Banking Act of 1933

Definition of "Banking Act of 1933"
  1. A law established during the Great Depression to reform the banking sector. This legislation introduced federal deposit insurance and regulated bank speculation. It established the Federal Deposit Insurance Corporation to back deposits using federal funds, required the separation of investment and commercial banking, and permitted different interest rates for diverse financing durations. The law also included further acts such as the Emergency Banking Relief Act that provided a bank holiday to prevent depositor panic and permitted the reorganization of banks under federal oversight. It allowed the president to remove the US from the gold standard, resulting in depositors being reassured and foreign gold drain stopped. The Banking Act of 1935 gave the Federal Reserve Board the authority to set commercial banks' cash reserves, which later became a recognized method of controlling the money supply. The Financial Modernization Act of 1999, also known as the Gramm-Leach-Bliley Act, repealed core parts of this act, especially those parts that prohibited banks from affiliating with securities firms, enabling banks to undertake previously prohibited activities like securities investment and insurance underwriting
How to use "Banking Act of 1933" in a sentence
  1. The Banking Act of 1933 was instrumental in stabilizing the financial sector during the Great Depression.
  2. Regulations set by the Banking Act of 1933 led to the establishment of the Federal Deposit Insurance Corporation.
  3. The prohibition of banks affiliating with securities firms was overturned by the Financial Modernization Act of 1999, modifying how the Banking Act of 1933 was originally intended.

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