[1] The entire law is often referred to as the Glass–Steagall Act, after its Congressional sponsors, Senator Carter Glass (D) of Virginia, and Representative Henry B. Steagall (D) of Alabama.

[7] Supporters of the Act cite it as a central cause for an unprecedented period of stability in the U.S. banking system during the ensuing four or, in some accounts, five decades following 1933.

[14] Those efforts culminated in the 1999 Gramm-Leach-Bliley Act (GLBA), which repealed the two provisions restricting affiliations between banks and securities firms.

Section 7 limited the total amount of loans a member bank could make secured by stocks or bonds and permitted the Federal Reserve Board to impose tighter restrictions and to not limit the total amount of such loans that could be made by member banks in any Federal Reserve district.

Section 11(a) prohibited Federal Reserve member banks from acting as agents for nonbanks in placing loans to brokers or dealers.

[11] Provisions of the 1933 Banking Act that were later repealed or replaced include (1) Sections 5(c) and 19, which required an owner of more than 50% of a Federal Reserve System member bank's stock to receive a permit from (and submit to inspection by) the Federal Reserve Board to vote that stock (replaced by the Bank Holding Company Act of 1956);[22] (2) Section 8, which established the Federal Open Market Committee (FOMC) made up of representatives from each of the 12 Federal Reserve Banks (revised by the Federal Reserve Board-dominated FOMC established by the Banking Act of 1935 and later amended in 1942);[23] (3) Section 11(b), which prohibited interest payments on demand deposits (repealed by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and allowing interest-bearing demand accounts beginning July 21, 2011) and authorized the Federal Reserve Board to limit interest rates on time deposits (phased out by the Depository Institutions Deregulation and Monetary Control Act of 1980 by 1986),[24] both of which interest limitations were incorporated into Regulation Q, and (4) Section 12, which prohibited Federal Reserve System member bank loans to their executive officers and required the repayment of outstanding loans (replaced by the 1935 Banking Act's regulation of such loans and modified by later legislation).

[28] On January 25, 1933, during the lame duck session of Congress following the 1932 elections, the Senate passed a version of the Glass bill.

This theory, defended by Senator Glass's longtime advisor Henry Parker Willis, had served as a foundation for the Federal Reserve Act of 1913 and earlier US banking law.

Glass and Willis argued the failure of banks to follow, and of the Federal Reserve to enforce, this theory had resulted in the "excesses" that inevitably led to the Wall Street Crash of 1929 and the Great Depression.

The House had passed a federal deposit insurance bill on May 27, 1932, that was awaiting Senate action during the 1933 "lame duck" session.

[59] Contemporary observers suggested Aldrich's proposal was aimed at J.P. Morgan & Co.[60] A later Glass–Steagall critic cited Aldrich's involvement as evidence the Rockefellers (who controlled Chase) had used Section 21 to keep J.P. Morgan & Co. (a deposit taking private partnership best known for underwriting securities) from competing with Chase in the commercial banking business.

5661 (in a voice vote) after substituting the language of S. 1631 (amended to shorten to one year the time within which banks needed to eliminate securities affiliates) and requested a House and Senate conference to reconcile differences between the two versions of H.R.

5661 included Senator Arthur Vandenberg's (R-MI) amendment providing for an immediate temporary fund to insure fully deposits up to $2,500 before the FDIC began operating on July 1, 1934.

In the House, nearly one-third of the Representatives signed a pledge not to adjourn without passing a bill providing federal deposit insurance.

[82] Time Magazine reported the 1933 Banking Act passed by "accident because a Presidential blunder kept Congress in session four days longer than expected.

[84] In his account of the "First New Deal" Raymond Moley stated Roosevelt was "sympathetic" to the 1933 Banking Act "but had no active part in pressing for its passage".

While Berle shared Glass's hope that the new law's deposit insurance provisions would force all banks into the Federal Reserve System, he correctly feared that future Congresses would remove this requirement.

[87] According to Carter Golembe, the Banking Act of 1933 was the "only important piece of legislation during the New Deal's famous "one hundred days" which was neither requested nor supported by the new administration.

[92] Kennedy notes that after the 1933 Banking Act became law Roosevelt "claimed full credit, to the amusement or outrage of contemporary and hindsighted observers".

[94] In 1935 President Roosevelt opposed Glass's effort to restore national bank powers to underwrite corporate securities.

[97] In that book's later brief description of the 1933 Banking Act, however, Schlesinger does not mention Frankfurter and focuses on the role of the Pecora Investigation and opposition to deposit insurance, including from Roosevelt, in the debate over the legislation.

[107] The dramatic "ten days" of National City hearings in February 1933, however, were a high point of publicity for the Pecora Investigation.

[57] H. Parker Willis and others have written that the Pecora Investigation hearings concerning J. P. Morgan & Co., which began on May 23, 1933, gave the "final impetus" to the 1933 Banking Act.

Their revelations were that several J. P. Morgan partners had not paid income taxes in one or more years from 1930 to 1932 and that the firm had provided exclusive investment opportunities to prominent business and political leaders.

[118] According to Helen Burns "Roosevelt met with severe criticism from the liberals and the progressives for not nationalizing the banks during the period of crisis."

He wished it had not been so heavily compromised to satisfy Representative Steagall (a "half portion" of what the Glass bill originally sought).

[120] Berle supported separating commercial banking from other activities, but disagreed with the Winthrop Aldrich position, contained in Glass–Steagall's Section 21,[59] that this should also apply to "private bankers".

Moss argues this false belief encouraged legislative and regulatory relaxations of traditional restrictions and that this led to financial instability.

[129] Commentators argued traditional banking regulation contained the "seeds of its own destruction" by "distorting competition" and "creating gaps between cost and price".

[7] Jan Kregel accepts that "supporters of free-market liberalism" were correct in describing "competitive innovations" of nonbanks as breaking down the "inefficiencies of a de facto cartel" established by the 1933 Banking Act but argues the "disintegration of the protection" provided banks was "as much due to the conscious decisions of regulators and legislators to weaken and suspend the protections of the Act.