It removed barriers and obstacles that securities companies, banking companies, and insurance companies had to endure. In this paper, I will seek to compare and contrast the Glass-Steagall Act with the Gramm-Leach-Bliley Act, also known as the Citigroup Relief Act (White 3).
To begin with, the Glass-Steagall Act prohibited all commercial banks from taking part in the issuance and flotation of securities. It remained unclear as to why the Congress decided to mandate this divorce but one thing is clear, it made the involvement of commercial banks in securitizing insurmountable burden. This came due to the dichotomy between and among the actual motivation behind Congress’ decision and the ostensible legislative intent. On the other part, enactment of the Gramm-Leach-Bliley Act revolutionized the circumstances since it repealed a section of the Glass-Steagall Act of 1933 whereby it did away with obstacles or barriers present in the market among insurance, securities, and banking companies. In other words, it relived these companies of any barrier that deterred any single firm from acting as a combination of a commercial bank, investment bank, and an insurance company (White 12).
Secondly, a study conducted within almost three thousand banks in years between 1856 and 1936 proved that securities were not to blame for most of banks failure or collapse however; they were a particular hazard to banks. More intense studies revealed that the underwritten securities of commercial banks were actually of higher quality as opposed to the prior claim that the affiliate underwritings were of poor quality. The history of Glass-Steagall Act reflects the common notion that the possible underlying cause of the 1929 market crash came about because of using bank credit in excess to speculate stock market. Quiet a number o econometrics assert that what prompted the