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This Day In Market History: The Original Glass-Steagall Act Is Passed

This Day In Market History: The Original Glass-Steagall Act Is Passed

Each day, Benzinga takes a look back at a notable market-related moment that occurred on this date.

What Happened?

On this day in 1932, the first Glass-Steagall Act was passed by Congress.

Where The Market Was

The S&P 500 was trading at 8.26 and the Dow closed the day at 82.09.

What Else Was Going On In The World?

In 1932, Amelia Earhart became the first woman to complete a non-stop solo flight across the Atlantic Ocean. In the U.S., the Great Depression sent the national unemployment rate soaring to 24.5 percent. The average rent for a house was $18 per month.

Keeping Banks On A Leash

It may seem like out-of-control big banks are a modern problem, but politicians have been working to protect Americans’ deposits for more than 80 years. The Glass-Steagall Act of 1932 was the first step toward the Banking Act of 1933, which is commonly referred to as the Glass-Steagall Act.

The original 1932 legislation came about after the Great Depression caused dozens of U.S. banks to fail. Senator Carter Glass of Virginia and Representative Henry Steagall of Alabama co-sponsored a piece of legislation designed to help stimulate the frozen credit market by authorizing the Federal Reserve to lend to distressed banks and make government gold available to combat shortages due to hoarding.

A year later, Glass and Steagall co-sponsored the Banking Act of 1933, the legislation which restricted the type of speculative investing that commercial banks can perform. Much of the Banking Act of 1933 was repealed in 1999, and speculative trading by large U.S. banks led to the largest financial crisis since the Great Depression less than 10 years later.

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