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Emergency Banking Act
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| Financial regulation in the United States | |
| Dodd-Frank Act | |
| Federal Reserve | |
| Financial regulation by state | |
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| Key terms | |
| Commercial bank • Credit union • Depository institution • Financial system • Investment banking • Securities | |
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The Emergency Banking Act was a federal law passed in 1933. Signed into law by President Franklin D. Roosevelt (D) on March 9, 1933, the act granted the president, the comptroller of the currency, and the secretary of the treasury broader regulatory authority over the nation's banking system. According to the Federal Reserve, the act was intended to restore faith in the banking system.[1]
Legislative history
The Emergency Banking Act was drafted by the staff of President Herbert Hoover (R) during the Great Depression, but was not introduced in the United States Congress until after the inauguration of President Franklin D. Roosevelt (D). On March 5, 1933, the day after his inauguration, President Roosevelt called a special session of Congress to address the nation's economic crisis and declared a four-day banking holiday, which shut down the banking system, including the Federal Reserve. The act was introduced to a joint session of Congress on March 9, 1933, by Representative Henry Steagall (D) and passed the same day. President Roosevelt also signed the bill into law the same day.[1]
Provisions
The Emergency Banking Act amended the Trading with the Enemy Act of 1917 and provided for the reopening of banks after the four-day banking holiday and an examination of banks by the Department of the Treasury. The act expanded the president's regulatory authority over the nation's banking system, granted the comptroller of the currency the power to restrict the operations of banks with impaired assets, and gave the Federal Reserve Board the authority to issue emergency currency backed by assets of a commercial bank. The act granted the secretary of the treasury the authority to determine if a bank needed additional funds to operate and, with the approval of the President, to request that the Reconstruction Finance Corporation invest in the bank.[1]
The authorities granted to the president and Federal Reserve under Titles I and IV, in combination with Executive Order 6102, which criminalized the possession of monetary gold, moved the nation off of the gold standard. The standard was partially restored by the Gold Reserve Act of 1934, but was officially eliminated in 1971.[1]
See also
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