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The Banking Act of 1933

 

            
             In 1933, the US economy had declined to .
            
             (approved June 16, 1933) extended federal .
             reserve open market activities; created the .
             Federal Deposit Insurance Corporation to insure .
             deposits; and regulated the operations of member .
             banks and seperated security groups.
             The Banking Act of 1933 is also known as .
             the Glass-Steagall Act of 1933 because it was .
             authored by Senators Carter Glass and Henry .
             Steagall. This act made sure that banks did .
             not get mixed up with Wall Street. Spurred by .
             the 1929 market crash, known better as either .
             the Great Depression or Black Tuesday, and the .
             bank failures that followed, the act was aimed .
             at restoring confidence in the banking system.
             (Henriques) .
             This Banking Act of 1933 also helped .
             establish the Federal Deposit Insurance .
             Corporation,FDIC. The FDIC insured customer .
             accounts, and it also stopped banks from being .
             able to accept deposits and underwriting .
             securities at the same time. Banking .
             institutions were given a year to decide whether .
             to become commercial banks, which could accept .
             customer deposits in checking and savings .
             accounts, or investment banks, which could .
             engage in the riskier business of corporate .
             underwriting, involving the purchase of new .
             securities from the corporate issuers and their .
             resale to the public.(Henriques).
             The Banking Act of 1933 was probably the .
             newly-elected Roosevelt administration's most .
             important response to the perceived shambles of .
             the nation's financial and economic system.
             (Benston).
             The FDIC helped people gain courage in the .
             banks again. The initial coverage was only .
             $2,500 per account, but it has since been .
             increased to a maximum of $100,000 for one .
             person at one bank.(Clayton) Although the .
             insurance helped many people out since it was .
             started, it did not help out anyone that lost .
             anything before 1934.
             The FDIC created less and less worries for .
             people as it grew. Thanks to the FDIC banks .
             slowly started to rise again since the fall.


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