Banking Act of 1933

The Banking Act of 1933, also known as the Glass-Steagall Act, was a law passed in response to the Great Depression. It aimed to stabilize the banking system by separating commercial banking (which deals with deposits and loans) from investment banking (which deals with securities and investments). This separation was intended to reduce risks and conflicts of interest, preventing banks from using customer deposits to finance risky investments. The act also established the Federal Deposit Insurance Corporation (FDIC), which protects bank depositors by insuring their deposits up to a certain amount, thereby boosting confidence in the banking system.