C glass stegall act 1933 i separate commercial and

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c. Glass- Stegall Act (1933) i. Separate commercial and investment banking. Commercial is for individuals and business for accounts and loans. Investment banks don’t take deposits; they buy up bonds, stocks, property, etc. to make money for the investors. Because these two were in the same business, if a bank lost money in the investment side, it would use
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the commercial money and lose that money. Commercial Banks are now much less risky. ii. This is in place until 1999, and this is where our current bank problems come from. Banks found it was too restricting. d. Federal Deposit Insurance Corporation (FDIC) i. It guarantees people that deposit money in banks will get money back if the bank goes under. The government will make sure of it. They know people are less likely to lose money since the banks are more stable. e. There are fewer banks close in FDR first two terms than any other 8 year administration. In 1936, not a single national bank closed. This was the first year that happened since 1877. From 1921-1933 (pre-banking act), the average loss was $.45 to each $100. From 1934-1960, the average loss is less than 1/5 of cent per $100. f. People thought banks shouldn’t be run for profit but for the benefit of people. FDR never wanted to take over the banks so he finds a happy medium. 3. Agriculture a. Agricultural Adjustment Administration (AAA) i. Its goal was to raise the price of farm goods. They paid farmers to grow less so prices would go up so what farmers do sell makes more money. The problem was how the fewer crops came about.
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