After the stock market crashed, what acts were passed to prevent market crashes in the future?

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The Banking Act of 1933, also known as the Glass-Steagall Act, had several provisions. It was passed under Franklin D. Roosevelt as one of the first acts or programs of the New Deal. First, it established the Federal Deposit Insurance Corporation to provide insurance for depositors in banks. This act was intended to prevent runs on banks, which were common in the Great Depression, and restore people's faith in the banking industry. The Banking Act also prohibited commercial banks from participating in investment banking, as investment banking was seen as too risky for commercial banks. This provision was  supposed to protect depositors' accounts from too much risk, though this part of the provision was repealed in 1999.

The Securities Act of 1933 requires sales of securities to be registered with the SEC, or Securities and Exchange Commission. The idea behind the act is to ensure that consumers understand the securities they are purchasing before doing so. Accurate information about securities can help consumers gauge their risks and prevent a market crash. The Securities Act of 1934 regulated the trading of securities on the secondary market, meaning not through the original issuer of the security (as the Securities Act of 1933 had) but through other brokers or dealers. This act also established the SEC, or Securities and Exchange Commission, to enforce the regulation of securities and thereby prevent a future market crash. 

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The crash of the stock market was a major factor leading to the start of the Great Depression. There were several factors leading to the crash of the stock market. One factor was that people began to invest in the stock market without doing the proper research. The prices of stocks had been rising for so many years, people just expected the stock prices to continue to rise. If they had done proper research, they would have seen that the stock prices were overvalued.

Another issue with the stock market was that there weren’t many new investors coming into the stock market. By 1928 or 1929, most people who wanted to invest were already invested in the market. Thus, without new investors, it was hard to keep the demand for stocks at a high level. When stock prices began to slip, this was a big issue since new investors weren’t coming into the market to buy stocks.

Finally, the practice of buying stock on margin was questionable. Many people went into debt to buy stocks. They paid ten percent of the total cost and would pay the balance on an installment plan. People weren’t worried about the debt they had incurred because they believed the stock prices would continue to rise. When the prices fell, many people were in serious financial trouble.

The Glass-Steagall Act and the Securities Act were two laws that tried to prevent similar conditions from arising in the future that could lead to a serious economic crisis such as the Great Depression. The Glass-Steagall Act prevented commercial banks from investing in the stock market. Part of the issue regarding the crash of the stock market was that banks also invested in the market. When stock prices dropped, banks lost their investments, which involved the money people had deposited in the banks. Many people couldn’t get their money from their bank accounts because of the losses the banks incurred in the stock market. This law also created the Federal Deposit Insurance Corporation. This insured saving accounts up to $2500. People could feel confident that their money was safe in their bank accounts with this insurance. Along with declaring a bank holiday and allowing only the strong banks from a financial standpoint to reopen, the government took steps to try to make sure banking practices wouldn’t lead to another economic crisis.

The Securities Act was designed to regulate and to reform the stock market. Companies had to provide investors with complete and accurate financial information about the stock of their companies. The Security and Exchange Commission was created to regulate the stock market and to prevent fraud. This law also was passed to establish controls to prevent a future stock market crash.

After the stock market crashed, steps were taken to try to prevent actions that could lead to future crashes of the stock market.

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