Henry B. Steagall Chariman House Banking Currency

The Glass-Steagall Act was four separate acts passed to regulate banking in 1933. Its best known for separating banks that received deposits from those that bought stock.

The Glass-Steagall Act separated banks from their Investment banking divisions.  Roosevelt had not supported this act, initially. Both before the new Congress was called into session, and over the course the Congressional session, the Senate Banking Committee investigated the sins of the banks leading up to the great depression. Under the leadership of Ferdinand Pecora, as the chief of the Congressional Banking Committee, the banks were forced to admit they had colluded between themselves to siphon money from their banking operations to their investment activities. Many of the banks’ investment activities had been designed for only one purpose– i.e., to enrich the partners of the banks. As a result, it became clear that to ensure the safety of the public’s money; it would be necessary to split the banks from their investment houses. The Glass-Steagall Act mandated the separation. It also included another unrelated, but significant provision; i.e., the imposition of Federal Deposit Insurance.  Federal Deposit Insurance guaranteed that all personal accounts–up to $5,000 (for the first few months the F.D.I.C. only insured $2,500). This provision, (which, initially was not supported by Roosevelt) ended the runs on banks in the United States.