The Pecora Hearings: A Case Study

On October 29, 1929, the stock market crashed. Not only did millions of investors lose their money but banks lost all of the money they had invested that their customers had given to them. To make the problem worse is that the people who had remaining money in the banks tried

One major component of the Glass-Steagall Banking Act was to separate investment banking from commercial banking. Commercial banks were now forbidden from investing in stock markets in order to reduce speculation.

The stock market crash of 1929, additionally called the Great Crash, was a sharp decrease in U.S. stock exchange values in 1929 that added to the Great Depression of the 1930s. The market accident was a consequence of various economic imbalances and structural failings (Pettinger). In the 1920s, there was a fast development in bank credit and advances. Energized by the quality of the economy, individuals felt the share

In Document 3, by New York Times, October 29, 1929, stated that, “Stock prices slump $14,000,000,000 in nation-wide stampede to unload; bankers to support market today.” On October 29, 1929, a panic overcame the markets, being called Black Tuesday. The stock market catastrophically dropped in value by $16 million dollars––nearly one-half of the market’s pre-crash value––and almost all companies’ stock was affected by Black Tuesday. In Document 2, John T. Raskob, former executive, General Motors; Chairman,

The stock market crashed on Thursday, October 24, 1929, less than eight months into Herbert Hoover’s presidency. Most experts, including Hoover, thought the crash was part of a passing recession. By July 1931, when the President wrote this letter to a friend, Governor Louis Emmerson of Illinois, it had become clear that excessive speculation and a worldwide economic slowdown

The Glass-Steagall Act effectively built a Chinese wall between commercial and investment banking wherein the commercial banks were not allowed to trade securities or take part in the insurance business. It also prohibited the commercial banks from payment of interest on demand deposits and from engaging in inter-state operations. The act implemented Regulation Q which put ceilings on the interest rates the banks could pay on their time deposits say savings deposits. Regulation Q prevented the competitive interest rate wars that didn’t allow rates to reach unreasonably high levels. If rates had not been regulated then the banks would have been forced to lend at higher rates to remain profitable which would have led to riskier investments by them and failure problems would have followed. Looking at the evidence we see that from 1930 to 1933 more than 9000 commercial banks failed whereas, from 1934 to 1973 only 641 U.S banks were closed.[1] The act

The emergency legislation that was passed within days of President Franklin Roosevelt taking office in March 1933 was just the start of the process to restore confidence in the banking system. Congress saw the need for substantial reform of the banking system, which eventually came in the Banking Act of 1933, or the Glass-Steagall Act. The bill was designed “to provide for the safer and more effective use of the assets of banks, to regulate interbank control, to prevent the undue diversion of funds into speculative operations, and for other purposes.” The measure was sponsored by Sen. Carter Glass (D-VA) and Rep. Henry Steagall (D-AL). Glass, a former Treasury secretary, was the primary force behind the act. Steagall, then chairman of the House Banking and Currency Committee, agreed to support the act with Glass after an amendment was added to permit bank deposit insurance.1 On June 16, 1933, President Roosevelt signed the bill into law. Glass originally introduced his banking reform bill in January 1932. It received extensive critiques and comments from bankers, economists, and the Federal Reserve Board. It passed the Senate in February 1932, but the House adjourned before coming to a decision. It was one of the most widely discussed and debated legislative initiatives in 1932.

In 1929, shortly after President Hoover had taken office, there was unfortunate crash in the stock market (Foner 799). On Black Tuesday, over a period of five hours, over ten billion dollars had “vanished”. Although the crash of the stock market was a major proponent to America’s economic downfall,

According to the book Security policies and procedures: Principles and practices states, “On November 11, 1999, the Glass-Steagall Act was repealed and the Gramm-Leach-Bliley Act (GLBA) was signed into law by President Bill Clinton. Also known as the Financial Modernization Act of 1999, GLBA effectively repealed the restrictions placed on banks during the six preceding decades, which prevented the merger of banks, stock brokerage companies, and

Glass Steagall Act limits activities, affiliations, and securities within commercial banks. It was passed after the great depression. Gramm-Leach-Bliley Act was passed in 1999 that enacts the U.S to control its way of financial institution deal while having the private information of other individuals. The point was to not let banks get into risky investment activities.

Following WW I in the 1920’s, there was a decade of an economical explosion. The post-war era brought about many changes. Businesses showed great profits, migration to big cities of industrial companies occurred with the hopes of making a better life, people were given the opportunity to purchase things on credit, while others borrowed money making poor decisions buying high priced stocks with the intention of selling stocks for a profits to repay lenders. When Black Tuesday occurred on October 29, 1929, this marked the beginning of the Great Depression that left devastating economic hardships for the American people. Although it was always my belief that the stock market crash was the sole contributor of the Great Depression, there was

On ‘Black’ Tuesday, October 29, 1929, a rapid fall of selling of shares in the stock exchange crushed the stock exchange. On occasion there were no offers to buy stock at all but just to sell it. And by the end of the trading session 16,410,000 shares of stock had been dumped, a number never been know before at that time. After a few weeks some $30 billion of wealth had evaporated in to air.

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

“By 1929, 2 out of every 5 dollars a bank loaned [to people] were used to purchase stocks.”( Suddath) The days that transpired are infamous and will live on through the history of America.

It was 1929, and in the United States things could not be better for those smart enough, or for that matter, brave enough, to gamble on the Stock Market. All of the big stocks were paying off handsomely, the little ones too. However, as much as analysis tried to tell the people that this period of great wealth would last, no one could imagine what would come of the United States economy in the next decade. The reasons for this catastrophic event in American 20th century history are numerous, and in his book, The Great Crash, John Kenneth Galbraith covers the period and events which lead up to the downward spiral in the fall of 1929 and the people behind the scenes on Wall Street who helped this fire spread.