Banking Practice Exam 2025 - Free Banking Practice Questions and Study Guide

The Glass-Steagall Act, enacted in the 1930s, primarily aimed to separate investment banking from commercial banking. This separation was instituted to reduce the risks associated with financial speculation, which had been a significant factor contributing to the Great Depression. By creating distinct boundaries between these two types of banking, the act sought to protect consumers' deposits in commercial banks, which are used for everyday banking services, from the more volatile and risky investment banking activities. This distinction was crucial in maintaining stability in the financial system and ensuring that depositors' funds were safeguarded from the higher risks associated with investment banking practices.

The other choices refer to different aspects of banking regulation that were not the focus of the Glass-Steagall Act: controlling interest rates relates more to monetary policy and central bank functions, regulating credit card fees addresses consumer protection in credit markets, and limiting federal insurance on deposits pertains to deposit insurance policies rather than the structural separation stipulated by Glass-Steagall.