The New Deal Of A Big Depression Hit America

1440 Words Sep 22nd, 2015 6 Pages
Question 1
It all started 1933, when a big depression hit America. Stocks dropped more than 90% leaving people with nothing in their hands. Banks were accused of extensive speculation and people believed something needs to be done to hold the bankers back. At the same time, an individual by the name of Franklin Delano Roosevelt became president of the United States of America. He believed that the system has to be changed and dedicated his presidential era to regulation of the financial sector. This approach became famous as "The New Deal" (Piereson, 2008, May 15th).

An important regulation document was the Glass-Steagall Act, which seperated the commerical banking business from the investment banking. Due to speculation in investment banking parts, people with savings also lost their money, since the whole bank went bankrupt. The new regulation framework was supposed to avoid such scenarios in the future. In 1999, the act was repealed (Piereson, 2008, May 15th).

Another example is the Investment Company Act, which should protect investors and public interests (Piereson, 2008, May 15th).

New rules were introduced in Roosevelts era on a constant basis, which are rather important even today and form one of the pillars of modern credit and capital. Some of these rules include:

Deposit insurance Securities regulation Federal regulation of banks

In conclusion, it can be seen that investor protection started in the 30s and made financial markets saver for market…
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