The "Glass–Steagall Act" is not the official title of the law; it is a colloquialism that refers to its legislative sponsors, Carter Glass, a US Senator from Virginia and Henry B. Steagall, the Congressman from Alabama's 3rd congressional district. The official title was "An Act to Improve the Facilities of the Federal Reserve System for the Service of Commerce, Industry, & Agriculture, to Provide Means for Meeting the Needs of Member Banks in Exceptional Circumstances, & for Other Purposes".[2]
The Glass–Steagall Act of 1932 authorized Federal Reserve Banks to (1) lend to five or more Federal Reserve System member banks on a group basis or to any individual member bank with capital stock of $5 million or less against any satisfactory collateral, not only “eligible paper,” and (2) issue Federal Reserve Bank Notes (i.e., paper currency) backed by US government securities when a shortage of “eligible paper” held by Federal Reserve banks would have required such currency to be backed by gold.[3] The Federal Reserve Board explained that the special lending to Federal Reserve member banks permitted by the 1932 Glass–Steagall Act would only be permitted in “unusual and temporary circumstances.”[4]
Historical contextedit
The crash of 1929 evolved into a panic situation due to people losing their savings. Therefore, a massive withdrawal of deposits of the banks took place leading to the bankruptcy of many entities. In 1933, a young prosecutor named Ferdinand Pecora, who was a member of the US Senate's Monetary and Financial Affairs Commission, interrogated several bank managers about their detestable role in the crisis. These hearings and the coming to power of Franklin D. Roosevelt and his New Deal policy gave rise to the law.
^kanopiadmin (18 August 2014). "America's Great Depression - Murray N. Rothbard".
^United States. Congress (February 27, 1932), An Act to Improve the Facilities of the Federal Reserve System for the Service of Commerce, Industry, & Agriculture, to Provide Means for Meeting the Needs of Member Banks in Exceptional Circumstances, & for Other Purposes, retrieved 2020-03-29
^Friedman and Schwartz 1963 , p. 321 and pp. 399-406. Patrick 1993, pp. 71-77.
^Federal Reserve Board (1932), "Review of the Month: The Glass–Steagall bill" (PDF), Federal Reserve Bulletin, 73 (3): 141–142 and 180–181, retrieved July 23, 2015. Each form of special lending to Federal Reserve member banks required approval from at least five members of the Federal Reserve Board. Group lending could be made to fewer than five (but not fewer than two) member banks if the borrowing banks had deposit liabilities equal to at least 10% of the deposits liabilities of member banks in their Federal Reserve district. The special lending to individual member banks could be made only in “exceptional and exigent circumstances.” Both forms of lending were based on the borrowing member banks not having sufficient "eligible assets" to borrow on normal terms.
External linksedit
Public Law 72-44, 72d Congress, H.R. 9203
April 10, 2024
glass, steagall, 1932, legislation, separating, investment, commercial, banking, glass, steagall, legislation, first, glass, steagall, passed, united, states, congress, february, 1932, prior, inclusion, more, comprehensive, measures, banking, 1933, which, more. For the legislation separating investment and commercial banking see Glass Steagall legislation The first Glass Steagall Act was a law passed by the United States Congress on February 27 1932 prior to the inclusion of more comprehensive measures in the Banking Act of 1933 which is now more commonly known as the Glass Steagall Act It was the first time that currency non specie paper currency etc was permitted to be allocated for the Federal Reserve System It was passed in an effort to stop deflation and expanded the Federal Reserve s ability to offer loans to member banks rediscounts on more types of assets such as government bonds as well as commercial paper 1 The Glass Steagall Act is not the official title of the law it is a colloquialism that refers to its legislative sponsors Carter Glass a US Senator from Virginia and Henry B Steagall the Congressman from Alabama s 3rd congressional district The official title was An Act to Improve the Facilities of the Federal Reserve System for the Service of Commerce Industry amp Agriculture to Provide Means for Meeting the Needs of Member Banks in Exceptional Circumstances amp for Other Purposes 2 Contents 1 Contents 2 Historical context 3 See also 4 References 5 External linksContents editThe Glass Steagall Act of 1932 authorized Federal Reserve Banks to 1 lend to five or more Federal Reserve System member banks on a group basis or to any individual member bank with capital stock of 5 million or less against any satisfactory collateral not only eligible paper and 2 issue Federal Reserve Bank Notes i e paper currency backed by US government securities when a shortage of eligible paper held by Federal Reserve banks would have required such currency to be backed by gold 3 The Federal Reserve Board explained that the special lending to Federal Reserve member banks permitted by the 1932 Glass Steagall Act would only be permitted in unusual and temporary circumstances 4 Historical context editThe crash of 1929 evolved into a panic situation due to people losing their savings Therefore a massive withdrawal of deposits of the banks took place leading to the bankruptcy of many entities In 1933 a young prosecutor named Ferdinand Pecora who was a member of the US Senate s Monetary and Financial Affairs Commission interrogated several bank managers about their detestable role in the crisis These hearings and the coming to power of Franklin D Roosevelt and his New Deal policy gave rise to the law See also editUS corporate law US banking lawReferences edit kanopiadmin 18 August 2014 America s Great Depression Murray N Rothbard United States Congress February 27 1932 An Act to Improve the Facilities of the Federal Reserve System for the Service of Commerce Industry amp Agriculture to Provide Means for Meeting the Needs of Member Banks in Exceptional Circumstances amp for Other Purposes retrieved 2020 03 29 Friedman and Schwartz 1963 p 321 and pp 399 406 Patrick 1993 pp 71 77 Federal Reserve Board 1932 Review of the Month The Glass Steagall bill PDF Federal Reserve Bulletin 73 3 141 142 and 180 181 retrieved July 23 2015 Each form of special lending to Federal Reserve member banks required approval from at least five members of the Federal Reserve Board Group lending could be made to fewer than five but not fewer than two member banks if the borrowing banks had deposit liabilities equal to at least 10 of the deposits liabilities of member banks in their Federal Reserve district The special lending to individual member banks could be made only in exceptional and exigent circumstances Both forms of lending were based on the borrowing member banks not having sufficient eligible assets to borrow on normal terms External links editPublic Law 72 44 72d Congress H R 9203 Retrieved from https en wikipedia org w index php title Glass Steagall Act of 1932 amp oldid 1145210203, wikipedia, wiki, book, books, library,
