A comparison of federal financial remediation in the great depression and 2008–2009

Barrie A. Wigmore

doi:10.1108/S0363-3268(2010)0000027008

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Research in Economic History

ISSN: 0363-3268
Series editor(s): Susan Wolcott and Christopher Hanes

Subject Area: Economics

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A comparison of federal financial remediation in the great depression and 2008–2009

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Title:	A comparison of federal financial remediation in the great depression and 2008–2009
Author(s):	Barrie A. Wigmore
Volume:	27 Editor(s): Alexander J. Field ISBN: 978-1-84950-770-7 eISBN: 978-1-84950-771-4
Citation:	Barrie A. Wigmore (2010), A comparison of federal financial remediation in the great depression and 2008–2009, in Alexander J. Field (ed.) Research in Economic History (Research in Economic History, Volume 27), Emerald Group Publishing Limited, pp.255-303
DOI:	10.1108/S0363-3268(2010)0000027008 (Permanent URL)
Publisher:	Emerald Group Publishing Limited
Article type:	Chapter Item
Abstract:	Studies of Depression-era financial remediation have generally focused on federal deposit insurance and the provision of equity to banks by the Reconstruction Finance Corporation (RFC). This paper broadens the concept of financial remediation to include other programs – RFC lending, federal guarantees of farm and home mortgages, and the elimination of interest on demand deposits – and other intermediaries – savings and loans, mutual savings banks, and life insurance companies. The benefits of remediation or the amounts potentially at risk to the government in these programs are calculated annually and allocated to the various intermediaries. The slow remediation of real estate loans (two-thirds of these intermediaries' loans) needs further study with respect to the slow economic recovery. The paper compares Depression-era remediation with efforts during the 2008–2009 crisis. Today's remediation contrasts with the 1930s in its speed, magnitude relative to GDP or private sector nonfinancial debt, the share of remediation going to nonbanks, and emphasis on securities markets.