[mod.politics] Stability via New Deal

hank.walker@UNH.CS.CMU.EDU (08/05/86)

I think it is much more likely that the financial stability since the
Depression has been due to changes in the banking and investment
industry, rather than the New Deal.  In the 1920s you could buy stock
on 10% margin.  It is now 50%.  Banks could also loan money on very
low margin.  The margins are much higher now.  Banks were mostly
individual institutions.  Now they belong to the Federal Reserve
system.  There used to be no insurance.  There is now federal, state,
or private insurance for banks and savings and loans.  Notice how
there were recently runs on poorly insured banks in financial trouble,
while federally insured banks that were also in trouble did not
experience runs.

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