THE GREAT DEPRESSION VS. THE CREDIT CRISIS: CHAOS & OPPORTUNITIES RICK TOBIN
What was considered the worst financial year of “The Great Depression”, according to various financial analysts,
back between 1929 and 1939? ANSWER: 1932. Why? This was the year when the “Bank Runs” began at some
financial institutions when bank customers flooded their local bank branches in order to try to pull out all of their
remaining cash deposits.
Government Bailouts & Programs linked to The Great Depression
Herbert Hoover was the U.S. President back when The Great Depression first began. President Hoover did not
believe that the U.S. government should become too involved with trying to bail out the individual investors who
were struggling with their finances at the time, or with the near 25% national unemployment rates.
President Hoover was then followed by Franklin Roosevelt, and his various economic stimulus programs related
to his “New Deal” financial and economic strategies. Some of President Roosevelt’s “New Deal” programs
included these ones listed below:
1.)
FHA
(Federal
Administration):
government
Housing
This
agency
was
a
created
to
improve the housing crisis which
began during the many years of The
Great Depression. Back prior to the
introduction of FHA, 40% and 50%
down payments were required to
purchase a high percentage of owner
occupied homes. Subsequent to the
introduction of FHA, it became easier
to purchase homes with much lower
down payments and longer term
government-backed mortgage loans.
Interestingly, the most common funded residential loans for owner-occupied homes in the USA after the start of
“The Credit Crisis” continues to be FHA insured loans. As I have noted in past articles, upwards of 97% of all
funded residential loans in the USA over the past few years are alleged to be either government backed or
insured loans (i.e. FHA, VA, USDA, Fannie Mae, or Freddie Mac).