American School of Business National Bank Act of 1863 Discussion Answer the attached questions in your words, along with it you can find a sample of answer
American School of Business National Bank Act of 1863 Discussion Answer the attached questions in your words, along with it you can find a sample of answers so you can understand it. 1- Do you think that before the National Bank Act of 1863 the prevailing conditions in
the banking industry fostered or hindered trade across states in the United States?
Answer: Two important conditions hindered trade across states before 1863: there was no
national currency, and banknotes issued by state banks could become worthless any day.
Given these two conditions, individuals interested in conducting their business across states
had to use mostly gold as a mean of payment, with all the inconveniences attached to that
particular type of money.
4- In light of the recent financial crisis of 20072009, do you think that the firewall
created by the Glass-Steagall Act of 1933 between commercial banking and the
securities industry proved to be a good thing or not?
Answers will vary. In general, one could say that the Glass Steagall Act was a good
choice in term of separating a risky industry (the securities industry) from traditional
commercial banking. In this sense, the Act of 1933 proved to be a good thing, since the
banking industry did not experience many crises during its life (it was repealed in 1999).
One could also argue that this Act put U.S. banks at a disadvantage against its foreign
competitors in terms of lost opportunities to make profits
15- How does the Dodd-Frank Act of 2010 compare to the Glass-Steagall Act of 1933?
One could argue that in some sense the spirit of the Dodd-Frank Act is similar
to the spirit that gave rise to the Glass-Steagall Act. Both Acts appeared as a response to serious
events in the financial market that resulted in financial system crises with negative effects on the
overall economy. Both Acts tried to impose limitations to either the type of business that some
institutions could engage in, or to increase regulations to avoid excessive risk taking.
Answer:
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