Glass-Steagall--Financial
regulation put into place in 1933 after the stock market crash of 1929. The
crash occurred because of over-leveraging and banks taking too
much risk with depositor’s money in the stock market. The main purpose of this
act was to separate investment and commercial banking in the hopes of preventing another Great
Depression. In 1935, a temporary agency established by the
act, the FDIC,
was made permanent although Congress wasn’t exactly sure about doing this. Looking
back now, the “dismantling” of this long standing regulation during1999 may have
been a major contributing factor to the Great Recession.
It may have been better to implement a version of the Glass-Steagall Act globally