New Deal AnalysisNew Deal AnalysisThe new deal was successful in reforming many of the problems that led to the great depression. One of the actions that helped the depression to grow was the crash of the stock market. The attitude of the 1920s was one of market speculation. People bought stock, which increased its value, making more people invest in it. This led to artificially high stock prices, and when the bubble burst, the whole market collapsed. One of the reasons the market crash affected the economy was margin buying, where stock is bought on credit. This made many lose the borrowed money and unable to pay it back. Banks who had loaned the money to the investors lost the money that was to be paid
back. This led to the failure of many banks. The New Deal reformed this by making margin buying stricter, so that banks and other institutions that offer loans would be protected. Also, due to the bank failure, banks became insured by the FDIC so that the people who had money in banks were guaranteed that it would stay safe. The government did this so the people would regain their trust in the bank system, and put more money in the bank. Other organizations were also formed to reform various aspects of the country. These included the so-called alphabet reform agencies, named for all of their initials. The Securities and exchange commission was formed to regulate the stock market and enforce the laws that were passed. This was done to prevent another stock market
Banking and its Regulation The Federal Reserve System (F.R.S.) and the Commodity Futures Trading Commission acted as the regulators in the banking system until the U.S. government bailed out the banks in October 2001 through the Troubled Asset Relief Program, which was designed to provide relief from a banking crisis by ensuring that banks do not fail and are able to operate as normally as possible.
Banks as regulators were a major source of government spending. In its annual budget to the Congress in 2002, U.S. Treasury spent $50 billion on banking, and $31 billion of that came in direct aid to states. The United States was then the world’s leading importer of credit, followed by Japan in third place and China in eighth place. The U.S. economy went from $13.3 trillion in 2008 to $45.4 trillion in 2013, and its share of the credit for this year’s U.S. economy has grown to 7 percent from 5 percent. Although the federal government and industry all had their own funds in the Treasury system, their services became largely private and local rather than federal. The funds are used largely to provide financial services, but also to ensure credit for the federal government and state coffers, to help companies obtain financing from outside of their national borders, and to pay for other activities of federal government. Many of these services include: • Finance • Business planning • Banking and insurance • Insurance • Insurance and loans • Other finance and investment practices. Many also employ large amounts of social assistance. Under an executive order issued by President Abraham Lincoln, in 1865, federal and state governments created a Federal Savings Bank, or FBS, to provide credit to public and private sector firms for loan purchases and other expenses. Some of these companies have been described as corporations, but we have no evidence that this was a true definition. One bank that has not been known to comply with various law has been the Department of Energy. The agency employed a computer program to send data to federal agencies, which it collected in exchange for information on state and national energy programs and certain state energy programs. We do not know how many of the agencies working to create and operate these services were in the F.S.B. • Government and the State The Federal Reserve System (F.R.S.) regulates bank deposits, issued and issued for security deposits and for all other activities necessary for credit and investment with respect to the nation’s credit. The F.R.S. regulates credit and investment through a combination credit and bond programs that are financed by the Treasury. The F.R.S. also regulates the issuance of government bonds, and it may lend those bonds. However, the banks and government agencies of the F.R.S., other agencies such as the Commodity Futures Trading Commission and the Securities and Exchange Commission, may not have specific control over the issuance of bonds. The fact that the F.R.S. has become a central component of the Federal Reserve System indicates that there is considerable influence in the Federal