Glass-steagall act (banking act of 1933)

Legislation excluding commercial banks that are members of the Federal Reserve System from most types of investment banking activities. The coau­thor of the Act, Senator Carter Glass of Virginia, believed that com­mercial banks should restrict their activities to involvement in short-term loans to coincide with the nature of their primary classifi­cation of liabilities, demand deposits. Today, many in the banking field view these constraints as particularly burdensome because of increased competition from other financial institutions for customers' savings and investment dollars.

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