Abstract
In March 1933, President Franklin Roosevelt declared a national bank holiday and persuaded Congress to approve emergency measures to revive the U.S. banking system. Those measures included capital infusions from the Reconstruction Finance Corporation and asset-backed loans from the Federal Reserve. National City Bank, Chase National Bank, and other universal banks received large bailouts, which enabled them to withstand the huge losses they suffered from their securities operations and related loans. Roosevelt also supported legislation proposed by Senator Carter Glass and Representative Henry Steagall to prohibit banks from engaging in securities activities and to bar nonbanks from accepting deposits. A Senate investigation led by Ferdinand Pecora revealed widespread abuses in securities offerings made by National City, Chase, and other universal banks and private investment banks during the 1920s. Pecora’s revelations generated widespread public support for the Glass-Steagall Act, which Roosevelt signed into law in June 1933.
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