Money and Banking: Course Research Project #2
Up to 100 points available
Note: this is an Individual or Group Project (up to 3 classmates)
Financial Crisis Events and Effects on the Banking Industry
For this assignment I would like you to write a minimum 5-full page report (not including the cover and reference pages) discussing four specific major U.S. financial crisis events and the effects these had (and will have) on the banking industry. These events are:
(1) The Great Depression (1929);
(2) Savings and Loan Crisis (1980’s);
(3) The Great Recession (2007) and
(4) The COVID-19 Pandemic (2020).
I would like you to discuss the reasons, causes and the effect these events had on the banking industry. Note, the discussion is about the banking industry. Yes, you will be discussing consumers and businesses, but that is in regard to the BANKING INDUSTRY!
The Great Depression
“As the economic depression deepened in the early 30s banks began to fail at alarming rates. During the 20s, there was an average of 70 banks failing each year nationally. After the crash during the first 10 months of 1930, 744 banks failed – 10 times as many.” “Bank failures during the Great Depression were partly driven by fear, as panicked savers began withdrawing cash before expected bank failures. As more cash was taken out, banks had to stop lending and many called in loans. This drove borrowers to deplete their savings, which made the banks’ cash crisis worse.” New laws for the banking industry were implemented during and after the Great Depression what were those and the effects it had on the banking industry?
Savings and Loan Crisis
“The Savings and Loan Crisis was the most significant bank collapse since the Great Depression of 1929. By 1989, more than 1,000 of the nation’s savings and loans had failed. The crisis cost $160 billion. Taxpayers paid $132 billion, and the S&L industry paid the rest.” What laws were implemented that helped create this crisis? What laws were enacted during and after this crisis? What happened to the loans of S&L’s, how was the consumer affected?
The Great Recession
“The Great Recession of 2007 to 2009 was under way. It may feel as though the financial system hasn’t changed much in the decade since the downturn, but it has. The recession transformed investment banks and created a deep divide between banks that quickly remodeled their business and those that failed to move rapidly”. https://hbr.org/2017/10/how-the-great-recession-changed-banking#:~:text=The%20Great%20Recession%20of%202007,that%20failed%20to%20move%20rapidly.
The COVID-19 Pandemic
“Banks are quickly being drawn in to this crisis. Faced by such a sharp change in the economic outlook, banks, credit unions and other lenders in most countries need to brace themselves for widespread economic disruption and a recession, potentially a deep one. That will inevitably lead to loan losses. Things that seemed unthinkable a few months ago are no longer unthinkable.” What are potential current and long-term effects of the pandemic on the banking industry?https://pulse.11fs.com/research-reports/2020/03/how-the-coronavirus-pandemic-will-affect-banking
You must use the following format; if you do not, points will be deducted off your grade.
– The required Section Headings are as follows:
The Great Depression (1929) Discussion;
Savings and Loan Crisis (1980’s) Discussion;
The Great Recession (2007) Discussion
COVID-19 Pandemic (2020) Discussion
Your opinion (with support): Which event had the greatest impact on the banking industry?