Emergency banking Act (Ch. The New Deal) Flashcards
The Emergency banking was what year?
1933; under the presidency of FDR (Roosevelt)
what was the Emergency banking act in response to?
The banking system was on the verge of collapse. As bank funds invested in stock markets and corporate bonds lost their value and panicked depositors withdrew their savings, banks after banks had closed it doors. By March of 1933, banking had been suspended in a majority of states.
How many banks failed between 1920 and 1933 (resulting in FDR’s Emergency banking act)?
~5,000 banks, approxiamtely 1/3rd of nation’s total. Representing a loss of tens of millions of dollars to depositors.
In 1936 (After the FDR’s Emergency banking Act was in place) how many banks failed?
Zero banks failed under FDR because of the bank holiday and the Emergency Banking Act
What was Roosevelt’s reaction to the collapsing of the banking system?
Roosevelt temporarily halter all banking activity declaring it a “bank holiday” and called Congress into special session. On March 9, 1933 it rushed to pass the Emergency banking Act.
What did the Emergency banking Act do?
- It provided funds to shore up threatened institutions
- took the United States off the gold standard
- Kept unsafe banks from reopening
- Reopened safe banks and established them with Federal Deposit Insurance Corporation (FDIC) programs
- led to the established the Glass-Steagall Act
What was the Glass-Steagall Act
barred commercial banks from being involved in buying and selling of stocks. Until its repeal in the 1990s, the law prevented many of the irresponsible practices that contributed to the stock market crash.
What was the Federal Deposit Insurance Corporation (FDIC)?
A government system that ensured the accounts of individual depositors.
Why did FDR take the Units States off the gold Standard?
He severed the link between the country’s currency and its gold reserves, making it possible the issuance of more money in the hope of stimulating business activity.
What did the Emergency banking Act, Glass-Steagall, declaring a bank holiday, and removing the United States from the gold-standard accomplish?
It rescued the financial system and greatly increased the government power over it.
What does the FDIC insure?
- Deposits under $100,000
- designed to protect the average American with investments and savings in the banks rather than the wealthy Americans who may have more money in the stock market.
the Emergency banking Act was part of what new deal? 1st or second?
1st; it was part of what was known as “The Hundred Days”to get thing going again
