Research Paper On The Glass Stougall Act
The Repeal of Glass Steagall Act
Introduction:
The Glass Steagall Act was established in 1932 by F Roosevelt. It was first law passed by the then president Roosevelt. The law was enacted to provide securities to the economy from speculative runs on the banks which will destroy their assets and also help US economy to recover from the great depression era. The Glass Steagall act was also the part of Banking Act of 1933. It put restrictions on commercial banks and investment banks. It forced the banks to choose between commercial banking and investment banking, so that common man’s money can be protected to be used for speculative purposes. This law mainly had four legislations. Further, this was law amended and reinforced by the Banking Act …show more content…
As explained earlier, to curb the inflation when the interest started rising, it created credit crunches for banking sector in 1960s and 1970s. Banks were not able to fulfill the borrowing requests. This turned borrowers to turn to capital markets to raise money. http://2.bp.blogspot.com/-UHIDkoaZNKI/UIMd_TOP8wI/AAAAAAAAAAc/GMo1XdlshKc/s1600/TBills.png
Helen Garten, Associate Professor at Rutgers University in her paper Subtle Hazards, Financial Risks, and Diversified. Banks: an Essay on the Perils of Regulatory Reform concluded that regulatory system is the main reason behind the bank failures as now Capital Markets act as efficient alternatives for bank loans and deposits.
There were some regulatory and congressional advancement to tackle these problems. For example:
In 1967, underwriting of municipal revenue bonds was allowed. In 1974, investments in acknowledged securities were allowed for national banks. In 1977, PP was authorized by banks. Also, banks tried to benefit from the lop holes of the GSA. In 1982, underwriting and dealing in securities was permitted. In 1988, CEBA was passed, which enabled to be associated with securities actions. In coming years, numerous legislations and refinements were done to undermine the
Introduction:
The Glass Steagall Act was established in 1932 by F Roosevelt. It was first law passed by the then president Roosevelt. The law was enacted to provide securities to the economy from speculative runs on the banks which will destroy their assets and also help US economy to recover from the great depression era. The Glass Steagall act was also the part of Banking Act of 1933. It put restrictions on commercial banks and investment banks. It forced the banks to choose between commercial banking and investment banking, so that common man’s money can be protected to be used for speculative purposes. This law mainly had four legislations. Further, this was law amended and reinforced by the Banking Act …show more content…
As explained earlier, to curb the inflation when the interest started rising, it created credit crunches for banking sector in 1960s and 1970s. Banks were not able to fulfill the borrowing requests. This turned borrowers to turn to capital markets to raise money. http://2.bp.blogspot.com/-UHIDkoaZNKI/UIMd_TOP8wI/AAAAAAAAAAc/GMo1XdlshKc/s1600/TBills.png
Helen Garten, Associate Professor at Rutgers University in her paper Subtle Hazards, Financial Risks, and Diversified. Banks: an Essay on the Perils of Regulatory Reform concluded that regulatory system is the main reason behind the bank failures as now Capital Markets act as efficient alternatives for bank loans and deposits.
There were some regulatory and congressional advancement to tackle these problems. For example:
In 1967, underwriting of municipal revenue bonds was allowed. In 1974, investments in acknowledged securities were allowed for national banks. In 1977, PP was authorized by banks. Also, banks tried to benefit from the lop holes of the GSA. In 1982, underwriting and dealing in securities was permitted. In 1988, CEBA was passed, which enabled to be associated with securities actions. In coming years, numerous legislations and refinements were done to undermine the