Glass-Steagall Act

Real World Example

The Glass-Steagall Act, part of the New Deal reforms, was crucial in restoring trust in the U.S. banking system during the Great Depression by separating commercial and investment banking. This act aimed to prevent the risky financial practices that led to the 1929 stock market crash, highlighting the tension between financial innovation and consumer protection. Today, the principles of Glass-Steagall still matter as debates continue over financial regulation and protecting consumers from economic crises. For example, strict banking regulations can help ensure that people's savings aren't endangered by risky investment decisions made by their banks. This law's legacy impacts everyone who relies on banks for secure savings and loans, ensuring a more stable financial environment.