Regulatory reforms were implemented from "summary" of The Great Crash 1929 by John Kenneth Galbraith
In response to the financial chaos that followed the Crash of 1929, a series of regulatory reforms were introduced. These reforms aimed to address the issues that had contributed to the economic collapse and prevent such a disaster from happening again in the future. One of the key reforms was the establishment of the Securities and Exchange Commission (SEC) in 1934. The SEC was tasked with overseeing the securities industry and enforcing regulations to protect investors from fraud and manipulation. Another important reform was the Glass-Steagall Act of 1933, which aimed to separate commercial banking from investment banking activities. This was done to prevent banks from taking excessive risks with their depositors' money and to reduce the likelihood of another banking crisis. The act also established the Federal Deposit Insurance Corporation (FDIC) to insure bank deposits and provide stability to the banking system. Furthermore, the Banking Act of 1935 introduced additional regulations to strengthen the banking sector and prevent risky practices that could lead to another financial crisis. These reforms included limiting the ability of banks to speculate in the stock market and imposing stricter capital requirements to ensure banks had enough reserves to cover potential losses.- These regulatory reforms were a response to the failures of the financial system that had led to the Great Crash of 1929. By introducing stricter regulations and oversight, policymakers aimed to restore confidence in the markets and prevent another economic catastrophe. While these reforms were not without controversy, they played a crucial role in stabilizing the economy and laying the groundwork for future financial regulation.
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