Question

What changes to the financial sector were imposed by the Banking Act of 1933? Explain

Answer 1

barking Act of 1933 The Banking Act,叶1933 alo remnd to as Gtans - Steagall Act, urao in plemented by United fhalus Congess bankung Act o 933 that umited commarcial bant seunitin activities and 악tliahoru betuun communi! lanks and searihiu Thus Bonking Aut of 1 33 came as an emurgoncy Commasuial Bants wens accustd o bung too skeculativz and taking too muich kik htun ot depulbrs toulowirg tu stock masket vaoh Commmas cial bants pu havy engaged in stok maukut trading, and duy wotd dupositors tuds in these verus wohon Stouk masku cnsh habpanid, mary banks wue unable to un usbomes deposits Many deb ositors wuskedb banks to voi'thdraw thais saungs tiu bank was sbiu haviną tunds hs ulan-Steagau Act un tnactis to souw yoblem laused by tommercial hanks tia industry twas usung dejostbors tuuds bo

last line- the banking industry was using depositor's funds to

bust in naky hantolios one ct uu changes cuatd hy S thu at was tu sepauation o conmarial banks and nweotunt bankng a ttiuibies Bauks wsu guun onu gear b choose i thuy would kenain in commercial bankg Or Unuustrnunt banking Commartial banks weu prohibiled to trode in se cusities ohilu inwstut barks wer not allowed to haxtoom th tuncions ot commu cial banks Thu lauw alos tounud tu rdval Depauit Insurance Cospoah CfoIC) to insun bank dposits h FoIc was guer auuthoxity to insuna bank s wdes Pederal Resruu tu Sstem and at as agulator ot Barks At Start, o 1933, FDlc insund dihoals upto f9soo tohich was inaoed upto $S000 tiuu (a3s ohen agen y became harmanent This imit has now ouu gear upto 2s0,000 toen a bank has been declased insolwed, Fol takes the eons ibili ot huoteching oupaitor's funds In 1965, tu us angun honed tんParkhotdung Company Act as an extension ot tu Clan- Steagall Act, to bigken agulations oj Rarkig act targetesb unelotoutug inwrane and sepasatrd insurene and bantig actiuities ot commrial banks

some o tu targe bank hat wo enahed by epal of Qano-Steagall Act useu amongst tiut mas that contibuted b tinancial cisiu The Volcku Rule Atur tnanial cuou, some legulators vwanted to ve- un stat Glan Stagal Ark ty layer alhough oisted that Act would maku um small to com pue with ti banks Iastead lagislatbs haro ed Dodd-frank Act in θ010 mat made trough Volcte Rule Thu Volctu Rule nestri uts bants fsom uog dupojltae auso veshuict commarual bants tvom ouonny equily tud or hodge tud n duivatbius commodity tutues, and ohbo Thu volcke nule also Nesius banky trom trodig since sueh aciuibeo donot bentt consumor

Rehanl ot the alan Seaga At After th imlunintation ot Gan-Steagall Adt these was a conuun that large banks were om mer ially disadvantaged ou toign bant bankug gAS a esult bankens, and most ugulotas stasted b ourtun in act in (98o's by umoving Bme ambiguous vules In 1aaa, nge haroed L ham m -Leach-eiley Art, and was signad by usoident eill cinto n ohih alowed banks to 어ter bom corn mu cial and inuzotmant banking sexvces It avso aliowed banks bo huowide unswane underoiting he nwo lau encowagd th grouoth o laige bank us including Cct Group, Bank ot mexi a p Morgan ett Attomath ot the ftyeal with hanovng o Gramm- liach-Bisey buu binki wunt back to inoting in riaty hotolie May eonomist biliene that aggeoive kiok tak ung layid a signhiet nole in financial