Is the Emergency Banking Act Still in Effect?

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Money is a funny societal construct in that people believe it has value therefore it does. Banking systems and stock markets can seem complex, but at the core of the commercial banking industry, it almost all comes down to faith. You believe all your money will be in your account when you go to access it, so what would happen if everyone tried to pull their funds out simultaneously?

Is the Emergency Banking Act Still in Effect? 

Yes, there are many features from the Emergency Banking Act of 1933 that the U.S. still employs today.

  • Federal Deposit Insurance Corporation (FDIC): Insuring bank accounts was a direct result of the Emergency Banking Act, thus giving the U.S. the FDIC. Today, bank accounts that are FDIC-insured are covered up to $250,000. Without this insurance, Americans would have much less faith in the banking system.
  • Executive power extension: In times of financial crisis the President can operate outside of the Federal Reserve and has regulatory authority over the nation’s banking system. In turn, the Federal Reserve can issue emergency currency backed by assets of a commercial bank.

Emergency Banking Relief Act Overview

After the financial devastation of the stock market crash of 1929, President Herbert Hoover began to draft a bill to pull the nation out of its financial spiral. A few years later, President Franklin D. Roosevelt signed the Emergency Banking Act of 1933.

The mission was to restore confidence in the federal government’s financial and banking system in the wake of the Great Depression. This closed the banks for a weeklong holiday which in turn halted all of the bank runs causing the banking crisis.

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After President Roosevelt reopened the banks, he addressed the nation and assured the people that their money was safe and things had improved for both the banking system and the stock market.

Final Take 

The bank failures of the Great Depression remain one of the hardest hits the U.S. has taken as a nation economically. The Emergency Banking Act of 1933 was the government’s legislative response which shored up the people’s confidence in the U.S. banking and financial system.

By just temporarily closing banks for a few days for inspection, the Emergency Banking Act halted bank runs, boosted the stock market and ultimately restored the financial faith in how money is valued and protected in the American economic society. In addition, it provided the banking system with the FDIC which still insures all bank accounts through most major American banks to this day.


Here are the answers to some of the most frequently asked questions regarding the Emergency Banking Relief Act.
  • Is the Emergency Banking Act still in effect?
    • Yes, there are many features from the Emergency Banking Act of 1933 that the U.S. still employs today such as FDIC-insured bank accounts. When it started, bank accounts were FDIC-insured up to $2,500, which now has expanded to cover accounts up to $250,000 today. It also granted executive power extension in times of financial crisis so the President can operate outside of the Federal Reserve to have regulatory authority over the nation's banking system.
  • What was FDR's fireside chat?
    • FDR famously addressed millions of Americans about recovery from the Great Depression, the promulgation of the Emergency Banking Act in response to the banking crisis, the 1936 recession, New Deal initiatives and the course of World War II. He did so less formally and with his trademark familiarity which led to the "fireside chat" moniker.
  • Is the Reconstruction Finance Corporation still around?
    • No, the Reconstruction Finance Corporation, or RFC, which essentially acted as a discount lending arm of the Federal Reserve Board, was dismantled under President Eisenhower's administration which actively sought to limit the government's involvement in the economy.
  • What was the most important result of the Emergency Banking Act?
    • One key feature of the Emergency Banking Act of 1933 was the creation of the Federal Deposit Insurance Corporation, or FDIC, which to this day covers your bank account to the total amount, typically up to $250,000. Most major banks in the United States are FDIC-insured.
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About the Author

Caitlyn Moorhead has written content for a variety of businesses and publications. After graduating from Central Michigan University cum laude, she moved to New York City where she wrote columns, articles and plays for several years before relocating to Austin, Texas in the fall of 2020.
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