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Which of the following about Glass-Steagall are true? I. It established the FDIC. II. Separated commercial...

Which of the following about Glass-Steagall are true?

I. It established the FDIC.

II. Separated commercial banking from investment banking.

III. Forbade commercial banks from underwriting any securities.

IV. Allowed the establishment of bank holding companies.

V. Allowed the Federal Reserve to oversee commercial bank activity.

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Answer #1

Following statements are True -

I. It established the FDIC

II. Separated commercial banking from investment banking

The Glass-Steagall Act came into force in 1933 after a major wall street crash 1929. The major reason behind this crash was that commercial bank had taken lot of risk in the financial market through its investing activities and put depositor's money at risk. Thus, Glass-Steagall Act came into existence with following provisions -

1. Separation of commercial bank from investment banking

2. establishment of Federal Deposit Insurance Corporation (FDIC)

3. underwriting of only government bonds

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