SEPTEMBER 21, 2008 – FEDERAL RESERVE BOARD APPROVES APPLICATIONS OF INVESTMENT BANKING CORPORATIONS GOLDMAN SACHS AND MORGAN STANLEY TO BECOME BANK HOLDING COMPANIES

2008 – FEDERAL RESERVE BOARD APPROVES APPLICATIONS OF INVESTMENT BANKING CORPORATIONS GOLDMAN SACHS AND MORGAN STANLEY TO BECOME BANK HOLDING COMPANIES
Prior to the Great Depression, banking corporations could engage in both both “commercial” (traditional loans to individuals and businesses) and “investment” (stock and other forms of speculative activities) activities. Overzealous speculation by banks using depositors money was one of the causes of the Depression. This led to the 1933 Glass Steagall Act, separating commercial from investment activities. This law was overturned in 1999, leading to a breach in the “firewall” keeping the two types of financial activities separate. This grant application allowed two of the largest investment banks on the planet to gegin engaging in commercial banking activities.

SEPTEMBER 21, 1950 –FEDERAL DEPOSIT INSURANCE LIMIT RAISED

1950 –FEDERAL DEPOSIT INSURANCE LIMIT RAISED
The popular FDIC (Federal Deposit Insurance Corporation) limit is raised by Congress to $10,000. The FDIC insures commercial bank deposits against loss due to bankruptcy or default. It was created following the Great Depression when depositors lost their savings when banks collapsed due to speculative investments and/or depositor fears which led to a run on banks.