Banking Case Study Example | Topics and Well Written Essays - 500 words

Banking - Case Study Example From this paper it is clear that  in 1927, Congressman Louis McFadden moved a bill that was later enacted into law. This new law allowed commercial banks to spread and open more branches to the extent that was permitted by the laws of the state in which it was operating. This meant that if the laws of a state allowed opening of new branches in any location within the state, then the bank was allowed to do so. In another instance, if a state’s laws allow opening of branches within the current city of location, then a commercial bank was not allowed to open branches in other cities. However, this Act did not allow commercial banks to open branches across different states. This Act had the effect of allowing for geographical growth of commercial banks and they were able to compete with federal-owned banks.As the discussion stresses  the sponsors of this Act were motivated by the events that were happening then in the banking sector. It was after the economy had experienced a crisis in the stock market sector of the economy which was followed by the Great Depression. It had been previously discovered that monies had been borrowed from mainstream commercial banks for speculation purposes in the stock market. After the stock market crisis, many banks went at a loss and it was discovered that there was need to separate the two areas of the trade. The Glass-Steagall Act made into law that commercial banks will only deal with deposits and loans while investment banks will deal with only stock trading.