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H.R. 5661, Banking Act of 1933 (Glass-Steagall Act), June 13, 1933

Revelations of the Senate investigation of banks and brokerages prompted Congress to pass new regulatory legislation even before the Pecora Committee released its final report in June 1934. With the Banking Act of 1933, Congress created the Federal Deposit Insurance Corporation (FDIC) to insure bank deposits. The Banking Act further protected customers’ savings by separating commercial and investment banking.

Records of the U.S. House of Representatives, National Archives and Records Administration

H.R. 5661, Banking Act of 1933 (Glass-Steagall Act), June 13, 1933

The Stock Market Crash

The 1929 New York stock market crash propelled an economic collapse that resulted in the Great Depression. To understand the cause of the financial crash, the Senate Committee on Banking and Currency investigated Wall Street banking and investment practices. Informally named after its astute and dynamic chief counsel, Ferdinand Pecora, the Pecora Committee exposed practices that, while legal, were judged unethical. Congress drew on the committee’s discoveries to restructure the banking and securities industries, approving the Banking Act in 1933 and the Securities Exchange Act in 1934.

[Financial lobbyists] are powerful, but they are not powerful enough to defy Congress. They are strong, but they are not strong enough to obstruct the Government. At least that is my hope.

Senator Duncan Fletcher of Florida, Speech to the Senate, May 7, 1934