New Deal Banking Reforms

Executive Summary

• These were designed to stabilize the banking industry in light of the Great Depression.

Introduction

The New Deal reforms were a group of laws and new regulations that had a very impressive impact on the economy of the United States and were of course vociferously opposed by private banking interests. This is covered in the following quotation.

“Overall, the banking reforms of the New Deal era substantially reduced financial exclusion. For example, the homeownership rate increased from roughly 40 percent prior to the New Deal, to over 65 percent in 1970 (FHLBB 1983; Levitin and Wachter 2013).” – The Public Banking Option

This is a reason listed for the reforms of the New Deal. “We chose to emphasize the public character of financial infrastructure because it was a hardwon lesson from the Great Depression—that has largely been forgotten. For example, a description of the reasons for financial regulation in the 1940s stated that, “The primary reasons for bank supervision lie in the fact that, by the very nature of their business, banks are quasi-public institutions; and in the further fact that, at times, some banks have failed to meet their obligations and responsibilities, with serious consequences to the public” (D’Arista 1994).” – The Public Banking Option

Source: The Public Banking Solution

https://www.amazon.com/Public-Bank-Solution-Austerity-Prosperity/dp/0983330867