: Federal home loan bank act great depression
|Federal home loan bank act great depression|
|UNITED SHORE WHOLESALE MORTGAGE|
|Federal home loan bank act great depression|
U.S. Department of Housing and Urban Development - 1930-2010
As the Great Depression eased somewhat and the prospect of improved financial status for individual families increased, the National Housing Act of 1934 was passed to relieve unemployment and stimulate the release of private credit in the hands of banks and lending institutions.
Established the public housing program. In response, state governments pass enabling legislation to create a nationwide network of local public housing agencies. Later amended (in 1974) to add Section 8 - for both tenant-based (Housing Choice Vouchers and project-based assistance).
America's Great Depression is regarded as having begun in 1929 with the Stock Market crash and ending in 1941 with America's entry into World War II.
The increase in housing construction following World War II, led one driver login the growth of suburban areas and to new housing programs for declining urban areas authorized by the Housing Act of 1949.
Following World War II, and continuing into the early 1970s, "urban renewal" referred primarily to public efforts to revitalize aging and decaying inner cities, although some citizens bank wire aba number communities undertook such projects as well.
Federal involvement in housing rapidly expanded to include financing of new construction, preservation of existing housing resources, and urban renewal.
Expansion of Urban Renewal. The “workable program” - localities required to adopt comprehensive revitalization plans for receipt of federal economic development aid. Expansion of FHA insurance vehicles to incentivize private development of different types of multifamily housing.
The Housing and Urban Development Act of 1965 created HUD as a cabinet-level agency and initiated a leased housing program to make privately owned housing available to low-income families.
Section 3 - economic opportunities for low income persons. Section 235 and 236 subsidized mortgages for homeownership and affordable rental housing. Federal home loan bank act great depression Towns program.
HUD's Office of Policy Development and Research (PD&R), created in 1973, was tasked with conducting research on priority housing and community development issues.
Established major rental assistance programs - public housing operating subsidies, Section 8 vouchers and project-based section 8 assistance. Created the CDBG block grant program, consolidating previous “categorical” programs.
The 1980s saw significant measures to ensure housing opportunities for all with new rental programs, Low-Income Housing Tax Credits, and changes in rules governing thrift institutions.
Landmark legislation for homelessness programs and housing opportunities.
Amended the Fair Housing Act to prohibit discrimination against persons with disabilities or based on family status.
Created the HOME block grant program. Stabilized the FHA insurance fund. Converted the Section 202 program (elderly housing) to capital grants and rental assistance; added the Section 811 (disabilities) and Shelter Plus Care (permanent supportive housing for the homeless) programs.
Major amendments and reforms to HUD programs (HOME, public housing). Created the Housing for Persons with AIDS (HOPWA) program.
The Native American Housing Assistance and Self Determination Act of 1996 (NAHASDA) created the Indian Housing Block Grant program.
The Multifamily Assisted Housing Reform and. Affordability Act of 1997, more commonly called “Mark To Market” initiated a series of reforms and cost savings measures to help maintain and preserve the stock of long-term affordable subsidized housing in the Project-based Section 8 program. The primary mechanism for cost savings was through restructuring of FHA-insured multifamily mortgages to reduce debt service costs and thereby achieve reductions in annual Section 8 discretionary spending. The Act also helped strengthen the role of the State Housing Finance Agencies as providers and facilitators of affordable housing across the country.
- retitled as Quality Housing and Work Responsibility Act of 1998. Public housing and Section 8 voucher reforms. Added PHA Plan requirement. Created the ROSS program.
HUD worked with public agencies, private partners, nonprofit, faith-based, and community organizations to expand the availability of affordable housing, to improve structural and living conditions in HUD-insured and assisted rental federal home loan bank act great depression projects, to promote wider affordable rental housing opportunities, and to stabilize and sustain communities.
Consolidated HUD’s homeless programs
Economic stimulus bill in response to recession. Targeted spending on infrastructure, health, affordable housing, education, and energy. Also included tax incentives and expanded chase disney credit card pre approval benefits.
Response to subprime mortgage and national financial crisis. Created the FHFA. Improvements in federal regulation of mortgage lending institutions.
Response to the mortgage market collapse and subsequent recession. Made numerous reforms to regulation of mortgage lending and financial institutions. Created the CFPB.
Definitions of the following terms are taken directly from Barron’s Dictionary of Finance and Investment Terms, 7th Edition, John Downes, A.B. & Jordan Elliot Goodman, A.B., M.A. available in the Maag Reference Room at call number HG151 .D69 2006.
BANK INSURANCE FUND: Federal Deposit Insurance Corporation (FDIC) unit providing deposit insurance for banks other than thrifts. BIF was formed as part of the 1989 savings and loan association bailout bill to keep separate the administration of the bank and thrift insurance programs. There were thus two distinct insurance entities under the FDIC: BIF and Savings Association Insurance Fund (SAIF). In 2005, Congress passed legislation merging the SAIF and BIF into one insurance fund called the Deposit Insurance Fund (DIF). The same law also raised the federal deposit insurance level from $100,000 to $250,000 on retirement accounts and gave the FDIC the option to increase insurance ceilings on regular bank accounts from $100,000 by $10,000 a year, based on inflation, every five years thereafter starting April 1, 2010.
CENTRAL BANK: Country’s bank that (1) issues currency; (2) administers monetary policy, including open market operation; (3) holds deposits representing chase prime card login reserves of other banks; and (4) engages in transactions designed to facilitate the conduct of business and protect the public interest. In the United States, central banking is a function of the Federal Reserve System.
COMPTROLLER OF THE CURRENCY: Federal official, appointed by the President and confirmed by the Senate, who is responsible for chartering, examining, supervising, and liquidating all national banks. In response to the comptroller’s call, city bank credit card customer care phone number banks are required to submit call reports of their financial activities at least four times a year and to publish them in local newspapers. National banks can be declared insolvent only by the Comptroller of the Currency.
CREDIT UNION: Not-for-profit financial institution typically formed by employees of a company, a labor union, or a religious group and operated as a cooperative. Credit unions may offer a full range of financial services and pay higher rates on deposits and charge lower rates on loans than commercial banks. Federally chartered credit unions are regulated and insured by the National Credit Union Administration.
DEMAND DEPOSIT: Account balance which, without prior notice to the bank, can be drawn on by check, cash withdrawal from an automatic teller machine, or by transfer to other accounts using the telephone or home computers. Demand deposits are the largest component of the U.S. money supply, and the principal medium through which the Federal Reserve implements monetary policy.
DISCOUNT RATE: (1) Interest rate that the Federal Reserve charges member banks for loans, using government securities or eligible paper as collateral. This provides a floor on interest rates, since banks set their loan rates a notch above the discount rate. (2) Interest rate used federal home loan bank act great depression determining the present value of future cash flows.
DISCOUNT WINDOW: Place in the Federal Reserve where banks go to borrow money at the discount rate. Borrowing from the Fed has been a last resort for banks short of reserves, but in mid-2002, the Fed proposed encouraging direct loans to reduce volatility in the federal funds rate. Banks would be expected to use the “window” when Fed funds exceeded the Fed’s target rate.
EXCHANGE RATE: Price at which one country’s currency can be converted into another’s. The exchange rate between the U.S. dollar and the British pound is different from the rate between the dollar and the Euro, for example. A wide range of factors influences exchange rates, which generally change slightly each trading day. Some rates are fixed by agreement.
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC): Federal aency established in 1933 that guarantess (within limits) funds on depositS in member banks and thrift institutions and performs other functions such as making loans to or buying assets from member institutions to facilitate mergers or prevent failures. In 1989, Congress passed savings and loan association bailout legislation that reorganized FDIC into two insurance units: the Bank Insurance Fund (BIF) continued the traditional FDIC functions with respect to banking institutions and the Savings Association Insurance Fund (SAIF) insured thrift institution deposits, replacing the Federal Savings and Loan Insurance Corporation (FSLIC), which ceased to exist. In 2005, Congress passed the FDI Reform Act merging the SAIF and BIF into one insurance fund called the Deposit Insurance Fund (DIF). The same law also raised the federal deposit insurance level from $100,000 to $250,000 on retirement accounts and gave the FDIC the option to increase insurance ceilings on regular bank accounts from $100,000 by $10,000 a year, based on inflation, every five years thereafter starting April 1, 2010.
FEDERAL HOME LOAN BANK SYSTEM: System supplying credit reserves for savings and loans, cooperative banks, and other mortgage lenders in a manner similar to the Federal Reserve’s role with commercial banks. The Federal Home Loan Bank System is made up of 12 regional Federal Home Loan Banks. It raises money by issuing notes and bonds and lends money to savings and loans and other mortgage lenders based on the amount of collateral the institution can provide. The system was established in 1932 after a massive wave of bank failures. In 1989, Congress passed savings and loan bailout legislation revamping the regulatory structure of the industry. The Federal Home Loan Sns creditcard contact Board was dismantled and replaced with the Federal Housing Finance Board, which now oversees the home loan bank system. The Financial Services Modernization Act of 1999 expanded the collateral that member banks could use to obtain an advance. In addition to traditional mortgage loans, banks can now put up rural, agricultural, and small business loans.
FEDERAL HOUSING FINANCE BOARD (FHFB): U.S. government agency created by Congress in 1989 to assume oversight of the Federal Home Loan Bank System from the dismantled Federal Home Loan Bank Board.
FEDERAL OPEN-MARKET COMMITTEE (FOMC): Committee that sets interest rate and credit policies for the Federal Reserve System, the United States’ central bank. The FOMC has 12 members. Seven are the members of the Federal Reserve Board, appointed by the president of the United States. The other five are presidents of the 12 regional Federal Reserve banks. Of the five, four are picked on a rotating basis; the other is the president of the Federal Reserve Bank of New York, who is a permanent member. The Committee decides whether to increase or decrease interest rates through open-market operation of buying or selling government securities. The Committee’s decisions are closely watched and interpreted by economists and stock and bond market analysts, who try to predict whether the Fed is seeking to tighten credit to reduce inflation or to loosen credit to stimulate the economy.
FEDERAL RESERVE BANK: One of the 12 banks that, with their branches, make up the Federal Reserve System. These banks are located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. The role of each Federal Reserve Bank is to monitor the commercial and savings banks in its region to ensure that they follow Federal Reserve Board regulations and to provide those banks with access to emergency funds from the discount window. The reserve banks act as depositories for member banks in their regions, providing money transfer and other services. Each of the banks is owned by the member banks in its district.
FEDERAL RESERVE BOARD (FRB): Governing board of the Federal Reserve System. Its seven members are appointed by the President of the United States, subject to Senate confirmation, and serve 14-year terms. The Board establishes Federal Reserve System policies on such key matters as reserve requirements and other bank regulations, sets the discount rate, tightens or loosens the availablility of credit in the economy, and regulates the purchase of securities on margin.
FEDERAL RESERVE SYSTEM: System established by the Federal Reserve Act of 1913 to regulate the U.S. monetary and banking system. The Federal Reserve System (the Fed) is comprised of 12 regional Federal Reserve Banks, their 24 branches, and all national and state banks that are part of the system. National banks are stockholders of the Federal Reserve Bank in their region. The Federal Reserve System’s main functions are to regulate the national money supply, set reserve requirements for member banks, supervise the printing of currency at the mint, act as clearinghouse for the transfer of funds throughout the banking system, and examine member banks to make sure they meet various Federal Reserve regulations. Although the members of the system’s governing board are appointed by the President of the United States and confirmed by the Senate, the Federal Reserve System is considered an independent entity, which is supposed to make its decisions free of political bank of america battlefield blvd chesapeake. Governors are appointed for terms of 14 years, which further assures their independence.
FIXED EXCHANGE RATE: Set rate of exchange between the currencies of countries. At the Bretton Woods international monetary conference in 1944, a system of fixed exchange rates was set up, which existed until the early 1970s, when a floating exchange rate system was adopted.
FLOATING EXCHANGE RATE: Movement of a foreign currency exchange rate in response to changes in the market forces of supply and demand; also known as flexible exchange rate. Currencies strengthen or weaken based on a nation’s reserves of hard currency and gold, its international trade balance, its rate of inflation and interest rates, and the general strength of its economy. Nations generally do not want their currency to be too strong, because this makes the country’s goods too expensive for foreigners to buy. A weak currency, on the other hand, may signify economic instability if it has been caused by high inflation or a weak economy. The opposite of the floating exchange rate is the fixed exchange rate system.
FOREIGN EXCHANGE: Instruments employed in making payments between countries – paper currency, notes, checks, bills of exchange, and electronic notifications of international debits and credits.
FOREX MARKET: The exchanges and electronic trading systems comprising the market for foreign exchange, including the spot market for currencies, foreign currency futures and options, and forward exchange transactions. Participants include central banks, commercial and investment banks, hedge funds, international corporations, and individual traders. The Forex operates 24 hours a day, five days a week.
MEMBER BANK: Bank that is a member of the Federal Reserve System, including all nationally chartered banks and any state-chartered banks that apply for membership and are accepted. Member banks are required to purchase stock in the Federal Reserve Bank in their districts. Half of that investment is carried as an asset of the member bank. The other half is callable by the Fed at any time. Member banks are also required to maintain a percentage of their deposits as reserves in the form of currency in their vaults and balances on deposit at the Fed district banks. These reserve balances make possible a range of money transfer and other services using the Fed Wire system to connect banks in different parts of the country.
MONETARY INDICATORS: Economic gauges of the effects of monetary policy, such as various measures of credit market conditions, U.S. Treasury bill rates, and the Dow Jones Industrial Average (of common stocks).
MONETARY POLICY:Federal Reserve Board decisions on the money supply. To make the economy grow faster, the Fed can supply more credit to the banking system through its open market operations, or it ferry from edmonds to kingston wa lower the member bank reserve requirement or lower the discount rate – which is what banks pay to borrow additional reserves from the Fed. If, on the other hand, the economy is growing too fast and inflation is an increasing problem, the Fed might withdraw money from the banking system, raise the reserve requirement, or raise the discount rate, thereby putting a brake on economic growth. Other instruments of monetary policy range from selective credit controls to simple but often highly effective moral suasion. Monetary policy differs from fiscal policy, which is carried out through government spending and taxation. Both seek to control the level of economic activity as measured by such factors as industrial production, employment, and prices.
MONEY: Legal tender as defined by a government and consisting of currency and coin. In a more general sense, money is synonymous with cash, which includes negotiable instruments, such as checks, based on bank balances.
MONEY SUPPLY: Total stock of money in the economy, consisting primarily of (1) currency in circulation and (2) deposits in savings and checking accounts. Too much money in relation to the output of goods tends to push interest rates down and push prices and inflation up; too little money tends to push interest rates up, lower prices and output, and cause unemployment and idle plant capacity. The bulk of money is in demand deposits with commercial banks, which are regulated by the Federal Reserve Board. It manages the money supply by raising or lowering the reserves that banks are required to maintain and the discount rate at which they can borrow from the Fed, as well as by its open market operations – trading government securities to take money out of the system or put it in. Changes in the financial system, particularly since banking deregulation in the 1980s, have caused controversy among economists as to what really constitutes the money supply at a given time. In response to this, a more comprehensive analysis and breakdown of money was developed. Essentially, the varous forms of money are now grouped into two broad divisions: M-1, M-2, and M-3, representing money and near money; and L, representing longer-term liquid funds.
- M-1: Currency in circulation; commercial bank demand deposits; NOW and ATS (automatic transfer from savings) accounts; credit union share drafts; mutual savings bank demand deposits; nonbank travelers checks.
- M-2: M-1; overnight repurchase agreements issued by commercial banks; overnight Eurodollars; savings accounts; time deposits under $100,000; money market mutual fund shares.
- M-3: M-2; time deposits over $100,000; term repurchase agreements.
- L: M-3 and other liquid assets such as: Treasury bills; savings bonds, commercial paper, bankers’ acceptances, Eurodollar holdings of United States residents (nonbank).
MUTUAL SAVINGS BANK: Savings bank organized under state charter for the ownership and benefit of its depositors. A local board of trustees makes major decisions as fiduciaries, independently of the legal owners. Traditionally, income is distributed to depositors after expenses are deducted and reserve funds are set aside as required. In recent times, many mutual savings banks have begun to issue stock and offer consumer services such as credit cards and checking accounts, as well as commercial services such as corporate checking accounts and commercial real estate loans.
NATIONAL BANK: Internationally, synonymous with central bank. In the United States, a nationally chartered bank.
OFFICE OF THRIFT SUPERVISION (OTS): Agency of the U.S. Treasury Department created by the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), the bailout bill enacted to assist depositors that became law on August 9, 1989. The OTS replaced the disbanded Federal Home Loan Bank Board and assumed responsibility for the nation’s savings and loan industry. The legislation empowered OTS to institute new regulations, charter new federal savings and loan associations and federal savings banks, and supervise all savings institutions and their holding companies insured by the Savings Association Insurance Fund (SAIF).
OPEN-MARKET OPERATIONS: Activities by which the Securities Department of the Federal Reserve Bank of New York – popularly called the DESK – carries out instructions of the Federal Open Market Committee designed to regulate the money supply. Such operations involve the purchase and sale of government securities, which effectively expands or contracts funds in the banking system. This, in turn, alters bank reserves, causing a multiplier effect on the supply of credit and, therefore, on economic activity generally. Open-market operations represent one of three basic ways the Federal Reserve implements monetary policy, the others being changes in the member bank reserve requirements and raising or lowering the discount rate charged to banks borrowing from the Fed to maintain reserves.
RESERVE REQUIREMENTS: Federal Reserve System rule mandating the financial assets that member banks must keep in the form of cash and other liquid assets as a percentage of demand deposits and time deposits. This money must be in the bank’s own vaults or on deposit with the nearest regionaL Federal Reserve Bank. Reserve requirements, set by the Federal home loan bank act great depression Board of Governors, are one of the key tools in deciding how much money banks can lend, thus setting the pace at which the nation’s money supply and economy grow. The higher the reserve requirement, the tighter the money – and therefore the slower the economic growth.
SAVINGS & LOAN INSTITUTION: Depository financial institution, federally or state chartered, that obtains the bulk of its deposits from consumers and holds the majority of its assets as home mortgage loans. A few such specialized institutions were organized in the 19th century under state charters but with minimal regulation. Reacting to the crisis in the banking and home building industries precipitated by the Great Depression, Congress in 1932 passed the Federal Home Loan Bank Act, establishing the Federal Home Loan Bank System to supplement the lending resources of state-chartered savings and loans (S&Ls). The Home Owners’ Loan Act of 1933 created a system for ubank customer service hours federal chartering of S&Ls under the supervision of the Federal Home Loan Bank Board. Deposits in federal S&Ls were insured with the formation of the Federal Savings and Loan Insurance Corporation in 1934. A second wave of restructuring occurred in the 1980s. The Depository Institutions Deregulation and Monetary Control Act of 1980 set a six-year timetable for the removal of interest rate ceilings, including the S&Ls’ quarter-point rate advantage over the commercial bank limit amazon delivery careers personal savings accounts. The act also allowed S&Ls limited entry into some markets previously open only to commercial banks (commercial lending, nonmortgage consumer lending, trust services) and, in addition, permitted mutual associations to issue investment certificates. In actual effect, interest rate parity was achieved by the end of 1982. The Garn-St Germain Depository Institutions Act of 1982 accelerated the pace of deregulation and gave the Federal Home Loan Bank Board wide latitude in shoring up the capital positions of S&Ls weakened by the impact of record-high interest rates on portfolios of old, fixed-rate mortgage loans. The 1982 act also encouraged the formation of stock savings and loans or the conversion of existing mutual (depositor-owned) associations to the stock form, which gave the associations another way to tap the capital markets and thereby to bolster their net worth. In 1989, responding to a massive wave of insolvencies caused by mismanagement, corruption, and economic factors, Congress passed the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) that revamped the regulatory structure of the industry under a newly created agency, the Office of Thrift Supervision (OTS). Disbanding the Federal Savings and Loan Insurance Corporation (FSLIC), it created the Savings Association Insurance Fund (SAIF), now the Deposit Insurance Fund (DIF), under the administration of the Federal Deposit Insurance Corporation (FDIC). It also created the Resolution Trust Corporation (RTC) and Resolution Funding Corporation (REFCORP) to deal with insolvent institutions and scheduled the consolidation of their activites with SAIF after 1996. The Federal Home Loan Bank Board was replaced by the Federal Housing Finance Board (FHFB), which now oversees the Federal Home Loan Bank System.
SAVINGS ASSOCIATION INSURANCE FUND (SAIF): U.S. government entity created by Congress in 1989 as part of its savings and loan association bailout bill to replace the Federal Savings and Loan Insurance Corporation (FSLIC) as the provider of deposit insurance for thrift institutions. SAIF was administered by the Federal Deposit Insurance Corporation (FDIC) separately from its bank insurance program, called the Bank Insurance Fund (BIF). In 2005, Congress passed legislation merging the SAIF and BIF into one insurance fund called the Deposit Insurance Fund (DIF). The same law also raised the federal deposit insurance level from federal home loan bank act great depression to $250,000 on retirement accounts and gave the FDIC the option to increase insurance ceilings on regular bank accounts from $100,000 by $10,000 a year, based on inflation, every five years thereafter starting April 1, 2010.
SAVINGS BANK: Depository financial institution that primarily accepts consumer deposits and makes home mortgage loans. Historically, savings banks were of the mutual (depositor-owned) form and chartered in only 16 states; the majority of savings banks were located in the New England states, New York, and New Jersey. Prior to the passage of the Garn-St Germain Depository Institutions Act of 1982, state-chartered savings bank deposits were insured along with commercial bank deposits by the Federal Deposit Insurance Corporation (FDIC). The Garn-St Germain Act gave savings banks the options of a federal charter, mutual-to-stock conversion, supervision by the Federal Home Loan Bank Board, and insurance from the Federal Savings and Loan Insurance Corporation (FSLIC). In 1989, the Federal Home Loan Bank Board was replaced by the Federal Housing Finance Board (FHFB), and the FSLIC by the newly created Savings Association Insurance Fund (SAIF), a unit of the FDIC.
SPOT MARKET: Market in which commodities or currencies are sold for cash and delivered immediately. Trades that take place in futures contracts expiring in the current month are also called spot market trades. The spot market tends to be conducted over-the-counter – that is, through telephone trading – rather than on the floor of an organized commodity exchange.
THRIFT INSTITUTION: Organization formed primarily as a depository for consumer savings, the most common varieties of which are the savings and loan association and the savings bank. Traditionally, savings institutions have loaned most of their deposit funds in the residential mortgage market. Deregulation in the early 1980s expanded their range of depository services and allowed them to make commercial and consumer loans. Deregulation led to widespread abuse by savings and loans that used insured deposits to engage in speculative real estate lending. This resulted in the Office of Thrift Supervision (OTS), established in 1989 by the Financial Institutions Reform and Recovery Act (FIRREA), popularly known as the “bailout bill.” Credit unions are sometimes included in the thrift institution category, since their principal source of deposits is also personal savings, though they have traditionally made small consumer loans, not mortgage loans.
TIME DEPOSIT: Savings account or certificate of deposit held in a financial institution for a fixed term or with the understanding that the depositor can withdraw only by giving notice. While a bank is authorized to require 30 days’ notice of withdrawal from savings accounts, passbook accounts are generally regarded as readily available funds. Certificates of deposit, on the other hand, are issued for a specified term of 30 days or more, and provide penalties for early withdrawal. Financial institutions are free to negotiate any maturity term a customer federal home loan bank act great depression desire on a time deposit fifth third bank mortgage certificate, as long as the term is at least 30 days, and to pay interest rates as high or low as the market will bear.
Federal Home Loan Bank Act
|Long title||An Act to create Federal Home Loan Banks, to provide for the supervision thereof, and for other purposes.|
|Nicknames||Federal Home Loan Bank Act of 1932|
|Enacted by||the 72nd United States Congress|
|Effective||July 22, 1932|
|Statutes at Large||47 Stat. 725|
|Titles amended||12 U.S.C.: Banks and Banking|
|U.S.C. sections created||12 U.S.C. ch. 11 § 1421 et seq.|
The Federal Home Loan Bank Act, Pub.L. 72–304, 47 Stat. 725, enacted July 22, 1932, is a United States federal law passed under President Herbert Hoover in order to lower the cost of home ownership. It established the Federal Home Loan Bank Board to charter and supervise federal savings and loan institutions. It also created the Federal Home Loan Banks which lend to building and loan associations, cooperative banks, homestead associations, insurance companies, savings banks, community development financial institutions, and insured depository institutions in order to finance home mortgages.
The act was notably amended by Financial Institutions Reform, Recovery and Enforcement Act of 1989, which transferred regulation of thrifts to the Office of Thrift Supervision.
On November 21, 2013, Rep. Steve Stivers introduced the bill To amend the Federal Home Loan Bank Act to authorize privately insured credit unions to become members of a Federal home loan bank (H.R. 3584; 113th Congress) into the United States House of Representatives. The bill would amend the Federal Home Loan Bank Act to treat certain privately insured credit unions as insured depository institutions find sprint account number on phone purposes of determining eligibility for membership in a federal home loan bank. The bill was scheduled to be voted on under a suspension of the rules on May 6, 2014.
The Repeal of the Glass‐Steagall Act: Myth and Reality
It is fair to say that no one else sees it in quite such simple terms. The final Volcker Rule, as published in the Federal Register on January 31, 2014, ran to 541 pages.72 The rule was also accompanied by an appendix providing a further, long explanatory commentary. In addition, regulatory agencies issued hundreds of pages of supplemental guidance.
The Volcker Rule can be seen as a kind of reinstatement of Glass‐Steagall, but it is an unnecessary one for two reasons. First, and as noted above, the GLBA already prevents commercial banks from underwriting and dealing in most securities — subject to a few exceptions, such as U.S. government securities. The Volcker Rule is in some ways more restrictive, since it prohibits banks from trading anything except treasuries and agencies on their own account. That rules out foreign government bonds, as well as state and local bonds. The market for those securities will likely become less liquid as a result. Nevertheless, the Volcker Rule still allows commercial banks to hedge, underwrite, and make markets so long as it is not for their own account. Second, the Volcker Rule also appears to allow BHCs and their nonbank affiliates to trade only for their customers, for the purpose of market‐making, or for their own hedging transactions. This limitation is despite the fact that only commercial banks have access to either federally insured deposits or the Federal Reserve’s discount window.
Ultimately, the Volcker Rule is both irrelevant and highly likely to prove unworkable in practice.
The tragedy is that so much time and effort has been spent missing the point. More recent analyses of the causes of the Great Depression and the effect of the 1929 stock market crash suggest that bank failures then were due to the fragile nature of the banking system at the time (itself a product of regulations prohibiting branch banking), the persistence of regional crop failures, the decline in real estate values, and a general economic depression that was badly handled by policymakers (chief among them the Federal Reserve, which let the U.S. money supply collapse by a third).73 Glass‐Steagall could not have prevented the Depression had it been in force earlier, and it did little to address its fundamental causes subsequently.
The effect of Glass‐Steagall’s 1999 “repeal” has also been exaggerated. First, the restrictions contained in Glass‐Steagall were always subject to some exceptions; second, those exceptions had already been enlarged by regulatory and judicial decisions over the course of several decades, well before the GLBA was passed; and third, the GLBA only repealed some elements of Glass‐Steagall. The general prohibition on banks underwriting or dealing in securities remained intact.
In any case, the 2008 financial crisis had precious little to do with Glass‐Steagall, one way or the other. It was caused primarily by bad lending policies, which in turn led to the growth of the subprime market to an extent that neither the lawmakers nor regulatory authorities recognized at the time. The commercial banks and parent holding companies that failed — or had to be sold to other viable financial institutions — did so because underwriting standards were abandoned. Yes, these banks acquired and held large amounts of mortgage‐backed securities, which pooled subprime and other poor quality loans. But even under Glass‐Steagall, banks were allowed to buy and sell MBS because these were simply regarded as loans in a securitized form.
Yet by focusing the public’s anger on “greed,” “overpaid bankers,” and so‐called “casino banking,” politicians have been able to divert attention from the ultimate cause of the financial crisis, namely their belief that affordable housing can be provided by encouraging — or even obliging — banks to advance mortgages to homebuyers with low to very low incomes, and requiring government‐sponsored enterprises to purchase an ever‐increasing proportion of such loans from lenders. If politicians continue to believe that republic bank trinidad hours housing can only be provided in that way and act accordingly, no one need look any further for the causes of the next financial crisis.
1. Barack Obama, “Renewing the American Economy,” speech given at Cooper Union (March 27, 2008).
2. Elizabeth Warren’s statement in presenting S.1709 on July 7, 2015. The bill takes account of market changes by limiting the business of national banks to receiving deposits, advancing personal loans, discounting and negotiating evidences of debt, engaging in coin and bullion exchange, and investing in securities. No investment is allowed in structured or synthetic products — that is, financial instruments in which the return is calculated on the value of, or by reference to, the performance of a security, commodity, swap, or other asset, or an entity, or any index or basket composed of such items.
3. Zach Carter, “Elizabeth Warren Has Basically Had It with Paul Krugman’s Big Bank Nonsense,” Huffington Post, April 13, 2016, http://www.huffingtonpost.com/entry/elizabeth-warren-big-banks_us_570ea….
4. Robert Kuttner, “Alarming Parallels between 1929 and 2007,” testimony before the House Financial Services Committee, October 2, 2007.
5. Joseph E. Stiglitz, “Capital Fools,” Vanity Fair, January 2009, http://www.vanityfair.com/news/2009/01/stiglitz200901.
6. Andrew Ross Sorkin, “Reinstating an Old Rule Is Not a Cure for Crisis,” Dealbook, New York Times, May 21, 2012, http://dealbook.nytimes.com/2012/05/21/reinstating-an-old-rule-is-not‑a….
7. Carter Glass, “Operation of the National and Federal Reserve Banking Systems,” Report to accompany S.1631, May 15, 1933, https://fraser.stlouisfed.org/scribd/?title_id=993&filepath=/docs/histo….
8. Minutes of Special Meeting of the Federal Advisory Council, Washington (March 28–29, 1932), p. 4. https://fraser.stlouisfed.org/docs/historical/nara/fac_minutes/fac_1932….
9. Ibid., p. 9,
10. “Tenth Annual Report of the Federal Reserve Board” (Washington: Government Printing Office, 1942), p. 34.
11. See, for example, Milton Friedman and Anna J. Schwartz, A Monetary History of the Current bank login States, 1867–1960 (Princeton, NJ: Princeton University Press, 1963); Lloyd W. Mints, A History of Banking Theory in Great Britain and the United States (Chicago: University of Chicago Press, 1945); and Ben S. Bernanke, “Money, Gold, and the Great Depression,” H. Parker Willis Lecture in Economic Policy, Washington and Lee University, Lexington, VA, March 2, 2004.
12. Eugene N. White, “Before the Glass‐Steagall Act: An Analysis of the Investment Banking Activities of National Banks,” Explorations in Economic History 23, no. 1 (1986): 40ff.
13. See Charles W. Calomiris, U.S. Bank Deregulation in Historical Perspective (New York: Cambridge University Press, 2000), p. 57; and Federal Reserve Bulletin 25, no. 9 (September 1939): 730.
14. See, for example, Gary Richardson, and William Troost, “Monetary Intervention Mitigated Banking Panics during the Great Depression: Quasi‐Experimental Evidence from the Federal Reserve District Border, 1929 to 1933.” Journal of Political Economy 117, no. 6 (December 2009): 1031–1073.
15. Eugene N. White, “Before the Glass‐Steagall Act: An Analysis of the Investment Banking Activities of National Banks,” Explorations in Economic History 23, no. 1 (1986): 51.
16. Ibid., p. 35.
17. See David L. Mengle, “The Case for Interstate Branch Banking,” Federal Reserve Bank of Richmond Economic Review (November/December 1990). The author relies on figures from U.S. Department of the Treasury, Geographical Restrictions on Commercial Banking in the United States (Washington: Government Printing Office, 1981); can you send money on zelle with a credit card well as Banking Expansion Reporter, August 6, 1990.
18. Charles W. Calomiris and Stephen H. Haber, “Interest Groups and the Glass‐Steagall Act,” CESifo DICE Report 11, no. 4 (Winter 2013): 16.
19. R. Federal home loan bank act great depression Gilbert, “Requiem for Regulation Q: What It Did and Why It Passed Away,” Federal Reserve Bank of St. LouisReview chase bank holiday hours of operation 1986): 34.
20. The OCC’s Regulation 9 applies to national banks and allows them to open and operate trust departments in‐house, to function as fiduciaries, and to manage and administer investment‐related activities, such as registering stocks, bonds, and other securities.
21. Investment Co. Inst. v. Camp, 401 U.S. 617, 626–27 (1971).
22. Ibid., p. 682.
23. See ibid., p. 631.
24. Securities Activities of Commercial Banks: Hearingsbefore the Subcommittee on Securities of the Senate Committee on Banking, Housing, and Urban Affairs, 94th Cong. 193 (1975).
25. The Federal Reserve Board’s Regulation Y applies to the corporate practices of BHCs and, to a certain extent, state‐member banks. The regulation sets out the transactions for which a BHC must seek the Federal Reserve’s approval.
26. Bank Holding Companies and Federal home loan bank act great depression in Bank Control (Regulation Y), 12 C.F.R. 225 (1977).
27. Office of the Comptroller federal home loan bank act great depression Currency (OCC) Interpretive Letter no. 494, December 20, 1989 (reprinted in 1989–1990 Transfer Binder).
28. OCC Interpretive Letter No. 684, August 4, 1995 (reprinted in 1995–1996 Transfer Binder).
29. “Matched Swaps Letter,” OCC No‐Objection Letter No. 87–5, July 20, 1987, (reprinted in 1988–1989 Transfer Binder).
30. OCC No‐Objection Letter No. 90–1, February 16, 1990 (reprinted in 1989–1990 Transfer Binder).
31. OCC Interpretive Letter No. 652, September 13, 1994 (reprinted in 1994 Transfer Binder).
32. OCC Interpretive Letter No. 652, September 13, 1994 (reprinted in 1994 Transfer Binder), n. 124.
33. It should be noted that although the OCC’s various letters placed little emphasis on the complex risks involved in derivatives, those risks were spelled out more fully in the 1997 Derivatives Handbook. This document was for the use of the OCC’s own bank examiners, and alerted them to the variety and complexity of risks associated with derivative transactions.
34. OCC Interpretive Letter No. 380, December 29, 1986 (reprinted in 1988–1989 Transfer Binder).
35. OCC Interpretive Letter No. 577, April 6, 1992 (reprinted in 1991–1992 Transfer Binder).
36. OCC Interpretive Letter No. 386, June 19, 1987 (reprinted in 1988–1989 Transfer Binder).
37. Investment CompanyInstitute v. Clarke, 630 F. Supp 593 (D. Conn. 1986).
38. Federal Reserve Bulletin 73, no. 2 (February 1987): 148, fn. 43.
39. OCC Interpretive Letter No. 380, December 29, 1986 (reprinted in 1988–1989 Transfer Binder).
40. “Eligibility of Securities for Purchase, Dealing in Underwriting and Holding by National Banks: Rulings Issued by the Comptroller,” 47 Federal Register 18323 (April 29, 1982).
41. Federal Reserve Bulletin 64, no. 3 (March 1978): 222 (reference to the Federal Reserve’s proposed rulemaking, as published in 43 Federal Register 5382 [February 8, 1978]).
42. Securities Industry Association v. Board of Governors, 839 F.2d 51 (2nd Cir. 1988), citing Federal Reserve Bulletin 73, no. 6: 485–86 (June 1987).
43. 61 Federal Register 68750 (December 30, 1996).
44. Ibid., pp. 68750–755.
45. “Revenue Limit on Bank‐Ineligible Activities of Subsidiaries of Bank Holding Companies Engaged in Underwriting and Dealing in Securities,” Federal Reserve System Docket no. R‑0841.
47. Section 20 reads as follows: “No member bank shall be affiliated in any manner … with any corporation, association, business, trust or similar organization engaged principally in the issue, flotation, underwriting, public sale or distribution at wholesale or at retail or through syndicate participation in stocks, bonds or debentures, notes or other securities.”
48. Section 32 states that “no officer or director of any member bank shall be an officer, director or manager of any corporation, partnership, or unincorporated association engaged primarily in the business of purchasing, selling or negotiating securities and no member bank shall federal home loan bank act great depression the functions of a correspondent bank on behalf of any such individual, partnership, corporation or unincorporated association and no such individual, partnership, corporation, or unincorporated association shall perform the functions or a correspondent for any member bank or hold on deposit any funds on behalf of any member bank.”
49. The Bank Holding Act of 1956 allowed BHCs to engage directly in, establish, or acquire subsidiaries that engage in nonbanking activities deemed by the Federal Reserve to be “closely related” to banking, such as mortgage banking, consumer and commercial finance, leasing, real estate appraisal, and management consulting.
50. It would be difficult for any director, senior manager or employee of the bank to breach these restrictions. The penalties under 12. U.S.C. § 1818 are onerous and apply to any Institute Affiliated Part (IAP), as well as independent contractors such as attorneys. The civil money fines are heavy (a maximum of $1million per day while the violation continues); other penalties include temporary or permanent prohibition on participation in the industry. It is, however, difficult to find any instance when such penalties have been imposed.
51. Section 16 states that
The Great Depression of the late 1920s and early 1930s delivered a gut punch to the average American. By 1933, a quarter of Americans were out of work, the national average income had slumped to less than half of what it had been a few years earlier and more than one million Americans faced foreclosure on their homes.
One of the multiple programs a newly-elected Franklin D. Roosevelt established to stimulate the economy offered home-buying aid for Americans—but only white Americans. The Federal Housing Administration, operated through the New Deal’s National Housing Act of 1934, promoted homeownership by providing federal backing of loans—guaranteeing mortgages. But from its inception, the FHA limited assistance to prospective white buyers.
“The FHA had a manual which explicitly said that it was risky to make mortgage loans in predominantly Black areas,” explains Richard D. Kahlenberg, a senior fellow at The Century Foundation who has written about housing segregation in the United States. “And so as a result, the federal subsidy for home ownership went almost entirely to white people.”
Restrictions in Loans Draw Lines Between Neighborhoods
The assistance program not only limited recipients to white Americans, it established and then reinforced housing allpoint atm deposit cash in the United States, effectively drawing lines between white and Black neighborhoods that would persist for generations.
For example, in 1940, the FHA denied insurance to a private builder in Detroit because he intended to construct a housing development near a predominantly Black neighborhood. The FHA only wanted to insure houses in white neighborhoods.
The builder responded by constructing a half-mile long, six-foot high concrete wall between the Black neighborhood and where he planned to build, recounts historian Richard Rothstein in The Color of Law: A Forgotten History of How Our Government Segregated America. Assured that this wall would keep the neighborhoods racially segregated, the FHA then agreed to insure the houses.
A ‘New Deal’—for White Americans
The FHA not only focused its assistance on prospective white home owners, its policies actively sought to insure mortgages in white neighborhoods that would remain white.
“If a [Black] family could afford to buy into a white neighborhood without government help, the FHA would refuse to insure future mortgages even to whites in that neighborhood, because it was now threatened with integration,” Rothstein writes in The American Prospect.
Many housing deeds stated outright that a house could only be sold to white people, explaining this was in accordance with FHA requirements. William Levitt, who developed the Levittown suburban communities for returning World War II veterans, complied with the FHA by only selling to white veterans and creating deeds that prohibited them from reselling their homes to Black Americans.
READ MORE: How the GI Bill's Promise Was Denied to a Million Black WWII Veterans
Neighborhoods Separated by Walls, Highways
Like the Detroit builder, developers also tried to make their housing projects seem “less risky” by using barriers to separate them from predominantly Back neighborhoods. One common barrier, Kahlenberg says, became highways, which still separate many predominantly white and predominantly Black neighborhoods today.
In addition to the FHA’s discriminatory practices, federal housing projects from the 1930s onward helped keep Black Americans in neighborhoods with fewer education and job opportunities than white neighborhoods.
“The existing patterns of segregation were carefully and deliberately engineered—socially engineered—by the government in the first place,” says Kahlenberg.
Redlining Becomes a Lasting Legacy
The Fair Housing Act of 1968 sought to end these discriminatory practices, but didn’t completely end federal redlining—the denial of services like loans based on race—or address the negative effects that decades of discrimination and segregation had already had on Black Americans.
The term inmate calling tarrant county originates with actual red lines on maps that identified predominantly-Black neighborhoods as “hazardous.” Starting in the 1930s, the government-sponsored Home Owners’ Loan Corporation and the Federal Home Loan Bank Board used these maps to deny lending and investment services to Black Americans.
This lack of investment had a profound, lasting impact on Black neighborhoods, says Halley Potter, a senior fellow at The Century Foundation. “We see the legacy today when you look at maps and housing values and demographic patterns in our cities."