1933 Banking Act

1933 U.S. banking reform; established the Federal Deposit Insurance Corporation (FDIC) May 2013 An Act to provide for the safer and more effective use of the assets of banks, to regulate interbank control, to prevent the undue diversion of funds into speculative operations, and for other purposes. Banking Act of 1933 Banking Act of 1933; Glass–Steagall Act (especially when referring to the separation of commercial and investment banking in Sections 16, 20, 21, and 32) 73rd June 16, 1933 Pub. L. 73-66 https://fraser.stlouisfed.org/title/991 48 Stat. 162 (1933) Federal Reserve ActNational Bank ActClayton Act House of Representatives H.R. 5661 Rep. Henry B. Steagall (D-AL) May 16, 1933 U.S. House Committee on Banking and Currency House May 23, 1933 262–19 Senate with amendment May 25, 1933 voice vote June 12, 1933 Senate June 13, 1933 voice vote House June 13, 1933 191–6 Franklin Delano Roosevelt June 16, 1933 Banking Act of 1935Bank Holding Company Act of 1956Depository Institutions Deregulation and Monetary Control Act of 1980Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994Gramm–Leach–Bliley Act of 1999Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 Board of Governors v. Agnew, 329 U.S. 441 (1946)Investment Company Institute v. Camp, 401 U.S. 617 (1970)Board of Governors v. Investment Company Institute, 450 U.S. 46 (1981)Securities Industry Association v. Board of Governors, 468 U.S. 207 (1984) Banking Act of 1933 The Banking Act of 1933 (73 66 48 162 1933 06 16) was a statute enacted by the United States Congress that established the Federal Deposit Insurance Corporation (FDIC) and imposed various other banking reforms.https://www.pbs.org/wgbh/pages/frontline/shows/wallstreet/weill/demise.html Frontline: The Wall Street Fix: Mr. Weill Goes to Washington: The Long Demise of Glass–Steagall October 8, 2008 www.pbs.org PBS May 8, 2003 The entire law is often referred to as the Glass–Steagall Act, after its Congressional sponsors, Senator Carter Glass (D) of Virginia, and Representative Henry B. Steagall (D) of Alabama. The term "Glass–Steagall Act", however, is most often used to refer to four provisions of the Banking Act of 1933 that limited commercial bank securities activities and affiliations between commercial banks and securities firms. That limited meaning of the term is described in the article on Glass–Steagall Legislation. The Banking Act of 1933 (the 1933 Banking Act) joined two long-standing Congressional projects: A federal system of bank deposit insurance championed by Representative SteagallGolembe 1961. The regulation (or prohibition) of the combination of commercial and investment banking and other restrictions on "speculative" bank activities championed by Senator Glass as part of a general desire to "restore" commercial banking to the purposes envisioned by the Federal Reserve Act of 1913.Perkins 1971. Willis and Parker 1934. Although the 1933 Banking Act thus fulfilled Congressional designs and, at least in its deposit insurance provisions, was resisted by the Franklin D. Roosevelt administration, it later became considered part of the New Deal. The deposit insurance and many other provisions of the Act were criticized during Congressional consideration.Patrick 1993, p. 168-177. The entire Act was long-criticized for limiting competition and thereby encouraging an inefficient banking industry. Supporters of the Act cite it as a central cause for an unprecedented period of stability in the U.S. banking system during the ensuing four or, in some accounts, five decades following 1933.http://www.thedailyshow.com/watch/wed-april-15-2009/elizabeth-warren-pt--2 Elizabeth Warren Pt. 2 – The Daily Show with Jon Stewart – 4/15/2009 – Video Clip Comedy Central Thedailyshow.com April 15, 2009 January 8, 2012 Creation of FDIC and federal deposit insurance Federal Deposit Insurance Corporation The 1933 Banking Act established (1) the Federal Deposit Insurance Corporation (FDIC); (2) temporary FDIC deposit insurance limited to $2,500 per accountholder starting January 1934 through June 30, 1934; and (3) permanent FDIC deposit insurance starting July 1, 1934, fully insuring $5,000 per accountholder. 1934 legislation delayed the effectiveness of the permanent insurance system. The Banking Act of 1935 repealed the permanent system and replaced it with a system that fully insured balances up to $5,000 and provided no insurance for balances above that amount.FDIC 1983, chapter 3, pp. 43–44. Over the years, the limit has been raised which reached up to its current limit of $250,000. The 1933 Banking Act required all FDIC-insured banks to be, or to apply to become, members of the Federal Reserve System by July 1, 1934. The Banking Act of 1935 extended that deadline to July 1, 1936. State banks were not eligible to be members of the Federal Reserve System until they became stockholders of the FDIC, and thereby became an insured institution.Banking Act of 1933, commonly called Glass-Steagall http://www.federalreservehistory.org/Events/DetailView/25 March 20, 2014 April 28, 2015 https://web.archive.org/web/20150428033924/http://www.federalreservehistory.org/Events/DetailView/25 dead 1939 legislation repealed the requirement that FDIC-insured banks join the Federal Reserve System.FDIC 1983, chapter 3, pp. 44 and 47–53. Before 1950, the laws establishing the FDIC and FDIC insurance were part of the Federal Reserve Act. 1950 legislation created the Federal Deposit Insurance Act (FDIA).FDIC 1983, chapter 4, p. 61. Separation of commercial and investment banking Glass–Steagall Act Over time, the term Glass–Steagall Act came to be used most often to refer to four provisions of the 1933 Banking Act that separated commercial banking from investment banking.CRS 2010a 1 and 5 Wilmarth 1990 1161 Congressional efforts to "repeal the Glass–Steagall Act" referred to those four provisions (and then usually to only the two provisions that restricted affiliations between commercial banks and securities firms).Reinicke 1995, pp. 104–105. Greenspan 1987, pp. 3 and 15–22. FRB 1998. Those efforts culminated in the 1999 Gramm-Leach-Bliley Act (GLBA), which repealed the two provisions restricting affiliations between banks and securities firms.Macey 2000, p. 716. Wilmarth 2002, p. 219, fn. 5. The 1933 Banking Act's separation of investment and commercial banking is described in the article on the Glass–Steagall Act. Institutions were given one year to decide whether they wanted to specialize in commercial or investment banking. Other provisions of 1933 Banking Act Creation of the Federal Open Market Committee The act had a large impact on the Federal Reserve. Notable provisions included the creation of the Federal Open Market Committee (FOMC) under Section 8. However, the 1933 FOMC did not include voting rights for the Federal Reserve Board, which was revised by the Banking Act of 1935 and amended again in 1942 to closely resemble the modern FOMC. Regulation Q To decrease competition between commercial banks and discourage risky investment strategies, the Banking Act of 1933 outlawed the payment of interest on checking accounts and also placed ceilings on the amount of interest that could be paid on other deposits. Regulation of "speculation" Several provisions of the 1933 Banking Act sought to restrict "speculative" uses of bank credit. Section 3(a) required each Federal Reserve Bank to monitor local member bank lending and investment to ensure there was not "undue use" of bank credit for "speculative trading or carrying" of securities, commodities or real estate. Section 7 limited the total amount of loans a member bank could make secured by stocks or bonds and permitted the Federal Reserve Board to impose tighter restrictions and to not limit the total amount of such loans that could be made by member banks in any Federal Reserve district. Section 11(a) prohibited Federal Reserve member banks from acting as agents for nonbanks in placing loans to brokers or dealers.FRBNY 1933 pp. 1 (Section 3(a)), 4 (Section 7), 8 (Section 11(a)). Rodkey 1934, p. 893. Willis 1935, pp. 705–711. Glass also hoped to put "speculative" credit into more productive sectors of the U.S. economy. Other provisions still in effect Other provisions of the 1933 Banking Act that remain in effect include (1) Sections 5(c) and 27, which required state member banks to provide its district's Federal Reserve Bank and the Federal Reserve Board and national banks to provide the Comptroller of the Currency a minimum of three reports on their affiliates;FRBNY 1933, pp. 2–3 and 13. Alper Carl E. 1934 The Banking Act of 1933 in Operation and the Contemplated Modification St. John's Law Review 8 2 436 http://heinonline.org/HOL/Page?handle=hein.journals/stjohn8&div=1&g_sent=1&collection=journals February 24, 2012 (2) Section 13, which (as Section 23A of the Federal Reserve Act) regulated transactions between Federal Reserve member banks and their nonbank affiliates;FRBNY 1933, pp. 8–9. Omarova 2011. (3) Sections 19 and 30, which established criminal penalties for misconduct by officers or directors of Federal Reserve System member banks and authorized the Federal Reserve to remove such officers or directors;FRBNY 1933, pp. 11 (clause (d) of "Regulation of Holding Companies") and 30. The Glass–Steagall Act of 1933 Legislation Harvard Law Review 47 2 December 1933 328 1991623 10.2307/1332351 (4) Section 22, which eliminated personal liability ("double liability") for new shareholders of national banks;FRBNY 1933, p. 12. Macey Jonathan R. Miller Geoffrey P. Double Liability of Bank Shareholders: History and Implications Wake Forest Law Review 27 1 1992 31–62 (p. 38 for 1933 Banking Act) http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?article=2677&context=fss_papers February 10, 2012 and (5) Section 23, which gave national banks the same ability to establish branches in their "home state" as state chartered banks in that state.FRBNY 1933, p. 12. Alper 1933, pp. 195–196. The 1933 Banking Act gave tighter regulation of national banks to the Federal Reserve which required state member banks and holding companies to make three reports annually. The reports were to be given to their Federal Reserve Board and Federal Reserve Bank. Other provisions repealed or replaced Provisions of the 1933 Banking Act that were later repealed or replaced include (1) Sections 5(c) and 19, which required an owner of more than 50% of a Federal Reserve System member bank's stock to receive a permit from (and submit to inspection by) the Federal Reserve Board to vote that stock (replaced by the Bank Holding Company Act of 1956);FRBNY 1933, pp. 3 and 11 (Regulation of Holding Companies). Fischer Gerald C. Bank Holding Companies Columbia University Press New York 1961 61–78 9780231904445 https://books.google.com/books?id=T58vAAAAMAAJ Gerald C. Fischer, "Bank Holding Companies", New York: Columbia University Press (1961), pp. 61-78. (2) Section 8, which established the Federal Open Market Committee (FOMC) made up of representatives from each of the 12 Federal Reserve Banks (revised by the Federal Reserve Board-dominated FOMC established by the Banking Act of 1935 and later amended in 1942);FRBNY 1933, p. 4. Kennedy 1973, pp. 210 and 235-6. Friedman and Schwartz 1963, p. 445. (3) Section 11(b), which prohibited interest payments on demand deposits (repealed by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and allowing interest-bearing demand accounts beginning July 21, 2011) and authorized the Federal Reserve Board to limit interest rates on time deposits (phased out by the Depository Institutions Deregulation and Monetary Control Act of 1980 by 1986), Gilbert R. Alton Requiem for Regulation Q: What It Did and Why It Passed Away The Federal Reserve Bank of St. Louis Review 1986 22–37 http://research.stlouisfed.org/publications/review/86/02/Requiem_Feb1986.pdf February 10, 2012. http://www.bankersweb.com/headlines/article/regulation-Q-repealed Dodd-Frank Dispatch: Remainder of Regulation Q Repealed July 25, 2011 BankersWeb.com February 10, 2012February 2019 InternetArchiveBot yes . Klein Karen E. What Regulation Q's Repeal Means for Business Checking Bloomberg Business Week July 22, 2011 http://www.businessweek.com/small-business/what-regulation-qs-repeal-means-for-business-checking-07222011.html February 10, 2012 both of which interest limitations were incorporated into Regulation Q, and (4) Section 12, which prohibited Federal Reserve System member bank loans to their executive officers and required the repayment of outstanding loans (replaced by the 1935 Banking Act's regulation of such loans and modified by later legislation).Burns 1974, pp. 142 and 173. Magary Douglas K. Federal Regulation of Bank Loans to Bank Executives: An Amendment to the Federal Reserve Act Boston College Law Review 9 2 1968 393 http://lawdigitalcommons.bc.edu/cgi/viewcontent.cgi?article=1079&context=bclr February 10, 2012 Legislative history 1930–1932 Glass bills; Glass Senate subcommittee Between 1930 and 1932 Senator Glass introduced several versions of a bill (known in each version as the Glass bill) to separate commercial and investment banking and to establish other reforms (except deposit insurance) similar to the final provisions of the 1933 Banking Act. Glass had been the House sponsor of the Federal Reserve Act of 1913 (the Glass-Owen Act) and considered himself "the father of the Federal Reserve System". The various versions of his Glass bill consistently sought to (1) expand branch banking and bring more banks and activities under Federal Reserve supervision and (2) separate (or regulate the mix of) commercial and investment banking. Glass sought to "correct" what he considered to be the "errors" the Federal Reserve System had made in not controlling what he considered "speculative credit" during the 1920s. The Glass bills also sought to avoid deposit insurance by providing for a "Liquidation Corporation", a federal authority to purchase assets of a closed bank based on "an approximately correct valuation of its assets". Glass's idea was for a federal corporation to assume ownership of the assets of failed banks and sell them over time as the market could absorb them, rather than dump assets onto markets with little demand. The bills provided that such payments would be used to make immediate payments to depositors to the extent of the bank's "bona fide assets".Kennedy 1973, pp. 50–53 and 203–204. Perkins 1971, pp. 497–505. Willis and Chapman 1934, pp. 62–102 (with quoted asset liquidation language on pp. 65–66 as descriptions of the statutory language).Robert L. Fuller, "Phantom of Fear" The Banking Panic of 1933 (2011) 48 Glass introduced the first Glass bill on June 17, 1930. The bill's language indicated that it was intended as a "tentative measure to serve as a guide" for a subcommittee of the Senate Committee on Banking and Currency (the Glass Subcommittee) chaired by Glass that was authorized to investigate the operations of the National and Federal Reserve banking systems.Burns 1974, p. 8. On January 25, 1933, during the lame duck session of Congress following the 1932 elections, the Senate passed a version of the Glass bill.Kennedy 1973, pp. 72–73. Commercial banking theory; unit banks Senator Glass supported a commercial banking theory (associated with the real bills doctrine)Economic Theory in Retrospect https://archive.org/details/economictheoryin0000blau_m5e1 registration Blaug Mark Mark Blaug 1968 Richard D. Irwin, Inc. Homewood, IL revised 56 and 202–203 that commercial banks should no longer be allowed to underwrite or deal in securities. This theory, defended by Senator Glass's longtime advisor Henry Parker Willis, had served as a foundation for the Federal Reserve Act of 1913 and earlier US banking law. Glass and Willis argued the failure of banks to follow, and of the Federal Reserve to enforce, this theory had resulted in the "excesses" that inevitably led to the Wall Street Crash of 1929 and the Great Depression.Perkins 1971, pp. 501–505. Wilmarth 2008, p. 565. Friedman and Schwartz 1963, p. 388, fn. 134. Before and after the Wall Street Crash of 1929 Senator Glass used this commercial banking theory to criticize banks for their involvement in securities markets. Glass condemned banks for lending to stock market "speculators" and for underwriting "risky" or "utterly worthless" securities, particularly foreign securities, that were sold to unsophisticated bank depositors and small "correspondent banks".Benston, pp. 1 and 34–35. Wilmarth 2008, p. 565. Glass opposed direct bank involvement in these activities and indirect involvement through "securities affiliates". Such affiliates were typically owned by the same shareholders as the bank, with the affiliate's shares held in a "voting trust" or other device that ensured bank management controlled the affiliate. Glass and Willis viewed such affiliates as artificial devices to evade limits on bank activities. Large banks such as National City Bank (predecessor to Citibank) and Chase National Bank typically used such securities affiliates to underwrite securities.Perkins 1971, pp. 503–504 and 517–522. Peach 1941, pp. 66–70. Glass and Willis criticized all forms of "illiquid loans" including bank real estate lending. They were, however, especially critical of bank securities activities. Willis identified bank investments in, and loans to finance purchases of, government securities during World War I as the beginning of the corruption of commercial banking that culminated in the "speculative excesses" of the 1920s.Perkins 1971, pp. 490–497. Willis and Chapman 1934, pp. 62–72. Glass and Willis also identified the "unit banking" system of small, single office banks as a basic weakness of U.S. banking.Kennedy 1973, p. 207. Willis and Chapman 1934, p. 3. The Glass bills tried to limit banks to their "proper" commercial banking activities and to permit banks to expand their geographic operations through greater permission for branch banking.Kennedy 1973, pp. 203–209. Willis and Chapman 1934, pp. 62–102. Additionally, many small banks were not able to profit in the securities business, leading many small banks to push for deposit insurance. However, many large banks opposed deposit insurance because "they expected deposits running off from small, weak country banks to come to them". Roe 1994, pp. 97. Overall, most banks opposed deposit insurance, small banks and large banks, and public opinion was the main factor pushing for the policy.Shaw Christopher W. 2015 'The Man in the Street Is for It': The Road to the FDIC https://doi.org/10.1017/S0898030614000359 Journal of Policy History 27 1 36–60 10.1017/S0898030614000359 subscription Unit banks, Federal Reserve System, and deposit insurance Following his defeat in the 1932 presidential election, President Herbert Hoover supported the Glass bill.Kennedy 1973, p. 72. Burns 1974, pp. 24–25. Perkins 1971, p. 520. In 1932 Hoover had delayed Congressional action on the Glass bill by requesting further hearings and (according to Willis) by working to delay Senate consideration of revised versions of the Glass bill introduced after those hearings.Perkins 1971, p. 515. Willis and Chapman 1934, pp. 84–96. Willis 1935, p. 718. In the 1933 "lame duck" session of the 72nd United States Congress, the final obstacle to Senate passage came from supporters of small "unit banks" (i.e., single office banks). They opposed the Glass bill's permission for national banks to branch throughout their "home state" and into neighboring states as far as a 50-mile "area of trade".Kennedy 1973, pp. 207–208. Even in the extended period of economic prosperity in the 1920s, a large number of "unit banks" in agricultural areas failed as agricultural prices declined.Patrick 1993, p. 30. Kennedy 1973, p. 205. During the Great Depression unit bank failures grew. Willis and others noted that there were no significant bank failures in Canada, despite similar bad economic conditions. Canada permitted branch banking (which had led to a system of large, nationwide banks), but otherwise shared the U.S. system of "commercial banking" distinct from the "universal banks" common in Europe and elsewhere in the world.Willis and Chapman 1934, pp. 3–4 and 80–82. Flood 1992, p. 69. Kennedy 1973, p. 207. Glass stated he had originally supported the "little bank" but as so many unit banks failed, he concluded they were a "menace" to "sound banking" and a "curse" to their depositors.Kennedy 1973, p. 207. Glass also wanted Federal Reserve supervision of all banks under a "unified banking system".Burns 1974, pp. 71–72 and 79. Kennedy 1973, pp. 205–207. Glass stated "the curse of the banking system for this country is the dual system" under which states could charter banks that were supervised by state officials outside the Federal Reserve System.Burns 1974, p. 72. Under the Federal Reserve Act, all national banks were required to be members of the Federal Reserve System, but state chartered banks could choose whether to join.Kennedy 1973, pp. 8–9. Glass and others concluded that this had led to a "competition in laxity" between regulators of member and non-member banks.Rodkey 1934, p. 899. Alper 1933, p. 194. Flood 1992, pp. 67–69. In opposition to the Glass bill's branch banking provisions, Senator Huey Long (D-LA) filibustered the Glass bill until Glass revised his bill to limit national bank branching rights to states that permitted their own banks to branch. Glass also revised his bill to extend the deadline for banks to dispose of securities affiliates from three to five years.Patrick 1993, pp. 121–123. Perkins 1971, pp. 520–521. With those changes, the Glass bill passed the Senate in an overwhelming 54–9 vote on January 25, 1933.Kennedy 1993, p. 73. In the House of Representatives, Representative Steagall opposed even the revised Glass bill with its limited permission for branch banking.Patrick 1993, p. 123. Steagall wanted to protect unit banks, and bank depositors, by establishing federal deposit insurance, thereby eliminating the advantage larger, more financially secure banks had in attracting deposits.White Eugene. 1995 Deposit Insurance World Bank Policy Research Working Paper 1541 7–10 http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/1995/11/01/000009265_3961019154935/Rendered/PDF/multi_page.pdf February 25, 2012 150 separate bills providing some form of federal deposit insurance had been introduced in the United States Congress since 1886. The House had passed a federal deposit insurance bill on May 27, 1932, that was awaiting Senate action during the 1933 "lame duck" session.FDIC 1983, chapter 2, p. 29. Burns 1974, p. 18. After several states had closed their banks in what became the banking crisis of 1933, President Hoover issued a February 20, 1933, plea to the House of Representatives to pass the Glass bill as the "first constructive step to remedy the prime weakness of our whole economic life". On March 4, 1933, however, the lame duck session of the 72nd Congress adjourned without either the Glass bill or the House deposit insurance bill becoming law. On the same day, the Senate reconvened in a special session called by President Hoover and Franklin Delano Roosevelt was inaugurated as the new president.Kennedy 1973, p. 73–74. Burns 1974, pp. 40–41. Hoover Herbert Special Message to the Congress on Pending Legislation to Promote Economic Recovery Public Papers of the Presidents The American Presidency Project February 20, 1933 http://www.presidency.ucsb.edu/ws/index.php?pid=23433&st=&st1=#axzz1WCbH4E00 1933 extraordinary session of Congress Glass bills President Roosevelt called both Houses of Congress into "extraordinary session" on March 9, 1933, to enact the Emergency Banking Act that ratified Roosevelt's emergency closing of all banks on March 6, 1933. On March 11, 1933, Senator Glass reintroduced (as S. 245) his Glass bill revised to require banks to eliminate securities affiliates within 2 years rather than the 5 years permitted by the compromised version of the Glass bill the Senate had passed in January.Burns 1974, pp. 41–42 and 79. Perkins 1971, p. 524 (for change from 5 to 2 years). Roosevelt told Glass he approved most of the bill, including the separation of commercial and investment banking, that he shared Glass's desire for a "unified banking system" with state and national banks regulated by a single authority, but that he only approved countywide, not statewide, branch banking, and that he opposed deposit insurance.Patrick 1993, pp. 168–169. On March 7, 1933, National City Bank (predecessor to Citibank) had announced it would liquidate its security affiliate. The next day, Winthrop Aldrich, the newly named chairman and president of Chase National Bank, announced Chase would do the same and that Chase supported prohibiting banks from having securities affiliates.Perkins 1971, p. 523. Kennedy 1973, pp. 212–213. Aldrich also called for prohibiting securities firms from taking deposits.Kelly III, pp. 52–53. According to Aldrich and his biographer, Aldrich (a lawyer) drafted new language for Glass's bill that became Section 21 of the Glass–Steagall Act.Kelly III, p. 53, fn. 157. Garten 1999, p. 292, fn. 25. Contemporary observers suggested Aldrich's proposal was aimed at J.P. Morgan & Co.Kennedy 1973, pp. 212–213. Schlesinger Jr. 1958, p. 443. A later Glass–Steagall critic cited Aldrich's involvement as evidence the Rockefellers (who controlled Chase) had used Section 21 to keep J.P. Morgan & Co. (a deposit taking private partnership best known for underwriting securities) from competing with Chase in the commercial banking business.Tabarrok Alexander The Separation of Commercial and Investment Banking: the Morgans vs. the Rockefellers The Quarterly Journal of Austrian Economics 1 1 1998 1–18 http://www.whatcausedthehousingbubble.com/docs/12.pdf February 10, 2012 10.1007/s12113-998-1000-9 154995395 dead https://web.archive.org/web/20120616155319/http://www.whatcausedthehousingbubble.com/docs/12.pdf June 16, 2012 After Glass introduced S. 245, he chaired a subcommittee that considered the bill and prepared a revised version while negotiating at length with the Roosevelt Administration to gain its support for the bill.Kennedy 1973, pp. 204 and 217–218. Burns 1974, pp. 80–81. By April 13, 1933, the subcommittee had prepared a revised Glass bill, but delayed submitting the bill to the full Senate Committee on Banking and Currency to continue negotiations with the Roosevelt Administration.Kennedy 1973, p. 217. Patrick 1993, p. 169. President Roosevelt had declared on March 8, 1933, in his first press conference, that he opposed a guarantee of bank deposits for making the government responsible for the "mistakes and errors of individual banks" and for putting "a premium on unsound banking".Kennedy 1973, p. 215. Roosevelt Franklin D. Press Conference Public Papers of the Presidents The American Presidency Project March 8, 1933 http://www.presidency.ucsb.edu/ws/index.php?pid=14672&st=&st1=#axzz1cUaCOT1e Glass had reluctantly accepted that no banking reform bill would pass Congress without deposit insurance, but President Roosevelt and Treasury Secretary William Woodin continued to resist such insurance during their negotiations with the Senate subcommittee.Patrick 1993, pp. 168–169. Burns 1974, pp. 80–81 and 90. Kennedy 1973, pp. 217–218. On April 25, 1933, Roosevelt asked for two weeks to consider the deposit insurance issue. Rotemberg Julio J. Ciminero Sabina M. The U.S. Banking Panic of 1933 and Federal Deposit Insurance Case Study January 11, 1999 revised January 23, 2008 http://hbr.org/product/u-s-banking-panic-of-1933-and-federal-deposit-insu/an/799077-PDF-ENG February 10, 2012 Kennedy 1973, p. 218. In early May, Roosevelt announced with Glass and Steagall that they had agreed "in principle" on a bill.Kennedy 1973, p. 218. On May 10, 1933, Glass introduced his revised bill (S. 1631) in the Senate. The most important change was a new provision for deposit insurance. Glass had opposed deposit insurance throughout his career in Congress.Shaw Christopher W. Money, Power, and the People: The American Struggle to Make Banking Democratic University of Chicago Press 2019 978-0226636337 Chicago 93, 103, 142–143 As Roosevelt demanded, deposit insurance was based on a sliding scale. Deposit balances above $10,000 would only be partially insured. As Roosevelt had suggested, deposit insurance would not begin for one year.Patrick 1993, p. 169. Burns 1974, p. 90. Glass limited the deposit insurance to Federal Reserve System member banks in the hope this would indirectly lead to a "unified banking system" as the attraction of deposit insurance would lead banks to become Federal Reserve members.Kennedy 1973, p. 218. Patrick 1993, p. 172. Aside from the new federal deposit insurance system, S. 1631 added provisions based on earlier versions of the Glass bill that became Sections 21 (prohibiting securities firms from taking deposits) and 32 (prohibiting common directors or employees for securities firms and banks) of the Glass–Steagall Act.Patrick 1993, pp. 169–170. Kelly III 1985, p. 53. Steagall bill On May 16, 1933, Representative Steagall introduced H.R. 5661, which became the vehicle through which the 1933 Banking Act became law. This bill largely adopted provisions of the new Glass bill. Reflecting Steagall's support for the "dual banking system", however, H.R. 5661 permitted state-chartered banks to receive federal deposit insurance without joining the Federal Reserve System.Patrick 1993, pp. 171–172. Kennedy 1973, pp. 218–219. On May 23, 1933, the House passed H.R. 5661 in a 262–19 vote. On May 25, 1933, the Senate approved H.R. 5661 (in a voice vote) after substituting the language of S. 1631 (amended to shorten to one year the time within which banks needed to eliminate securities affiliates) and requested a House and Senate conference to reconcile differences between the two versions of H.R. 5661.Patrick 1993, pp. 172–174. Kelly III 1985, p. 54, fn. 171. Glass Bank Bill Passed by Senate The New York Times May 26, 1933 http://partners.nytimes.com/library/financial/052633glass-steagall.html https://web.archive.org/web/20131204200552/http://partners.nytimes.com/library/financial/052633glass-steagall.html live December 4, 2013 February 10, 2012 Banking Act of 1933 The final Senate version of H.R. 5661 included Senator Arthur Vandenberg's (R-MI) amendment providing for an immediate temporary fund to insure fully deposits up to $2,500 before the FDIC began operating on July 1, 1934. The "Vandenberg Amendment" was added to the Senate bill through a procedural maneuver supported by Vice President John Nance Garner, who was over the Senate in a judicial impeachment proceeding. This highlighted the differences between Garner and Roosevelt on the controversial issue of deposit insurance.FDIC 1983, chapter 3, pp. 42–43. Kennedy 1973, pp. 214–215. Roosevelt threatened to veto any bill that included the Vandenberg Amendment's provision for immediate deposit insurance.Kennedy 1973, p. 219. Burns 1974, p. 90. On June 7, however, Roosevelt indicated to Glass he would accept a compromise in which permanent FDIC insurance would not begin until July 1934, the limited temporary plan would begin on January 1, 1934, and state banks could be insured so long as they joined the Federal Reserve System by 1936.Patrick 1993, pp. 175–176. Roosevelt, like Glass, saw redeeming value in deposit insurance if its requirement for Federal Reserve System membership led to "unifying the banking system".Schlesinger Jr. 1958, p. 443. The Roosevelt Administration had wanted Congress to adjourn its "extraordinary session" on June 10, 1933, but the Senate blocked the planned adjournment.Lindley 1933, p. 143. Senators Block Plan to Adjourn by Filibuster on Reorganization; House Completes Action on Bills The New York Times June 11, 1933 1 https://www.nytimes.com/1933/06/11/archives/recess-taken-to-monday-borah-long-clark-and-la-follette-attack-the.html?scp=1&st=p February 10, 2012 This provided more time for the House and Senate Conference Committee to reconcile differences between the two versions of H.R. 5661. In the House, nearly one-third of the Representatives signed a pledge not to adjourn without passing a bill providing federal deposit insurance.Patrick 1993, p. 176. Flood 1992, p. 63. Bank Reform Bill Swiftly Approved The New York Times June 14, 1933 4 (for figure of nearly one–third) http://partners.nytimes.com/library/financial/061433glass-steagall.html https://web.archive.org/web/20131204200548/http://partners.nytimes.com/library/financial/061433glass-steagall.html live December 4, 2013 February 10, 2012 After Steagall and other House members met with Roosevelt on June 12, 1933, the Conference Committee filed its final report for H.R. 5661. Closely tracking the principles Roosevelt had described to Glass on June 7, the Conference Report provided that permanent deposit insurance would begin July 1, 1934, temporary insurance would begin January 1, 1934, unless the President proclaimed an earlier start date, and state non-member banks could be insured, but after July 1, 1936, would only remain insured if they had applied for Federal Reserve System membershipPatrick 1993, pp. 176–177. President Ceases Pressure for Adjournment; Would Let Congress Stay as Long as It Pleases The New York Times June 13, 1933 https://www.nytimes.com/1933/06/13/archives/president-ceases-pressure-for-adjournment-would-let-congress-stay.html?sq=congress&scp=7&st=p February 10, 2012 Although opponents of H.R. 5661 hoped Roosevelt would veto the final bill, he called Senator Glass with congratulations after the Senate passed the bill.FDIC 1983, chapter 3, p. 43. Willis and Chapman 1934, pp. 101–102. Bank Reform Bill Swiftly Approved The New York Times June 14, 1933 1 (for phone call to Glass) http://partners.nytimes.com/library/financial/061433glass-steagall.html https://web.archive.org/web/20131204200548/http://partners.nytimes.com/library/financial/061433glass-steagall.html live December 4, 2013 February 10, 2012 Roosevelt signed H.R. 5661 into law on June 16, 1933, as the Banking Act of 1933. Roosevelt called the new law "the most important" banking legislation since the Federal Reserve Act of 1913.Kennedy 1973, p. 222. Roosevelt Calls Recovery Act Most Sweeping Law in Nation's History The New York Times June 17, 1933 http://partners.nytimes.com/library/financial/061733glass-steagall.html https://web.archive.org/web/20131204200545/http://partners.nytimes.com/library/financial/061733glass-steagall.html live December 4, 2013 February 10, 2012 Commentator description and evaluation of 1933 Banking Act Roosevelt's role in 1933 Banking Act Time Magazine reported the 1933 Banking Act passed by "accident because a Presidential blunder kept Congress in session four days longer than expected."Business & Finance: New Rules for Bankers Time June 26, 1933 http://www.businessweek.com/small-business/what-regulation-qs-repeal-means-for-business-checking-07222011.html https://web.archive.org/web/20110724062709/http://www.businessweek.com/small-business/what-regulation-qs-repeal-means-for-business-checking-07222011.html dead July 24, 2011 February 10, 2012 H. Parker Willis described Roosevelt as treating the final bill with "indifference" but not "hostility".Willis and Chapman 1934, p. 101. In his account of the "First New Deal" Raymond Moley stated Roosevelt was "sympathetic" to the 1933 Banking Act "but had no active part in pressing for its passage". Moley also wrote that most of "the people who were close to the White House were so busy with their own legislative programs that Glass was left to his own devices."Moley Raymond 1966 The First New Deal Harcourt, Brace & World New York 317 0-15-131290-7Moley 1966., p. 317. Adolf A. Berle, like Moley a member of Roosevelt's First New Deal Brain Trust, was "disappointed" by the 1933 Banking Act.Lindley 1934, p. 311. He wished the more extensive branch banking permission in earlier Glass bills had been adopted. Berle concluded that limited branch banking with deposit insurance would preserve small banks certain to fail in an economic downturn, as they had consistently in the past. While Berle shared Glass's hope that the new law's deposit insurance provisions would force all banks into the Federal Reserve System, he correctly feared that future Congresses would remove this requirement.Berle 1934, pp. 243–250. According to Carter Golembe, the Banking Act of 1933 was the "only important piece of legislation during the New Deal's famous "one hundred days" which was neither requested nor supported by the new administration."Golembe 1960, pp. 181–182. In their books on banking events in 1933, Susan Eastabrook Kennedy and Helen Burns concluded that, although the 1933 Banking Act was not part of the New Deal, Roosevelt ultimately preferred it to no banking reform bill even though it did not provide the more "far reaching" reforms (KennedyKennedy 1973, p. 220) or "fuller solution" (BurnsBurns 1974, p. 93) he sought. Both present Roosevelt as being influenced by the strong public demand for deposit insurance in accepting the final bill.Kennedy 1973, p. 220. Burns 1974, p. 89. Both also describe the Banking Act of 1935 as being more significant than the 1933 Banking Act.Kennedy 1973, p. 223. Burns 1974, pp. 93, 113, and 139–174. Kennedy notes that after the 1933 Banking Act became law Roosevelt "claimed full credit, to the amusement or outrage of contemporary and hindsighted observers".Kennedy 1973, p. 222. Roosevelt's concerns with the 1933 Banking Act were not tied to what later became known as the "Glass–Steagall" separation of investment and commercial banking. The 1932 Democratic Party platform provisions on banking (drafted by Senator Glass) called for that separation. In a campaign speech Roosevelt specifically endorsed such separation.Burns 1974, pp. 22–24. In 1935 President Roosevelt opposed Glass's effort to restore national bank powers to underwrite corporate securities.Burns 1974, pp. 170–171. Perkins 1971, p. 269. Roosevelt confirmed to Glass in March 1933, that he supported the separation of commercial and investment banking, although Treasury Secretary Woodin feared that prohibiting bank underwriting of securities would "dampen recovery".Patrick 1993, p. 169. Accounts describing 1933 Banking Act as New Deal legislation Despite the Congressional origins of, and President Roosevelt's lack of support for, the 1933 Banking Act, many descriptions of the New Deal or of the 1933 Banking Act refer to the Act as New Deal legislation.Warren Elizabeth New Agenda for America: The Great Lesson New Deal 2.0 Franklin and Eleanor Roosevelt Institute October 29, 2009 http://www.newdeal20.org/2009/10/29/new-agenda-for-america-the-great-lesson-5920/ December 3, 2015 dead https://web.archive.org/web/20100715045803/http://www.newdeal20.org/2009/10/29/new-agenda-for-america-the-great-lesson-5920/ July 15, 2010 In the prologue to his classic account of the New Deal, Arthur M. Schlesinger Jr. suggests Felix Frankfurter and his colleagues were the source for the 1933 Banking Act (along with the Securities Act of 1933) in the tradition of "trust-busting liberalism".Schlesinger Jr. 1958, pp. 18–19. In that book's later brief description of the 1933 Banking Act, however, Schlesinger does not mention Frankfurter and focuses on the role of the Pecora Investigation and opposition to deposit insurance, including from Roosevelt, in the debate over the legislation.Schlesinger Jr. 1958, pp. 442–443. The Commerce Clearing House explanation of the Gramm-Leach-Bliley Act quoted Roosevelt as calling the 1933 Banking Act "the most important and far-reaching legislation ever enacted by the American Congress." Benson Kenneth R. Bianco Katalina M. Hamilton James Pachkowski John M. Roth Richard A. Turner Andrew A. Financial Services Modernization—Gramm-Leach-Bliley Act of 1999, Law and Explanation CCH Incorporated Chicago 1999 25 0-8080-0449-2. Grant Joseph Karl 2010 What the Financial Services Industry Puts Together Let No Person Put Asunder: How the Gramm-Leach-Bliley Act Contributed to the 2008-2009 American Capital Markets Crisis Albany Law Review 73 2 378 http://www.albanylawreview.org/articles/03%20GRANT.pdf February 24, 2012 https://web.archive.org/web/20120804064823/http://www.albanylawreview.org/articles/03%20GRANT.pdf August 4, 2012 dead mdy-all Roosevelt made that statement about the National Industrial Recovery Act on the same day he signed the 1933 Banking Act.Roosevelt Calls Recovery Act Most Sweeping Law in Nation's History The New York Times June 17, 1933 http://partners.nytimes.com/library/financial/061733glass-steagall.html https://web.archive.org/web/20131204200545/http://partners.nytimes.com/library/financial/061733glass-steagall.html live December 4, 2013 February 10, 2012. Roosevelt Franklin D. Statement on Signing the National Industrial Recovery Act Public Papers of the Presidents The American Presidency Project June 16, 1933 http://www.presidency.ucsb.edu/ws/index.php?pid=23433&st=&st1=#axzz1WCbH4E00 Glass–Steagall provisions and the Pecora Investigation Many descriptions of the 1933 Banking Act emphasize the role of the Pecora Investigation in creating a public demand for the separation of commercial and investment banking.Kennedy 1973, pp. 103–128 and 204–205. Burns 1974, p 78. Some accounts even suggest those Glass–Steagall provisions were created in response to the Pecora Investigation.The Financial and Banking Crisis American Decades, 2001 Encyclopedia.com http://www.encyclopedia.com/doc/1G2-3468301172.html December 3, 2015 dead https://web.archive.org/web/20120720102532/http://www.encyclopedia.com/doc/1G2-3468301172.html July 20, 2012 National City Bank (predecessor to Citibank) was the only commercial bank examined by Ferdinand Pecora before the 1933 Banking Act became law in June 1933.Perino 2010, pp. 5–6, 271–272 and 282–290. Stock Exchange Practices Hearings before the Committee on Banking and Currency Pursuant to S.Res. 84 and S.Res. 56 and S.Res. 97. : 1932 -1934. Fraser Economic Library and Archives April 11, 1932 Federal Reserve Bank of St. Louis https://fraser.stlouisfed.org/title/87 October 16, 2014 After the National City hearings ended on March 2, 1933, the Pecora Investigation resumed in May 1933, with the examination of "private bankers", covering J.P. Morgan & Co., Kuhn, Loeb & Co., and Dillon, Read & Co., before returning to a commercial bank with the examination of Chase National Bank beginning in late October 1933.Pecora 1939, pp. 131–187. Although those hearings, therefore, took place after the 1933 Banking Act became law, testimony from the lengthy Chase hearings is often cited as evidence for the need to separate commercial and investment banking.Wilmarth 2008, pp. 607–611. Benston 1990, pp. 76–89. Pecora was appointed counsel for what became known as the Pecora Investigation on January 22, 1933, and conducted his first hearing on February 15, 1933.Perino 2010, pp. 61 and 111–118. Earlier, on January 27, 1933, the Senate overwhelmingly passed a Glass bill separating commercial and investment banking. Even earlier, at Glass's instigation, the 1932 Democratic Party platform had called for such separation. During the 1932 Presidential campaign then President Hoover supported the regulation of investment banking, particularly securities affiliates of commercial banks, and Roosevelt supported the separation of commercial and investment banking.Kennedy 1973, pp. 58–59. The dramatic "ten days" of National City hearings in February 1933, however, were a high point of publicity for the Pecora Investigation.Perino 2010. They led to Charles Mitchell's resignation as Chairman of National City Bank. Days later, both National City and Chase announced they would eliminate their securities affiliates. Chase also announced it supported a legislative separation of commercial and investment banking. H. Parker Willis and others have written that the Pecora Investigation hearings concerning J. P. Morgan & Co., which began on May 23, 1933, gave the "final impetus" to the 1933 Banking Act.Willis and Chapman 1934, p. 101. Lindley 1933, pp. 138–143. Leuchtenburg William Edward 1963 Franklin D. Roosevelt and the New Deal Harper & Row New York 59–60 0-06-133025-6 https://archive.org/details/franklindrooseve00leuc/page/59 Those hearings did not deal with commercial bank securities activities. Their revelations were that several J. P. Morgan partners had not paid income taxes in one or more years from 1930 to 1932 and that the firm had provided exclusive investment opportunities to prominent business and political leaders. During the J. P. Morgan hearings Senator Glass dismissed the Pecora Investigation as a "circus".Perino 2010, pp. 285–86."Bored by Senatorial exhibitionism" Glass had not attended the earlier National City hearings.Business: Damnation of Mitchell Time March 6, 1933 http://www.time.com/time/magazine/article/0,9171,745272,00.html https://web.archive.org/web/20080228220946/http://www.time.com/time/magazine/article/0,9171,745272,00.html dead February 28, 2008 February 10, 2012 While the Pecora Investigation made dramatic headlines and generated public outrage, critics at the time and since attacked the hearings for creating misleading or inaccurate accounts of the investigated transactions. Glass–Steagall critics have argued that the evidence from the Pecora Investigation did not support the separation of commercial and investment banking.Bentson 1990, pp. 47–89. Cleveland and Huertas 1985, pp. 172–187. H. Parker Willis and Carter Glass on Banking Act of 1933 In 1935, H. Parker Willis wrote that the 1933 Banking Act was "already outdated" when it became law. He wrote that earlier Glass bills could have "made a difference" if they had become law in 1932.Willis 1935, pp. 718–719 Carter Glass became dissatisfied with the 1933 Banking Act's separation of commercial and investment banking. In 1935 he sponsored a bill passed by the Senate that would have permitted national banks to underwrite corporate bonds.Burns 1974, pp. 170–171. Patrick 1993, pp. 265–266. Wilmarth 2008, pp. 590–591. Conservative nature of Banking Act of 1933 Carter Golembe (addressing the FDIC insurance provisions) and Helen Garten (addressing the Glass–Steagall separation of investment and commercial banking and the FDIC insurance provisions) describe the 1933 Banking Act as legislation intended to protect the existing banking system dominated by small "unit banks".Golembe 1960, pp. 197–200. Garten 1991, p. 36. Garten labels this a "conservative" action at a time when there was serious consideration of nationalizing banks or of permitting a consolidated banking system through nationwide branch banking.Garten 1991, p. 36. Golembe saw deposit insurance as a compromise between forces that sought to stop the destruction of the "circulating medium" (i.e., bank deposits, particularly checking accounts) and forces that wanted to preserve the existing bank structure made up of a large number of geographically isolated banks.Golembe 1960, p. 182. After the closing of banks nationwide in early March 1933, press reports and public statements by Congressional leaders suggested banks might be nationalized or the existing system of "dual banking" might be eliminated through federal legislation, or even a Constitutional amendment, to prohibit state chartering of banks. Others proposed requiring all banks to join the Federal Reserve System. None of these proposals was contained in the 1933 Banking Act, although the Act's FDIC insurance provisions would have required banks to join the Federal Reserve System to retain deposit insurance.Kennedy 1973, pp. 204–207. Burns 1974, pp. 97–113 According to Helen Burns "Roosevelt met with severe criticism from the liberals and the progressives for not nationalizing the banks during the period of crisis." She states, "there seems little doubt that he could have done this" but she also concludes Roosevelt "did not believe in a government-owned and-operated bank" and was ultimately pragmatic or even conservative in his approach to banking legislation.Burns 1974, pp. 99 and 111–113. As described above, Adolf Berle, the 1933 Roosevelt Brain Trust's leading authority on banking law, was "disappointed" by the 1933 Banking Act. He wished it had not been so heavily compromised to satisfy Representative Steagall (a "half portion" of what the Glass bill originally sought). Berle argued the United States needed a "unified banking system" (most likely through the Federal Reserve System) that would perform more like the nationwide branch bank systems in Australia, Canada, and the United Kingdom (which otherwise all shared the U.S. "commercial banking" tradition).Berle 1934, pp. 243–249. Benston 1990, p. 1. Berle supported separating commercial banking from other activities, but disagreed with the Winthrop Aldrich position, contained in Glass–Steagall's Section 21, that this should also apply to "private bankers".Berle 1934, p. 251. Berle suggested that required a "separate study". Fate of 1933 Banking Act as "traditional bank regulation" Helen Garten describes the 1933 Banking Act as exemplifying the form and function of "traditional bank regulation" based on limiting bank activities and protecting banks from competition.Garten 1989, pp. 509–510. The Act established the traditional bank regulation of separating commercial from investment banking, limiting deposit interest rate competition through rate limitations, and restricting competition for deposits based on financial strength by insuring depositors. It also ratified the existing policy of limited branch banking, thereby limiting competition among banks geographically.Garten 1991, pp. 33–38. Huertas 1983, pp. 18–22. The resulting "government-enforced cartel in banking" allowed commercial banks to earn "high profits and avoid undue risk" until nonbanking companies found ways to offer substitutes for bank loans and deposits.Wilmarth 1990, p. 1141. Garten 1989, pp. 513–528. Garten 1991, pp. 36–59. Supporters of this traditional banking regulation argue that the 1933 Banking Act (and other restrictive banking legislation) produced a period of unparalleled financial stability.Russell 2008. David Moss argues this stability may have induced a false belief in the inherent stability of the financial system. Moss argues this false belief encouraged legislative and regulatory relaxations of traditional restrictions and that this led to financial instability.Moss David A. 2009 An Ounce of Prevention: Financial regulation, moral hazard, and the end of "too big to fail" Harvard Magazine September–October 26 http://harvardmag.com/pdf/2009/09-pdfs/0909-24.pdf February 25, 2012 August 4, 2012 https://web.archive.org/web/20120804064827/http://harvardmag.com/pdf/2009/09-pdfs/0909-24.pdf dead Earlier critics of the 1933 Banking Act, and of other restrictive banking regulation, argued it has not prevented the return of financial instability beginning in the mid-1960s.Huertas 1983, pp. 23–26. Hyman Minsky, a supporter of traditional banking regulation,Mayer 1974, pp. 523 and 531–535. described the 1966 return of financial instability (and its increasingly intense return in 1970, 1974, and 1980) as the inevitable result of private financial markets, previously repressed by memories of the Great Depression.Minsky 1982, pp. xii–xiv. Minsky proposed further controls of finance to limit the creation of "liquidity" and to "promote smaller and simpler organizations weighted more toward direct financing".Minsky 1982, p. 201 Commentators argued traditional banking regulation contained the "seeds of its own destruction" by "distorting competition" and "creating gaps between cost and price".Vietor 1987, p. 33. In particular, by establishing "cartel profits" traditional bank regulation led nonbank competitors to develop products that could compete with bank deposits and loans to gain part of such profits.Vietor 1987, pp. 48–51. Huertas 1983, pp. 23–26. Instead of financial stability inducing deregulation and financial instability after 1980, as later suggested by David Moss and Elizabeth Warren, Thomas Huertas and other critics of traditional bank regulation argued Regulation Q limits on interest rates (mandated by the 1933 Banking Act) created the "disintermediation" that began in the 1960s, led to the phase-out of Regulation Q through the Depository Institutions Deregulation and Monetary Control Act of 1980, and opened banking to greater competition.Huertas 1983, pp. 24–27. Vietor 1987, pp. 45–48. Jan Kregel accepts that "supporters of free-market liberalism" were correct in describing "competitive innovations" of nonbanks as breaking down the "inefficiencies of a de facto cartel" established by the 1933 Banking Act but argues the "disintegration of the protection" provided banks was "as much due to the conscious decisions of regulators and legislators to weaken and suspend the protections of the Act."Kregel 2010 57–58. See also Banks 2008 financial crisis American International Group Arthur Vandenberg Commodity Futures Modernization Act of 2000 Corporate Law Subprime mortgage crisis Systemic risk Banking Act of 1933 and 1935 - created and gave voting rights to the 7 Federal Reserve Board of Governors appointed by the president, there are a total of 12 FOMC members. Causes of the Great Depression#Trying to return to the Gold Standard — tight monetary policy to return to the gold standards after World War I caused the great depression References Alper Carl E. 1933 Banking Act of 1933 (Glass–Steagall Bill) St. John's Law Review 8 1 193–196 http://heinonline.org/HOL/Page?handle=hein.journals/stjohn8&div=1&g_sent=1&collection=journals February 24, 2012. Benston George J. The Separation of Commercial and Investment Banking: The Glass–Steagall Act Revisited and Reconsidered 1990 Oxford University Press New York 0-19-520830-7 . Berle Adolf A. Jr. 1934 Banking Reform Oxford University Press London; New York America's Recovery Program Wilcox Clair Fraser Herbert F. Malin Patrick Murphy 243–253 34015670. Burns Helen M. The American Banking Community and New Deal Banking Reforms, 1933–1935 1974 Greenwood Press Westport, CT 0-8371-6362-5 registration https://archive.org/details/america_bur_1974_00_8821. Carpenter David H. Murphy M. Maureen 2010a Permissible Securities Activities of Commercial Banks Under the Glass–Steagall Act (GSA) and the Gramm-Leach-Bliley Act (GLBA) Congressional Research Service Report R41181 http://assets.opencrs.com/rpts/R41181_20100412.pdf https://web.archive.org/web/20120804064833/http://assets.opencrs.com/rpts/R41181_20100412.pdf dead August 4, 2012 February 10, 2012 CRS 2010a Cleveland Harold van B. Huertas Thomas F. 1985 Citibank, 1812–1970 Harvard University Press Cambridge, MA 0-674-13175-4 https://archive.org/details/citibank181219700000clev. Federal Deposit Insurance Corporation The First Fifty Years: A History of the FDIC 1933-1983 1983 http://www.fdic.gov/bank/analytical/firstfifty/ February 24, 2012 FDIC 1983 https://web.archive.org/web/20120224051943/http://www.fdic.gov/bank/analytical/firstfifty/ February 24, 2012 dead mdy-all. Federal Reserve Bank of New York Summary of Banking Act of 1933, following the text of Act, Circular No. 1248 1248. Banking Act of 1933 Federal Reserve Bank of New York Circulars June 22, 1933 1–15 https://fraser.stlouisfed.org/scribd/?item_id=15952&filepath=/docs/historical/ny%20circulars/1933_01248.pdf October 16, 2014 FRBNY 1933. Federal Reserve Board Attachment I to Testimony of Chairman Alan Greenspan before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, June 17, 1998, Summaries of Prior Financial Modernization Legislation Considered and Passed by the Senate Banking Committee Since 1984 1998 http://www.federalreserve.gov/boarddocs/testimony/1998/19980617a1.htm February 24, 2012 FRB 1998. Flood Mark D. The Great Deposit Insurance Debate Review 74 4 1992 Federal Reserve Bank of St. Louis 51–77 10.20955/r.74.51-77 http://research.stlouisfed.org/publications/review/92/07/Deposit_Jul_Aug1992.pdf February 24, 2012. Friedman Milton Schwartz Anna Jacobson A Monetary History of the United States, 1867–1960 November 21, 1971 Princeton University Press Princeton, N.J. 0-691-00354-8. Garten Helen 1989 Regulatory Growing Pains: A Perspective on Bank Regulation in a Deregulatory Age Fordham Law Review 57 4 501–577 http://ir.lawnet.fordham.edu/cgi/viewcontent.cgi?article=2816&context=flr February 24, 2012. Garten Helen 1991 Why Bank Regulation Failed : Designing a Bank Regulatory Strategy for the 1990s Quorum Books New York 0-89930-580-6. Garten Helen 1999 The Consumerization of Financial Regulation Washington University Law Quarterly 77 2 287–318 http://lawreview.wustl.edu/inprint/77-2/772-287.pdf February 24, 2012 dead https://web.archive.org/web/20100607062159/http://lawreview.wustl.edu/inprint/77-2/772-287.pdf June 7, 2010 . Golembe Carter 1960 The Deposit Insurance Legislation of 1933: An Examination of its Antecedents and its Purposes Political Science Quarterly 75 2 181–201 10.2307/2146154 2146154. Greenspan Alan Testimony before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate Statements and Speeches of Alan Greenspan December 1, 1987 https://fraser.stlouisfed.org/scribd/?item_id=8368&filepath=/docs/historical/greenspan/Greenspan_19871201.pdf October 16, 2014. Huertas Thomas 1983 Chapter 1: The Regulation of Financial Institutions: A Historical Perspective on Current Issues Benston George J. Financial Services: The Changing Institutions and Government Policy Prentice-Hall Englewood Cliffs, N.J. 0-13-316513-2 https://archive.org/details/financialservice0000bens. Kelly III Edward J. 1985 Chapter 2: Legislative History of the Glass–Steagall Act 41–65 Walter Ingo Deregulating Wall Street: Commercial Bank Penetration of the Corporate Securities Market John Wiley & Sons New York 0-471-81713-9 https://archive.org/details/deregulatingwall0000unse/page/41. Kennedy Susan Estabrook 1973 'The Banking Crisis of 1933 University Press of Kentucky Lexington, KY 0-8131-1285-0 registration https://archive.org/details/bankingcrisisof10000kenn. Kregel Jan Jan Kregel 2010b Can a return to Glass–Steagall provide financial stability in the US financial system PSL Quarterly Review 63 252 37–73 1810803 Kregel 2010. Lindley Ernest K. 1933 The Roosevelt Revolution: First Phase Da Capo Press New York 1974 reprint of the 1933 edition published by Viking Press, New York Franklin D. Roosevelt and the Era of the New Deal 0-306-70651-2. Macey Jonathan R. 2000 The Business of Banking: Before and After Gramm-Leach-Bliley The Journal of Corporation Law 25 4 691–722 http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?article=2426&context=fss_papers February 25, 2012. Mayer Martin Martin Mayer 1974 The Bankers Weybright and Talley New York 0-679-40010-9 https://archive.org/details/bankersmaye00maye. Minsky Hyman Can It Happen Again? Armonk, N.Y. M.E. Sharpe 1982 0-873-32213-4. Patrick Sue C. 1993 Reform of the Federal Reserve System in the Early 1930s: The Politics of Money and Banking Garland Publishing, Inc. New York 0-8153-0970-8. Peach William Nelson 1941 The Security Affiliates of National Banks Arno Press Inc. New York 1975 reprint of the 1941 edition published by Johns Hopkins Press, Baltimore, MD, which was issued as ser. 58, no. 3 of Johns Hopkins University studies in historical and political science, originally presented as the author's thesis, Johns Hopkins University, 1939 0-405-06984-7. Pecora Ferdinand 1939 Wall Street Under Oath: The Story of Our Modern Money Changers A.M. Kelley New York 1966 reprint of 1939 edition published by Simon & Schuster, New York Reprints of Economics Classics 68020529. Perino Michael A. 2010 The Hellhound of Wall Street: How Ferdinand Pecora's Investigation of the Great Crash Forever Changed American Finance Penguin Press New York 978-1-59420-272-8 Perkins Edwin J. 1971 The Divorce of Commercial and Investment Banking: A History Banking Law Journal 88 6 483–528. Rodkey Robert G. 1934 Banking Reform by Statute Michigan Law Review 32 7 881–908 10.2307/1280817 1280817. Russell Ellen Lesson from New Deal Banking Reforms The Political Economy of Monetary Policy and Financial Regulation: A Conference in Honor of Jane D'Arista Political Economy Research Institute March 2–3, 2008 http://www.peri.umass.edu/darista/ February 25, 2012 dead https://web.archive.org/web/20130605220145/http://www.peri.umass.edu/darista June 5, 2013 mdy-all. Schlesinger Arthur M. Jr. Arthur M. Schlesinger Jr. 1958 The Coming of the New Deal, 1933–35 II The Age of Roosevelt Houghton Mifflin Boston 0-395-48905-9 registration https://archive.org/details/comingofnewdeal0000schl. Vietor Richard Chapter 2: Regulation-Defined Financial Markets: Fragmentation and Integration in Financial Services Wall Street and Regulation Hayes Samuel L. Jr. Boston Harvard Business School Press 1987 7–62 0-87584-183-X https://archive.org/details/wallstreetregula00haye/page/7. Willis Henry Parker Chapman John 1934 The Banking Situation: American Post-War Problems and Developments Columbia University Press New York 742920. Willis H. Parker 1935 The Banking Act of 1933 in Operation Columbia Law Review 35 5 697–724 10.2307/1115748 1115748. Wilmarth Arthur E. Jr. 1990 The Expansion of State Bank Powers, the Federal Response, and the Case for Preserving the Dual Banking System Fordham Law Review 58 6 1133–1256 http://ir.lawnet.fordham.edu/cgi/viewcontent.cgi?article=2889&context=flr February 25, 2012. Wilmarth Arthur E. Jr. 2002 The Transformation of the U.S. Financial Services Industry, 1975–2000: Competition, Consolidation and Increased Risks University of Illinois Law Review 2002 2 215–476 315345. Wilmarth Arthur E. Jr. 2008 Did Universal Banks Play a Significant Roe in the U.S. Economy's Boom-and-Bust Cycle of 1921–33? A Preliminary Assessment 559–645 Current Development in Monetary and Financial Law 4 International Monetary Fund Washington, D.C. 978-1-58906-507-9 838267. Further reading Allen Larry The Encyclopedia of Money 2009 ABC-CLIO 2nd Santa Barbara, CA 165–167 978-1598842517 Anderson Benjamin Economics and the Public Welfare New York D. Van Nostrand Company 1949 . Burns Arthur F. 1988 The Ongoing Revolution in American Banking American Enterprise Institute Washington, D.C. 0-8447-3654-6 https://archive.org/details/ongoingrevolutio0000burn. Calomiris Charles W. White Eugene N. 1994 The Origins of Federal Deposit Insurance, chapter 5 in The Regulated Economy: A Historical Approach to Political Economy, edited by Claudia Golden and Gary D. Libecap, Chicago: University of Chicago Press 0-226-30110-9 Journal of Comparative Business and Capital Market Law 5 2 137–193 https://www.nber.org/chapters/c6575.pdf February 27, 2012. Calomiris Charles W. 2000 U.S. Bank Deregulation in Historical Perspective Cambridge University Press New York 0-521-58362-4 Coggins Bruce 1998 Does Financial Deregulation Work? A Critique of Free Market Approaches Edward Elgar Publishing Limited Northampton, MA New Directions in Modern Economics 1-85898-638-9. Mayer Martin 1984 'The Money Bazaars E.P Dutton New York 0-525-24221-X https://archive.org/details/moneybazaarsunde00maye. Mayer Martin 1997 The Bankers: The Next Generation Truman Talley Books New York 0-525-93865-6 https://archive.org/details/bankersnextgener00maye. Shaw, Christopher W. (2019). Money, Power, and the People: The American Struggle to Make Banking Democratic. Chicago: University of Chicago Press. Shaw, Christopher W. (2015). "'The Man in the Street Is for It': The Road to the FDIC." Journal of Policy History, 27 (1): 36–60. Wilmarth Arthur E. Jr. 2007 Walmart and the Separation of Banking and Commerce Connecticut Law Review 39 4 1539–1622 984103. External links Banking Act of 1933 as amended (PDF/details) in the GPO Statute Compilations collection Public Law 66, 73d Congress, H.R. 5661: an Act to Provide for the Safer and More Effective Use of the Assets of Banks, to Regulate Interbank Control, to Prevent the Undue Diversion of Funds into Speculative Operations (Banking Act of 1933) Full text of the Banking Act of 1933 followed by New York Federal Reserve Bank Explanation Glass Subcommittee hearings Pecora Investigation hearings FDIC History: 1933–1983 1987 Federal Reserve Bank of Kansas City Jackson Hole Symposium on Restructuring the Financial System https://web.archive.org/web/20120804064825/http://www.kc.frb.org/publicat/sympos/1987/S87.pdf August 4, 2012 Article from March 10, 1933, in The Southeast Missourian detailing debate about intended and unintended consequences of having FDIC Category:1933 in American law Category:73rd United States Congress Category:Federal Deposit Insurance Corporation Category:United States federal banking legislation Banking Act Category:Separation of investment and retail banking Category:1933 in economic history Category:Acts of the 73rd United States Congress