Glass-Steagall Act
The Glass-Steagall Act, sometimes also known as the Banking Act, established the Federal Deposit Insurance Corporation (FDIC).
Contents
Description
The FDIC insures deposits.
To be eligible for FDIC insurance, banks must join the Federal Reserve system and accept regulatory supervision.
History
Since 1930, Glass had advocated for regulations to the American banking system. Chiefly these were to separate commercial and investment banking practices, and to bar states from chartering banks that could operate outside of Federal Reserve supervision. Hoover added his support to the bill in late 1932, but senators from states that maintained such chartered banks (e.g., Long) fillibustered it.
Steagall introduced a new bill in May 1933 as a compromise. The FDIC would be established and could only insure deposits with banks in the Federal Reserve system.
Vandenberg amended the bill to establish a federal fund for immediate and temporary insurance up to $2,500. Roosevelt used the threat of a veto to force an amendment which made temporary insurance effective from January 1, and permanent insurance effective even later from July 1.
This act was passed and signed into law in June 1933.
Most recently, the Dodd-Frank Act amended the insurance limit to $250,000 per ownership category in 2010.