Chapter 14.2, Problem 3R

To determine

To evaluate: The most significant laws affecting banking since the 1920s.

Explanation of Solution

Federal Reserve System was founded in the year 1913 to control reserves and money supply, and to allow loans to member banks. Whereas thousands of banks close in 1933, FDR allows banks to show soundness in order to open up; the congress passes Glass- Steagall banking act Federal Deposit Insurance Corporation, FDIC insures assets. Gold Standard turned to fact; privately owned gold is prohibited. The Glass-Steagall Act, part of the Banking Act of 1933, was landmark banking law that divided Wall Street from Main Street by providing insurance to citizens who entrust their assets to commercial banks. These are the important laws that have affected the banking system.

Economics Concept Introduction

Introduction: Regulation of banking is a type of government regulation that are required for certain conditions, limitations, and guidelines, seeking, inter alia, to establish market transparency between banking institutions and the individuals and businesses with whom they interact.