The Glass-Steagall Act, officially known as the Banking Act of 1933, was a landmark piece of legislation in the United States that aimed to address issues related to banking practices and conflicts of interest in the financial industry. The act was passed in the aftermath of the Great Depression to promote financial stability and protect consumers by separating commercial banking activities from investment banking activities.

Key provisions of the Glass-Steagall Act included:

1. **Separation of Commercial and Investment Banking:**
– The Glass-Steagall Act sought to prevent the concentration of financial power by separating commercial banking, which involves traditional banking activities such as accepting deposits and making loans, from investment banking, which involves underwriting and dealing in securities.

2. **Prohibition of Affiliation:**
– The act prohibited commercial banks from affiliating with securities firms or engaging in investment banking activities. It aimed to prevent conflicts of interest and speculative activities that contributed to the financial instability leading to the Great Depression.

3. **Establishment of the Federal Deposit Insurance Corporation (FDIC):**
– The Glass-Steagall Act established the FDIC to provide deposit insurance and ensure the stability of the banking system. The FDIC insures deposits in commercial banks, providing a safety net for depositors in the event of a bank failure.

4. **Regulation of Securities Activities:**
– The act placed restrictions on the ability of commercial banks to engage in underwriting and dealing in securities. It aimed to curb the risks associated with securities activities that could potentially threaten the stability of banks.

5. **Creation of the Securities and Exchange Commission (SEC):**
– The Glass-Steagall Act played a role in the creation of the Securities and Exchange Commission (SEC), an independent regulatory agency responsible for overseeing and regulating the securities industry and protecting investors.

6. **Repeal of Glass-Steagall:**
– The Glass-Steagall Act’s restrictions were gradually eroded over the years. The Gramm-Leach-Bliley Act of 1999, also known as the Financial Services Modernization Act, played a significant role in repealing key provisions of Glass-Steagall. This allowed for the reintegration of commercial and investment banking activities.

7. **Criticism and Impact:**
– The repeal of Glass-Steagall has been the subject of debate and criticism, with some attributing the financial crisis of 2008 in part to the removal of these regulatory barriers. Critics argue that the separation provided a protective barrier against excessive risk-taking and conflicts of interest in the financial industry.

8. **Dodd-Frank Wall Street Reform and Consumer Protection Act:**
– The Dodd-Frank Act, enacted in 2010, included regulatory reforms aimed at addressing issues in the financial system. While it did not reinstate Glass-Steagall, it introduced measures to enhance financial stability, regulate systemic risks, and protect consumers.

While the Glass-Steagall Act is no longer in force, its legacy and the debates surrounding the separation of banking activities continue to influence discussions on financial regulation and reform. Policymakers and experts continue to explore ways to address systemic risks and promote a stable and resilient financial system.