Essay On The Stougall Act

As a result of the market Crash on “Black Thursday”, October 24, 1929 The “Pecora Hearings” held in 1932 investigated the cause of the market crash of 1929 accusing commercial banks of misleading the public into investing in risky securities with poor quality (Calomiris, 2010)

With troubling incidents like the stock market crash of 1929, reform was highly necessary to never have a relapse of these events in the future. Historian Allan Nevins says that the New Deal was the epiphany the government needed to possess greater responsibility for the economic welfare of its citizens. It made the government initiate attempts to reorganize the economic turmoil and restore the people’s faith in banking system which was successful with the Emergency Banking Relief Act and Bank Holiday. Congress allotted for the Treasury Department to weed out the unfit banks and reopen the stable banks, significantly lowering bank failures. Especially with measures like the Glass-Steagall Act it offered assurance and insurance to citizens with a compensation of 5,000 dollars in the case of an inconvenience of their bank and since the creation of the FDIC there were no incidents in which a depositor has lost its insured funds. Many of the legislations passed under the Reform point remained for fifty years to prove the reliability and effectiveness like the Securities and Exchange Commission that regulated stock market activities and prevented another large scale crash to occur, keeping the economy at bay. And the Social Security Act of 1935 to reinforce the sensation of

Faced with this economic decline, came other factors that included unemployment and lack of confidence in banks (Church 100). Restoring faith in banks across the United States was one goal for FDR. As depositors lost confidence in the national bank, over $1,000,000,000 was taken out in cash and hoarded (Boardman 64). The Emergency Banking Act closed all banks for four straight days, and put them under inspection by the national government (Schraff 52). Banks were put under meticulous scrutiny by the Treasury Department. The U.S. government demanded that all hoarded gold be returned and all of the $1,000,000,000 was deposited (Boardman 65). Banks were allowed to open only under a strict system of licensing (Schraff 52). Another banking program was The Federal Deposit Insurance Corporation, or FDIC, which was created by Congress to guarantee deposits up to $5000 (Gupta). In the case

The effects of the Depression during the 1930’s still impact America today. The New Deal was passed to rebuild the economy after the Great Depression. William L. Niemi and David J. Plante discussed the meaning of the new deal to our economy today, “Under the New Deal regime there were more labor rights, less Supreme Court intervention in the economy, more public accountability in the structure of financial institutions driving the political economy, and a more equitable distribution of wealth”(Plante, Niemi, 413-427). Franklin Roosevelt created the New Deal, which was his plan to take America out of the Depression. He had three goals: relief, reform, and recovery. The New Deal set up policies that help us prevent future economic depressions and achieve long-term recovery. Policies that still stand and affect our economy today are the Securities and Exchange Commissions (SEC) and the Federal Deposit Insurance Corporation (FDIC). The SEC today still regulates the stock market and enforces laws that protect the industry. The SEC was used to restore the nations confidence in the economy after the Depression. The FDIC is an important part of America’s financial system. The FDIC was part of the Banking Act of 1933. The FDIC insures banks with a certain amount of money to make it a safer place to put your money in. Roosevelt

When Franklin D. Roosevelt was elected to his first term as president of the United States in 1932, America was in a severe depression. When Franklin Roosevelt took office in March of 1933, President Hoover handed the problems of the Great Depression over to Roosevelt. Upon taking office, Franklin Roosevelt issued a bank holiday which forced all banks to close from March 6 to March 10 while he met with Congress to pass the Emergency Banking Act to allow banks with enough money to reopen and for the Federal Government to help the banks that did not have enough money (A Bank). This act was a prerequisite to many other programs that would develop under Franklin D. Roosevelt’s administration. Under

Two days after taking office, Roosevelt issued a proclamation closing all American banks for four days until Congress could meet in special session to consider banking-reform legislation. So great was the panic about bank failures that the "bank holiday," as the president euphemistically described it, created a general sense of relief. Three days later, Roosevelt sent to Congress the Emergency Banking Act, a generally conservative bill designed primarily to protect the larger banks from being dragged down by the weakness of smaller ones. The bill provided for Treasury Department inspection of all banks before they would be allowed to reopen, for federal assistance to some troubled institutions, and for a thorough reorganization of those in the greatest difficulty.

President Roosevelt’s first act as a president was to declare a four-day bank holiday. During the break, Congress drafted the Emergency Banking BIll of 1933, which restored the public's belief in the government and stabilized the banking system. Three months later, Roosevelt signed the Glass-Steagall Act, which made the FDIC, federally insuring

One of FDR's main points to start out was to change the banking system so people could trust them once again. FDR created the Emergency Banking Act that shut down all banks across the US and let them open if they were inspected and were stable. The EBA also showed how government role was expanding, as the program allowed the government to disregard states and businesses rights to shut the banks down. John L. Lewis supports the Wagner Act which FDR response was

After the nation’s banks were hit hard by a severe financial panic in 1907, the United States President and Congress decided the nation’s banking system needed reformed and strengthened. Subsequently, in 1910, a small group of bankers and politicians secretly met on Georgia’s Jekyll Island for 10-days and drafted an outline of a new central banking system that would protect the United States economy from future financial crises and provide the platform for America to thrive. This outline, known as the Aldrich Plan named after Senate Republican of Rhode Island, Nelson Aldrich was submitted to congress but was voted down. However, this would later serve as the model for which the Federal Reserve Act was based. The Federal Reserve Act was signed into law on December 23, 1913, by Woodrow Wilson and established the Federal Reserve, or the Fed, as the central bank for United States.

The first order was to reopen the banks and restore public confidence by enacting the Glass Steagall-Banking Reform Act, which insured deposit up to $5,000.00. Since then people deposit their money with the assurance that it will be there when they need it.

The Glass Steagall Act was passed on 1933, which is also known as The Banking Act to tighten regulation on the way banks did their business. This act was written as an emergency measure when about 5,000 banks failed during the Great Depression. Banks mostly failed because of the way they would invest with money. The act prohibits banks from investing money on investments that turn out to be risky. Banks could no longer sell securities or bonds. The act also created Federal Deposit Insurance Corporation (FDIC) to protect the deposits of individuals, which is still used to this date. The FDIC in this era insures your deposits in your bank up to $250,000. This gave the public confidence again to deposit their money in the bank. In 1933

The banking industry as a whole after the stock market crashed was going bankrupt due to not being able to carry the “bad debt” that was created from using customer money to buy stock. Because the banks were out of money, they were unable to cover customer withdrawals from their bank, causing many bank customers to lose all of their savings. With the uncertainty of the future of the banking industry, many people withdrew all of their savings, which caused more than 9,000 banks to close their doors and go out of business (Kelly). Due to the effects of the Great Depression, and the collapse of the banking industry, the government created regulations to prevent similar failure in the future. For Example, the SEC, (or Securities Exchange Commission), which regulates the sell and trade of stocks, bonds and other investments was created as a result of The Great Depression. The FDIC (or Federal Deposit Insurance Corporation), was created to insure bank accounts so that that the consumer would be protected if the bank were to go out of business (Kelly). The Great Depression's effect on the banking industry led to many useful changes to the banking industry and helped restore confidence in banks in the American people.

The significance of the Emergency Banking Act created a system to audit, loan funds to, and reopen banks under Treasury Department supervision. As for the significance of the Glass-Steagall Banking Act it established strict guidelines for banking operations and expanded the power of the Federal Reserve System. This law closed many small banks and forced several thousand others to merge with larger more stable

Roosevelt quickly stepped up to take measures in fixing the economy in the country. The Glass-Steagall Act of 1933 was the one of the first government responses to the Great Depression. Drafted by Senator Carter Glass and Representative Henry Steagall, the act’s clear objective was to regain the lost confidence in the American financial institutions with two main provisions. First, the act restricts and limits commercial banking activities with investment banks. By separating the two, banks are allowed to operate more efficiently without the influence or risk of their counterpart, reducing the chances of another bank run.

In 1993, after the Great Depression, was issued the Glass-Steagall Act to limit the power of the banking system. The two key points of this act were the creation of the Federal Deposit Insurance Corporation and the separation between commercial and investment banks . To achieve this second goal, they prevented commercial Federal Reserve members banks from dealing in non-governmental securities for costumers, investing in non-investment grade securities for themselves, underwriting or distributing non-governmental securities and, finally, affiliating with banks and companies that can do the actions listed. After 66 years, part of the Glass-Steagall Act was repealed by the