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How Did The Banking Act Of 1933 Entail

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History Of FDIC In 1929, the American citizens were awakened to a market crash. The banks no longer had the money that one may have put into the bank. The people of the United States no longer had integrity in the banks. Many people were hiding their money in the walls and in mattresses because they believed the government stole their money. This depression and economic crisis went on for four years before President Roosevelt signed the Banking Act of 1933. The purpose of this act was to restore the confidence in the banks. Just Like that the FDIC was created. What exactly did the Banking act of 1933 entail? To start President Roosevelt came up with this idea to help the citizens restore their faith in him and the banks. To prevent losing another one point seven billion dollars of deposited money and to prevent another Great Depression. The bill was passed and designed to provide safer and effective use of the banks holding onto one's personal assets. It was made to …show more content…

The FDIC also has resources on how one can better manage their money to prevent bank failure and or if you have been through bank failure. No one has lost a penny since 1933 because the FDIC was put into place. Trust and retirement funds are also protected by this act. After the act was put into place the banks went into a three day holiday. The government sent government bankers into each bank to see what banks needed to close and which ones could stay open. They made this decision based on people and amount of money in the bank or if their books were not clean. The FDIC still till this day make sure they work with and keep healthy banks opens to lower the risk of depositors losing their money. However it does not prevent loses from cyber crime or fraud that is your banks job to handle and decide

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The FDIC was created in 1933 in response to the thousands of bank failures that occurred in the 1920s and early 1930s. The FDIC was a provision of the Glass-Steagall Act. During the nine year period from 1921-1929 more than 600 banks failed each year. The failed banks were small banks operating in the rural suburban areas and held the deposits of mostly farmers and blue collar folks. When banks fold and continue to do so, people will start to worry about their money in any bank.

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The Glass-Steagall Act of 1932 permitted the use of government securities to back Federal Reserve notes. It also separated personal and investment banking. During The Great Depression, many banks were involved in personal and investment banking. Investment banking is much riskier than personal banking so problems in the investment banking business effected the personal banking business. However, Glass-Steagall had much less impact than Hoover originally thought because it was too late.

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The nation had no safety net with no public unemployment insurance and no Social Security. President Roosevelt's Emergency Banking Act passed Congress on March 9, which close the banks that were insolvent and reorganized the banks. After Roosevelt's first fireside chat almost three-quarters of the banks had reopened.

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FDR’s first incentive was to make “The Emergency Banking Act which authorized the Federal Reserve Board to issue new banknotes and allow the reopening of banks that had adequate assets, and arranged for the reorganization of those that did not” (Source 2). The New Deal helped reopen banks and provided loans to banks that needed help, and closed banks that were too unstable to open (Source 4). Along with this, he made the Glass-Steagall Act that insured bank accounts through the FDIC’s (Federal Deposit Insurance Corporation) main purpose is to insure deposits, examine and supervise financial institutions for safety, soundness, and consumer protection, make large and complex financial institutions resolvable (Source 5).

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FDR came out with regulations for banks so that the depression couldn't get worse or it would help prevent it in the future. The president explained that the banks had enough money from the bank holiday to reopen and supply the needs of the great depression, but he had to remind them that “no sound bank is a dollar worse than what it was a week before” which tells us that banks are still not 100% so give them time and don't rush them. It was explained that not every bank will

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When banks failed, people that had money in their account, in the bank would lose their money even if they did not owe any debt to the bank. This caused families to go homeless and even

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As stocks continued to fall, the nation lost hope, businesses were failing and unemployment rose dramatically. The president at the time, Herbert Hoover, did many things to control and put an end to the great depression but was unsuccessful. And so the inauguration of Franklin D. Roosevelt felt like a miracle for the destitute americans. Franklin saw the miserable state of the U.S economy and had a plan, the New deal, This consisted of many fresh ideas to fix the problems of the Great Depression, such as the Glass Steagall Banking Reform Act which was established to properly segregate commercial banking from investment banking. This act created the federal deposit Insurance which ended a century long tradition of unstable banking that reached a crisis during the Great depression.

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Due to the Dust Bowl farmers were defaulting on loans which was a huge cause of bank failures. Also in 1933, the Federal Deposit Insurance Corporation was created to ensure people's deposits, which now insures $250,000 per bank. Another big cause of the banks failing was because the Great Depression caused people to all withdraw their money at once, which created a huge run on banks. People still debate if the banking system collapse caused the great depression or if the great depression caused all the bank failures, and you can find evidence to show both sides were

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This resulted in the creation of national banks would be able to purchase bonds to be deposited into the treasury. One third of the money received was invested into US securities. Originally, there was not much regulation. The National Banking Act created basic changes in the banking system and how credit was distributed. A single capital market began to emerge and there was the creation of a uniform and stable currency.

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From 1929 to 1933, more than two-fifths of the nation’s 24,970 banks disappeared through failure or merger Robert J. Samuelson: Revisiting The Great Depression; page 15). Banking panics began as large numbers of investors lost confidence in their banks and demanded deposits in cash. As more banks went bankrupt, it only increased the panic and the demand for Americans to withdraw their money from the banks because they did not trust them. In addition to the banking crisis around the country, banks reduced lending and there was a fall in investment.

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People tried to deal with the closings of banks and congressional leaders were finding a way to reopen banks as soon as possible and the issue was to make the relation between gold and notes weak. On March 13, an emergency legislation went into effect and member banks could reopen because they were strong enough to survive the crisis. Consequently the banking system had been

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By implementing them the Government wanted to make sure that a second Great Depression will never happen again. Such programs/acts were the Federal Deposit Insurance Corporation (FDIC), the Wagner Act and Social Security Administration(SSA). The FDIC protected bank depositions and monitored soundness of them. It helped to restore the confidence in banks and encourage deposits rather than withdrawals. Another program was Securities and Exchange Comission (SEC).

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In order to fix the banking crisis and help many families, the Federal Depositors Insurance Corporation examined

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President Roosevelt led to the formation of the FDIC, which offered a hedge against the massive bank losses

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And to cover up the expense the banks have to get the money from the interests they get on loans. The banks also gave loans to the stock market brokers and as the stock markets failed the bank couldn’t get the moneys back as a result they failed. And this bank failure along the stock market crash caused a great harm to the Us economy. During the mid 1920s the stock market went through

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