The Reason Why the Banking Act of 1933 Prohibited Commercial

question 96

Multiple Choice

The reason why the Banking Act of 1933 prohibited commercial banks from buying and selling corporate stocks and bonds was that

• A)there was concern that banks would be able to "take over" and monopolize these companies
• B)they would earn so much profit that they would stop lending to home buyers and small borrowers
• C)the instability inherent in the asset value of such a corporation would destabilize the banking system
• D)this would give large banks an unfair advantage over smaller banks
• E)the statement is incorrect; banks have always been allowed to purchase these stocks and bonds

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