Question

question 18 of 20

how were the programs established by the glass-steagall act and the securities exchange act similar?

a. both programs encouraged wage earners to place their money into financial institutions.
b. both programs provided insurance on possible losses of money.
c. both programs were needed to restore confidence in the american stock market.
d. both programs regulated institutions where individuals placed their money.

Explanation:

Analyze the Glass-Steagall Act

Using the Glass-Steagall Act knowledge point

• Passed in 1933 to separate commercial and investment banking.
• Created the Federal Deposit Insurance Corporation (FDIC) to protect individual bank deposits.
• Regulated commercial banks where individuals deposited their money.

Analyze the Securities Exchange Act

Using the Securities Exchange Act knowledge point

• Passed in 1934 to regulate the secondary trading of financial assets (stocks, bonds).
• Created the Securities and Exchange Commission (SEC) to oversee market transactions and investment institutions.
• Regulated investment firms, brokerages, and stock exchanges where individuals invested/placed their money.

Compare the two programs

• Option A: Neither program focused on encouraging wage earners to deposit money; they focused on regulation and safety.
• Option B: Only the Glass-Steagall Act (via the FDIC) provided deposit insurance; the Securities Exchange Act did not insure stock market losses.
• Option C: Only the Securities Exchange Act directly targeted the stock market; Glass-Steagall targeted commercial banking.
• Option D: Both acts regulated the financial institutions (commercial banks and investment brokerages/exchanges) where individuals placed their money to restore stability.

Answer:

• A. Both programs encouraged wage earners to place their money into financial institutions.
• B. Both programs provided insurance on possible losses of money.
• C. Both programs were needed to restore confidence in the American stock market.
• D. Both programs regulated institutions where individuals placed their money. (Correct answer)