectively separated commercial banking from investment banking and created the Federal Deposit Insurance Corporation, among other.

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The case for Glass-Steagall Act, the Depression-era law we need today

What could we lose? There are many reasons to desire a financial sector that is fractured by function. Many of the largest banks, brokerages, and insurance companies desired the Act at the glass-setagall. Venable LLPretrieved February 16, The Glasx-steagall York Times. With fewer divisions and complex structures, management will have an easier time preventing the next London Whale. In other words, concentration makes it more likely that government gets captured by corporate behemoths and that regulations are written to stack the deck in their favor.

Financial System Design ReconsideredChicago: An analysis of the investment banking activities of national banks”, Explorations in Economic History23 1: Archived from the original PDF on Archived from the original on 11 October Nobel Prize in Economics laureate Joseph Stiglitz argued that the effect of the repeal was “indirect”: The Safeguards Rule requires financial institutions to develop a written information security plan that describes how the company is prepared for, and plans to continue to protect clients’ nonpublic personal information.

Retrieved from ” https: Show 25 25 50 All. Of course, there are drawbacks to reviving a Glass-Steagall-like regime. Credit union Federal savings association Federal savings bank National bank State bank. A Study of the U. Notice requirements may vary. Burnsp Archived from the original on 14 September United States federal banking legislation United States federal privacy legislation United States federal computing legislation in law th United States Congress Separation of investment and retail banking in economics.


Together these factors make the financial system less susceptible to systemic risk. Mayer, MartinThe Bankers: Crucial to the passing of this Act was an amendment made to the GLB, stating that no merger may go ahead if any of the financial holding institutions, or affiliates thereof, received a “less than satisfactory [ sic ] rating at its most recent CRA exam”, essentially meaning that any merger may only go ahead with the strict approval of the regulatory bodies responsible for the Community Reinvestment Act CRA.

In terms of compliancethe key rules under the Act include The Financial Privacy Rule which governs the collection and disclosure of customers’ personal financial information by financial institutions. Pretexting sometimes referred to as “social engineering” occurs when someone tries to gain access to personal nonpublic information without proper authority to do so. Starting in the early s, federal banking regulators’ interpretations of the Act permitted commercial banksand especially commercial bank affiliates, to engage in an expanding list and volume of securities activities.

In summary, the financial privacy rule provides for a privacy policy agreement between the company and the consumer pertaining to the protection of the consumer’s personal nonpublic information.

Cleveland, Harold van B.

But the world is glass-steaggall different. University of California — Santa Barbara. Credit union Federal savings association Federal savings bank National bank State bank. The Fair Credit Reporting Act is responsible for the ‘opt-out’ opportunity, but the privacy notice must inform the customer of this right under the GLB.

From Wikipedia, the free encyclopedia.

Glass—Steagall in post-financial crisis reform debate. The American Presidency Project.

Gramm–Leach–Bliley Act – Wikipedia

The justification was that individuals usually put more money into investments when the economy is doing well, but they put most of their money into savings accounts when the economy turns bad. According to a policy report from the Cato Institute authored by one of the institute’s glasss-steagall, Mark A.

Financial institutions themselves might also benefit from such separation. This plan must include:.


Glass–Steagall legislation

Some commentators have stated that the GLBA’s repeal of the affiliation restrictions of the Glass—Steagall Act was an important cause of the financial crisis of — On the passage of S. The Regulation of Financial Institutions: The Financial Privacy Rule requires financial institutions to provide each consumer with a privacy notice at the time the consumer relationship is let and annually thereafter.

Retrieved October 8, Bernard Sanders of Vermont voted no. Aside from the Section 21 prohibition on securities firms taking deposits, neither savings and loans nor state-chartered banks that did not belong to the Federal Reserve System were restricted by Glass—Steagall.

Cleveland and Huertaspp. It received extensive critiques and comments from bankers, economists, and the Federal Reserve Board.

Glass–Steagall legislation – Wikipedia

As Theodore Roosevelt noted a century ago: It will improve the ability of regulators to monitor and regulate financial entities, indirectly making simpler regulations more viable. A year before the law was passed, Citicorpa commercial bank holding companymerged with the insurance company Travelers Group in to form the conglomerate Citigroupa corporation combining banking, securities and hlass-steagall services under a house of brands that included CitibankSmith BarneyPrimericaand Travelers.

Prior to the enactment glass-steaagll the Act those activities were limited to those that were so closely related to banking to be considered incidental to glass-dteagall. Calabriacritics of the legislation feared that, with the allowance for mergers between investment and commercial banks, GLBA allowed the newly-merged banks to take on riskier investments while at the same time removing any requirements to maintain enough equity, exposing the assets of its banking customers.

The bill then moved to a joint conference committee to work out the differences between the Senate and House versions.