Other names for this bill...
This bill is most commonly is referred to as Glass-Steagall, for the names of its sponsors.
What does the Banking Act do?
This bill was passed during to the Great Depression to protect money deposited in banks.
It created the Federal Deposit Insurance Corporation (FDIC), which insures your bank deposits.
Key provisions also made sure that money deposited in banks was safe in the first place - by not allowing banks to engage in speculation with the deposited money...
o If a bank takes deposits, it could not buy or sell securities (ex. stocks).
o If an company buys or sells securities, it could not take deposits.
o Banks (as well as their officers or directors) could not be affiliated with companies whose primary business is trading securities.
o If an company buys or sells securities, it could not take deposits.
o Banks (as well as their officers or directors) could not be affiliated with companies whose primary business is trading securities.
Bonus Material: Another provision of the law, known as Requlation Q restricted the amount of interest a bank could pay on savings accounts, and prevented them from paying any interest on checking accounts.