Advantages Of The Gramm-Bliley Act

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Glass-Steagall Act ( The Banking Act) The Glass-Steagall Act which is also known as the Banking Act of 1933 was passed by congress in 1933. This act was implemented to prohibit commercial banks from engaging in the investment banking business. It was legislated as an emergency response to the failure of nearly 5,000 banks during the Great Depression. It gave tighter regulation of national banks to the Federal Reserve System prohibited bank sales of securities and created the Federal Deposit Insurance Corporation (FDIC), which insures bank deposits with a pool of money appropriated from banks. The Glass-Steagall Act primary goal was to stop unusual run to the banks and restore public confidence in U.S banking system, it was widely believed…show more content…
With the passage of the Gramm–Leach–Bliley Act, commercial banks, investment banks, securities firms, and insurance companies were allowed to consolidate. Furthermore, it failed to give to the SEC or any other financial regulatory agency the authority to regulate large investment bank holding companies. ”The legislation was signed into law by President Bill…show more content…
This act is suppose to lower risk on numerous parts of financial system, it is commonly known as Dodd-Frank act. Dodd-Frank established new government agencies such as Orderly Liquidation Authority and Financial Stability Oversight Council which monitor companies which are considered “too big to fail “ in order to prevent future financial collapse. The Orderly Liquidation Authority fund provides money to financially weak companies to raise liquidity into companies through receivership program, additionally the council can also break up large banks that might pose threat to financial instability. These laws have been implemented to monitor any financial risk. The new Consumer Financial Protection Bureau (CFPB) is tasked with preventing predatory mortgage lending, improving the clarity of mortgage paperwork for consumers and reducing incentives for mortgage brokers to push home buyers into more expensive loans. The CFPB has also changed the way credit card companies and other consumer lenders disclose their terms to consumers. It requires loan terms to be presented in a new, easy-to-read-and-understand
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