The Great Depression: Bank Failures

(Presidential candidate Jim Webb ended his bid for the Democratic nomination yesterday as noted here. – Admin.)

By Russ Phillips

(Earlier postings: One and Two)

As mentioned yesterday, “Those who cannot remember the past are condemned to repeat it” (George Santayana) and it appears that many events in history repeat. This cyclical nature of history, in part, suggests the lack of mindfulness of the past and a lack of action to prevent its recurrence.

America’s banking system began to collapse in the early 1930s, in part, because so many commercial banks had speculated in stocks. After several prominent banks collapsed depositors rushed to withdraw funds from remaining banks. In the first two months of 1933 four thousand banks were forced out of business. Because accounts were not government-insured millions lost their life savings.

As a result of the Banking Act of 1933, bank deposits since have been insured by the Federal Deposit Insurance Corporation (FDIC). However, the Financial Crisis of 2007-2008 manifested itself in some ways very different from The Great Depression.  One significant factor was the housing market.

“The bursting of the U.S. (United States) housing bubble, which peaked in 2004, caused the values of securities tied to U.S.real estate pricing to plummet, damaging financial institutions globally. The financial crisis was triggered by a complex interplay of policies that encouraged home ownership, providing easier access to loans for (lending) borrowers, overvaluation of bundled subprime mortgages based on the theory that housing prices would continue to escalate, questionable trading practices on behalf of both buyers and sellers, compensation structures that prioritize short-term deal flow over long-term value creation, and a lack of adequate capital holdings from banks and insurance companies to back the financial commitments they were making.” (Source)

This 2:18 video clip, “Worsening Crisis,” appears on the Franklin D. Roosevelt Presidential Library and Museum website as part of its “Virtual Tour.” BTW, this is an excellent website that gives great insight into our nation’s history during the Roosevelt Presidency of twelve years.

What caused the Great Depression?

By Russ Phillips

“Those who cannot remember the past are condemned to repeat it” (George Santayana) and it appears that many events in history repeat. This cyclical nature of history, in part, suggests the lack of mindfulness of the past and a lack of action to prevent its recurrence.

Two momentous events that can be instructive for the future are The Great Depression (1929-1939) and the Financial Crisis (2007-2008).

Several days ago I posted about the Glass-Steagall Banking Act that was referred to in the October 13, 2015 Democratic Debate as well as by Ben Carson on ABC “This Week” two days ago.

This 2:58 video clip, “What Caused the Great Depression,” appears on the Franklin D. Roosevelt Presidential Library and Museum website as part of its “Virtual Tour.” BTW, this is an excellent website that gives great insight into our nation’s history during the Roosevelt Presidency of twelve years.

Mayors to Washington: Do Something!

Mayors to Washington: Do Something!
Education, infrastructure top mayors’ wish list, POLITICO Magazine survey finds.

Politico.com
By Eva Rodriguez
4/27/15

The cities’ CEOs are disgusted with Capitol Hill. Sure, we’ve known the American people have little regard for Congress, which has been experiencing record-low approval ratings. Yet fellow elected officials working in America’s cities also hold Washington in disfavor, and they had a clear message for their representatives on Capitol Hill: Gridlock has gone too far.

Some 82 percent of mayors queried said they had very little or no confidence in Washington lawmakers to address the nation’s most pressing problem, according to Politico Magazine’s inaugural Mayors’ Survey. What did mayors find most grating? Was it lawmakers’ almost genetically-encoded aversion to solving important challenges? Their tendency to grandstand? Their inability to resist kowtowing to powerful special interests? All of the above, nearly half of the respondents reported.

“We must do what we can on our own, locally and regionally,” said…
Continue reading