On November 12, 1999 last two provisions of the Glass-Steagall Act were finally declined by the Gramm-Leach-Billey Act, during the Bill Clinton government, after long years of pressure from the North American financial lobbies.
The Glass-Steagall Act was enacted in 1933 by Franklin D. Roosevelt Administration after impact of the Wall Street Crash of 1929. The cause of the Great Depression has been emphasized by the very short-term speculative leverage of U.S. banks. During the decade of the 20s, America's corporate profits were derived towards the purchase of shares on the stock market causing what Philip Snowden, the Statement of England's Chancellor of the Exchequer, described as “an orgy of speculation”. Leverage brokers with bank loans in the New York Stock Exchange were accounted for 18.5% of the estimated money supply in 1929. The crisis caused people to panic because they would lost their savings, so there was a run on bank deposits, which led many organizations to bankruptcy. To prevent that banks could not speculate again with savings, the Glass-Steagall Act separated commercial banks from investment banks, reduced size of banks by the creation of an American banking system, and banned bankers from participating in directorates.
If the Glass-Steagall Act had not been repealed, commercial banks would have been more regulated, “ninja” (no income, no jobs, no assets) mortgages would not have been granted, and “subprime” mortgages would not have existed. If the Glass-Steagall Act had not been repealed, commercial banks would not have been able to make speculative financial investments, “subprime” mortgages would not have been packaged in “mortgage backed securities” (MBS), and “conduits” (entities subsidiaries of banks, which are not companies but funds, and therefore without requirement to consolidate their balance sheets with parent bank) would not have existed. If the Glass-Steagall Act had not been repealed, the Great Recession of the year 2007 would not have happened.
The Glass-Steagall Act was enacted in 1933 by Franklin D. Roosevelt Administration after impact of the Wall Street Crash of 1929. The cause of the Great Depression has been emphasized by the very short-term speculative leverage of U.S. banks. During the decade of the 20s, America's corporate profits were derived towards the purchase of shares on the stock market causing what Philip Snowden, the Statement of England's Chancellor of the Exchequer, described as “an orgy of speculation”. Leverage brokers with bank loans in the New York Stock Exchange were accounted for 18.5% of the estimated money supply in 1929. The crisis caused people to panic because they would lost their savings, so there was a run on bank deposits, which led many organizations to bankruptcy. To prevent that banks could not speculate again with savings, the Glass-Steagall Act separated commercial banks from investment banks, reduced size of banks by the creation of an American banking system, and banned bankers from participating in directorates.
If the Glass-Steagall Act had not been repealed, commercial banks would have been more regulated, “ninja” (no income, no jobs, no assets) mortgages would not have been granted, and “subprime” mortgages would not have existed. If the Glass-Steagall Act had not been repealed, commercial banks would not have been able to make speculative financial investments, “subprime” mortgages would not have been packaged in “mortgage backed securities” (MBS), and “conduits” (entities subsidiaries of banks, which are not companies but funds, and therefore without requirement to consolidate their balance sheets with parent bank) would not have existed. If the Glass-Steagall Act had not been repealed, the Great Recession of the year 2007 would not have happened.