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Glass-Steagall Act
Practical Law Glossary Item 5-507-8468 (Approx. 2 pages)
Glossary
Glass-Steagall Act
The common name of the following four sections of the Banking Act of 1933 (Pub. L. No. 73-66, 48 Stat. 162) that prevent commercial banks and their affiliates from engaging in certain securities underwriting, distribution, and related activities:
- Section 16. This section sets out the permissible securities activities of national banks (12 U.S.C. § 24 (Seventh)).
- Section 21. This section imposes limits on the permissible banking activities of securities firms (12 U.S.C. § 378).
- Section 20. This section prohibited member banks from affiliating with firms engaged principally in securities activities (formerly codified at 12 U.S.C. § 377).
- Section 32. This section prohibited officer, director, and employee interlocks between member banks and securities firms (formerly codified at 12 U.S.C. § 78).
The Gramm-Leach-Bliley Act of 1999 (GLBA) repealed Sections 20 and 32. Sections 16 and 21 remain in effect. The effect of the GLBA on the Glass-Steagall Act was to preserve the ban on engaging in certain commercial banking and securities activities within the same entity, while allowing for these activities to be engaged in within the same holding company structure.