According to the Glass-Steagall Act, it is both permitted and encouraged that the banking industry engage in speculative investments
and become investment houses.
True
False



Answer :

According to the Glass-Steagall Act, it is **false** that the banking industry is permitted and encouraged to engage in speculative investments and become investment houses. Here's why: 1. The Glass-Steagall Act was enacted in 1933 in response to the Great Depression to separate commercial banking activities (like taking deposits and making loans) from investment banking activities (such as underwriting securities and engaging in speculative investments). 2. The Act aimed to prevent banks from engaging in risky investment activities with their customers' deposits, thus reducing the potential impact of a bank failure on the overall financial system. 3. Under the Glass-Steagall Act, commercial banks were not allowed to participate in investment banking activities like trading securities for their own profit or investing in high-risk ventures. 4. The act was repealed in 1999 with the Gramm-Leach-Bliley Act, which allowed for the combination of commercial and investment banking activities, leading to the formation of larger financial institutions that engage in both types of activities. In summary, the Glass-Steagall Act did not permit or encourage the banking industry to engage in speculative investments and become investment houses; rather, it aimed to separate commercial banking from riskier investment activities.
The answer is true because the statement is true