What are some of the lasting effects of the New Deal on banking and finance in the United States?
Two important pieces of legislation were created under the New Deal that had a tremendous impact on banking and finance in America are the Federal Deposit Insurance Corporation, F.D.I.C. and the Securities and Exchange Commission, S.E.C. Created in 1934 the F.D.I.C. insured bank deposits up to $100,000. The purpose of the law was to restore faith in the banking system. As the markets weakened and finally collasped in 1929 bank deposits simply evaporated. Americans might have held a bankbook stating they had $1000.00 however as more and more banks failed there was little anyone could do to recover their money. As a result Americans were apprehensive about depositing any money into the banks. The F.D.I.C. helped to restore confidence in the system. Just recently the federal government increased the insurance level to $250,000 in order to protect bank deposits vulnerable to the market failure this past October/November. The Securities and Exchange Commission was created to prevent fraud in the stock market by overseeing its regulatory actions. Several practices such as 'buying on margin' (buying on credit) and documentation of financial statements for the public were instituted in order to stabilize the financial markets. Unfortunately, in the recent past several major corporations were caught violating these practices by altering financial statements with the intent to decieve the stockholders. Although these pieces of legislation strengthened and stabilized the banking and finance industries after the 1929 stock market crash under our present economic climate a serious revaluation of laws might be necessary in order for them to sustain their original intent.