Emergency Banking Act

(noun)

One of the first pieces of New Deal's legislation. Although passed as an emergency measure, it largely stabilized the banking system.

Related Terms

Examples of Emergency Banking Act in the following topics:

  • Banking and Finance Reform

    • On March 9, Roosevelt sent to Congress the Emergency Banking Act, drafted in large part by Hoover's top advisors.
    • The act was passed and signed into law the same day.
    • The Emergency Banking Act, also known as the Glass–Steagall Act, also limited commercial bank securities activities and affiliations between commercial banks and securities firms to regulate speculations.
    • Several provisions of the act sought to restrict "speculative" uses of bank credit.
    • The act also established the Federal Deposit Insurance Corporation (FDIC), which insured deposits for up to $2,500, ending the risk of runs on banks.

  • Launching the New Deal

    • Only 36 hours after taking the presidential oath, Roosevelt closed all the banks (the so-called Bank Holiday).
    • The Emergency Banking Act followed the Proclamation and enabled the government to close weak banks and reopen more stable banks.
    • The initiative helped to rebuild trust in the U.S. banking system.
    • Federal Emergency Relief Administration (FERA; initiated by Hoover) created local and state government mostly unskilled jobs.
    • The National Labor Relations Act (1933; known also as the Wagner Act), which established the National Labor Relations Board (1935).

  • Competing Solutions

    • Also in 1932, Hoover signed the Emergency Relief and Construction Act, which authorized considerable funds for public works programs and direct relief programs.
    • All the banking transactions were suspended.
    • The legislation that followed this Proclamation was the Emergency Banking Act, which enabled the government to close weak banks and reopen more stable banks.
    • The initiative helped to rebuild trust in the U.S. banking system.
    • Federal Emergency Relief Administration (FERA; initiated by Hoover) created government, mostly unskilled jobs.

  • Strengthening the Monetary System

    • On March 9, 1933, the Emergency Banking Act was introduced to and passed by Congress.
    • In June of the same year, more long-term solutions were presented in the Banking Act of 1933 (also known as the Glass-Steagall Act although this term is not precise and usually refers to the provisions of the Banking Act of 1933 that dealt with commercial bank).
    • The most important provisions introduced by the 1933 Banking Act were:
    • Some of the provisions of the 1933 Banking Act are still in effect.
    • This picture shows the two congressional sponsors of the 1933 Banking Act, which introduced unprecedented reforms to the banking sector.

  • Congressional Initiatives

    • However, faced with a tide of poverty, Hoover and Congress approved the Federal Home Loan Bank Act to spur new home construction and reduce foreclosures.
    • The final Hoover Administration attempt to rescue the economy occurred in 1932 with the passage of the Emergency Relief and Construction Act, which authorized funds for public works programs and the creation of the Reconstruction Finance Corporation (RFC).
    • The agency gave $2 billion in aid to state and local governments, and made loans to banks, railroads, mortgage associations and other businesses.
    • Congress was desperate to increase federal revenue, and in one of the largest tax increases in American history, the Revenue Act of 1932 raised income tax on the highest incomes from 25% to 63%.
    • Also, a "check tax" was included that placed a 2-cent tax (equal to more than 30 cents in today's economy) on all bank checks.

  • The Financial Crisis

    • Changes in finance and banking laws in the 1990s and early 2000s gave banks the ability to afford to make bad loans, because they could sell them and not suffer the financial consequences when borrowers failed to repay.
    • In the U.S., Congress passed the American Recovery and Reinvestment Act of 2009.
    • Members of Congress agreed to use $700 billion in federal funds to bail out the troubled institutions, and Congress subsequently passed the Emergency Economic Stabilization Act, creating the Troubled Asset Relief Program (TARP).
    • Unable to receive credit from now-wary banks, smaller businesses found that they could not pay suppliers or employees.
    • Under such circumstances, many resented the expensive federal bailout of banks and investment firms.

  • Nativism

    • In 1798 President John Adams signed the Alien and Sedition Acts, which limited the ability of immigrants, especially radicals from France and Ireland, to gain full political rights.
    • Nativist movements included the Know Nothing or American Party of the 1850s, the Immigration Restriction League of the 1890s, the anti-Asian movements in the West, resulting in the Chinese Exclusion Act of 1882 and the "Gentlemen's Agreement of 1907," by which Japan's government stopped emigration to the U.S.
    • After intense lobbying from the nativist movement, the United States Congress passed the Emergency Quota Act in 1921.
    • The Emergency Quota Act was followed with the Immigration Act of 1924, a more permanent resolution.
    • This law reduced the number of immigrants able to arrive from 357,803, the number established in the Emergency Quota Act, to 164,687.

  • The Federal Reserve Act

    • President Wilson secured passage of the Federal Reserve Act in late 1913.
    • President Wilson secured passage of the Federal Reserve Act in late 1913, as an attempt to carve out a middle ground between conservative Republicans, led by Senator Nelson W.
    • In contrast to the Republicans, the liberal Democrats opposed all banking schemes and strenuously denounced private banks and Wall Street.
    • The decision to create twelve regional banks was meant to weaken the influence of the powerful New York banks, a key demand of Bryan's allies in the South and West.
    • Despite the fact that the Act intended to diminish the influence of the New York banks, the New York branch continued to dominate the Federal Reserve until the New Deal reorganized and strengthened the Federal Reserve in the 1930s.

  • Hoover's Efforts at Recovery

    • He encouraged NCC member banks to provide loans to smaller banks in order to prevent their collapse.
    • The banks within the NCC were often reluctant to provide loans and usually required small banks to provide their largest assets as collateral.
    • Hoover and Congress also approved the Federal Home Loan Bank Act to spur new home construction and reduce foreclosures.
    • The final Hoover Administration attempt to rescue the economy occurred in 1932 with the passage of the Emergency Relief and Construction Act, which authorized funds for public works programs and the creation of the Reconstruction Finance Corporation (RFC), an independent agency whose purpose was to provide government-secured loans to financial institutions, railroads and farmers.
    • Reed Smoot in April 1929, shortly before the Smoot-Hawley Tariff Act passed the House of Representatives.

  • The Bank War and Economic Boom

    • The Bank War refers to the political struggle that developed over the issue of rechartering the Second Bank of the United States (BUS) during the Andrew Jackson administration (1829-1837).
    • Pro-Bank interests warned the public that Jackson would abolish the Bank altogether if granted a second term.
    • Despite the Senate's refusal to confirm Taney's appointment, during his nine months as acting Secretary, he carried out Jackson's orders.
    • Jackson's campaign against the Bank had triumphed.
    • After removing federal funds from the bank, Jackson placed the money in so called "pet banks," which were privately owned.