Allowable Municipal Dealer Quotes

The Banking Act of 1933, also known as Glass-Steagall, regulated the stock market, separated securities dealers from banks, and established the Securities and Exchange Commission (SEC). Though the SEC regulated many securities markets, government securities were considered exempt. That meant that federal securities laws did not apply. The thinking at the time was to let those markets operate free of government regulation, which would allow the Treasury and municipalities to sell debt at a lower cost. Oh, and one more thing. There was a clause known as Regulation Q, which prohibited banks from paying interest on savings accounts.