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The Pecora investigations did much to invalidate the political clout of big business and opened the way politically for sweeping changes in the nation's financial structure. Against the objections of many orthodox bankers, Congress established the Federal Deposit Insurance Corporation (FDIC) to insure small depositors against the loss of their savings if a bank went under. The government promised to cover deposits up to twenty-five hundred dollars (later raised to five thousand dollars), an act that did much to bolster confidence in banks. The government also required bankers to separate commercial and investment banking and, in order to monitor investments, created the Securities and Exchange Commission (SEC). The SEC, along with the passage of the Public Utility Holding Company Act, prohibited the types of investor fraud that had been endemic in the 1920s, requiring full disclosure of the financial status of certain investments. The...
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This section contains 366 words (approx. 2 pages at 300 words per page) |
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