The "Great Fall": The Consequences of Repealing the Glass-Steagall Act
J. Robert Brown Jr.
University of Denver Sturm College of Law
Stanford Journal of Law, Business, and Finance, Vol. 2, No. 1, p. 129, Fall 1995
U Denver Legal Studies Research Paper Series
Glass-Steagall separated banking and securities activities from the Great Depression through much of the 1990s. By 1995, the Act was viewed as an anachronism, a dinosaur that in a deregulatory era ought to go.
In fact, Glass-Steagall had a significant impact on the vibrancy of the securities markets by preventing underwriting and other capital raising functions from becoming dominated by banks. Instead, the Act enabled the development of a strong securities industry that had as its primary purpose capital raising. This contributed to the strengths of the US capital markets. Evidence from Japan and Germany suggest that without some type of forced separation, securities markets tend to become bank dominated and the capital markets less vibrant. The same could happen to the United States with the repeal of Glass Steagall.
Number of Pages in PDF File: 18
Date posted: February 6, 2007