The Bottom-Up Recovery: A New Deal in Banking and Public Finance (Chapter 3)
The Bottom-Up Recovery: A New Deal in Banking and Public Finance, pp. 51-85, S.D. Collins & G.S. Goldberg, eds., When Government Helped: Learning from the Successes and Failures of the New Deal, Oxford University Press, 2014
43 Pages Posted: 30 Oct 2014
Date Written: October 27, 2014
This chapter, “The Bottom-Up Recovery: A New Deal in Banking and Public Finance,” published in 2014 in an edited volume by Oxford University Press entitled, When Government Helped: Learning from the Successes and Failures of the New Deal, analyzes the federal government's responses to recurring banking and financial crises in the 1930s and 2008 to present. The Hoover administration’s response was criticized by Franklin Roosevelt as a "trickle down" approach, propping up big banks while ignoring the needs of ordinary citizens. As president, Roosevelt would use public banking institutions, including the Federal Reserve and the Reconstruction Finance Corporation (RFC), to build a "bottom up" recovery by steering credit and capital to Main Street. The responses of the administrations of George W. Bush and Barack Obama more closely resemble the trickle down approach of the Hoover administration. The Federal Reserve refused to extend support to small and moderate sized businesses, as it did during the New Deal, and there has been no serious attempt to create a public infrastructure bank modeled on the RFC. The result has been to increase concentrations of capital in banking and big businesses while the needs of ordinary Americans in the 21st century have been neglected.
Keywords: bank, reform, central banking, Federal Reserve, fiscal policy, banking, financial regulation, economic crisis, Roosevelt, Hoover, Obama, Bush, economic recovery, stimulus, bailout, public option, New Deal, Great Depression, public sector, public works, public finance, financial regulations
JEL Classification: B6, E5, E6, G18, G28, H5,
Suggested Citation: Suggested Citation