Bank Holidays, etc

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  • #18924

    What happened when FDR declared a bank holiday? Did it help prevent the market from falling worse than it would have otherwise done?

    #18925
    jmherbener
    Participant

    What stopped the bank runs and failures was deposit insurance, not FDR’s bank holiday.

    The Federal bank holiday lasted from March 6-13, 1933. On March 9, congress passed the Emergency Banking Act which, along with the Federal Reserve’s promise to provide liquidity to the banks, provided federal deposit insurance.

    https://www.newyorkfed.org/medialibrary/media/research/epr/09v15n1/0907silb.pdf

    Deposit insurance was formalized with the passage of the Banking Act in June 1933, which established the FDIC.

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