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SEC. Even before Roosevelt came to power, there was a widespread feeling that the crash of 1929 had been something other than an act of God, and the Senate Banking Committee set out to prove it. The hearings from 1932 to 1934 were a revelation. The banker J.P. Morgan, who was believed to be worth more than $100 million, testified that by fictitious sales of stock to his wife, he legally avoided paying any income taxes at all. National City Bank President Charles Mitchell admitted that the top officials of his bank had given themselves $2.4 million in interest-free loans to protect their margin accounts in National City's stocks. Of the $50 billion in new stocks issued during the 1920s, another congressional committee said, "fully half have proved to be worthless . . . fraudulent." And when Utilities King Samuel Insull carried thousands of investors into bankruptcy, he protested at the prospect of indictment: "What have I done that every banker and business magnate has not done in the course of business?"
What indeed? According to Roosevelt's Truth-in-Securities Act of 1933, every new stock issue had to be registered with the Federal Trade Commission and had to disclose "every important essential element" about what was being sold. The Securities Exchange Act of 1934 extended those rules to all stocks, demanded that every company's insiders disclose their holdings, authorized the Federal Reserve to set margin rates, and established a new Securities and Exchange Commission to regulate the market (its first chairman: Joseph P. Kennedy). Wall Street howled. "The exchange," said Harvard-educated, Morgan-trained Stock Exchange President Richard Whitney, who later spent three years in Sing Sing prison for embezzlement, "is a perfect institution."
FDIC. Among the saddest sights of the early Depression years were the lines of small depositors waiting for hours outside ruined banks in the hope of salvaging at least part of their savings. In 1932 a terrifying 1,456 banks collapsed. The Glass-Steagall Act of 1933 provided a federal guarantee of all deposits under $5,000. The American Bankers Association denounced the bill as "unsound, unscientific, unjust and dangerous," and even Roosevelt had his doubts, but the Federal Deposit Insurance Corp. cost little and soon cut bank failures by more than 90%.