What Are The Similarities Between Great Depression And The Great Recession
Bank failures are a common occurrence outside of recessions. When we look at the bank bailout of the large companies that have taken place during numerous recessions, we wonder what happened to government regulation and the concern for the consumer. We have been depositing our savings and investments in financial institutions that have not been transparent as well as depending on government to decide regulations for us one recession after another. The purpose of financial institutions has evolved over the years, with new regulations being enacted to keep up with the changing economies and technologies. It has understandably been a challenge for regulatory agencies and the banking industry to adapt to the changing times. I will also attempt
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Both the Great Depression and Great Recession have followed the same pattern or cause for what happened. I like how Edwards (2011) addresses the issue when he state that each period is distinguished by a massive run up in asset prices followed by a tremendous deflationary pressure that has sent both debt and equity markets into turmoil (down). In the Great Depression, there were more than 9,000 bank failures, indicative of half of all banks nationwide. This is in comparison to 57 bank failures in the Great Recession indicating 0.6 percent of all banks and considering that banks in the 1930s recession were mostly smaller and not …show more content…
I believe that the FDIC continues to serve its purpose. I personally experienced this when Wachovia failed and was taken over by Wells Fargo. This was a takeover called purchase and assumption, the existing bank (Wells Fargo), took over the accounts of the failed bank (Wachovia). Federal law requires the FDIC to pay as soon as possible. Another example would be when a consumer purchases a car or takes out a mortgage from a bank, a statement comes in the mail one day and it’s from a totally different bank, Pritchard (n.d.), states that the FDIC will usually try to close banks down by Friday’s and get back to business on Mondays so the funds are usually available by the next business day, it all depends on the circumstance of the bank failure. A requirement of the FDIC is that a bank must meet a certain criteria to qualify for the
Both the Great Depression and Great Recession have followed the same pattern or cause for what happened. I like how Edwards (2011) addresses the issue when he state that each period is distinguished by a massive run up in asset prices followed by a tremendous deflationary pressure that has sent both debt and equity markets into turmoil (down). In the Great Depression, there were more than 9,000 bank failures, indicative of half of all banks nationwide. This is in comparison to 57 bank failures in the Great Recession indicating 0.6 percent of all banks and considering that banks in the 1930s recession were mostly smaller and not …show more content…
I believe that the FDIC continues to serve its purpose. I personally experienced this when Wachovia failed and was taken over by Wells Fargo. This was a takeover called purchase and assumption, the existing bank (Wells Fargo), took over the accounts of the failed bank (Wachovia). Federal law requires the FDIC to pay as soon as possible. Another example would be when a consumer purchases a car or takes out a mortgage from a bank, a statement comes in the mail one day and it’s from a totally different bank, Pritchard (n.d.), states that the FDIC will usually try to close banks down by Friday’s and get back to business on Mondays so the funds are usually available by the next business day, it all depends on the circumstance of the bank failure. A requirement of the FDIC is that a bank must meet a certain criteria to qualify for the