The Law a challenge to the 1930 for the finance division Power
The proposed merger of Citicorp with Travelers Group challenges of the era of depression idea that America’s financial house can best be maintained, provided that banks and brokers stay separate premises - an idea embodied in the Banking Act 1933, or the Glass-Steagall Act.
Inspired by the crash of 1929, the bank market and that losses followed, it was the act to restore confidence in the banking system. It was the Federal Deposit Insurance Corporation, insurance accounts receivable, banks and prohibits the adoption of two deposits and underwriting securities.
The banking institutions have a year to decide whether commercial banks, which could accept deposits of customers during the audit and savings accounts, or investment banks, which may in the business risk subscription, purchase of new securities of issuers, firms and their Following the sale to the public.
Under the Glass-Steagall Act, banks can not receive more than 10 percent of their income from the securities markets, a border, thin, that most cases of abandoned altogether on Wall Street, said Charles R. Geisst - professor of finance at Manhattan College and author of Buches”Wall Street: A History.”
Besides banks course, the act expressed anger public on the financial situation of power symbolized by JP Morgan & Company, said Ron Chernow, the author von”The House of Morgan”und”die next Titan: The Life of John D. Rockefeller, Sr.”Congress investigations into the causes of the accident, 1929 illustrated Morgan’s muscles. If you vouliez”modeste Wall Street, the nature and way of doing things, it was too modest JP Morgan,’’said Chernow. The nature and how to humiliate Morgan, the Congress decided, was to force the light of one of its two powerful sources of wealth.
The proposal was named after Senator Carter Glass, fiscal conservative Democrat, the Senate decided to VA Banking and Monetary Committee, and his counterpart from home, representatives Henry Bascom Steagall, a battery pack-Democratic Alabama. It was fast, but most of the discussions centering on the revolutionary idea of insurance of bank deposits. The law, despite repeated attempts to overthrow.
Glass-Steagall”c’était a very good reason,’’said Professor Geisst. ”This has been the establishment of a wall of fire, so that if something on the capture of fire insurance, it would not burn the deposits.”
Glass-Steagall is not only the reluctance of banks. The Bank Holding Company Act of 1956 places restrictions on what can the banks in the insurance field of the economy.
But during the last 15 years, the fire by the Glass Steagall wall planned in 1933 to just over one edge on the path between banks and securities houses. The Federal Reserve Board, which regulates banks, have been most major banks to establish subsidiaries that Wall Street firms to sell and underwriting of securities.
Therefore, the act is a self-Original his shadow, “said Chernow, added:”It is also riddled with loopholes at this point, there is effectively dead - Congress refuses to allow the last rites and buried.
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