What are the similarities between the Panic of 1907, the S&L crisis, and the crisis of 2008?
The Panic of 1907, the S&L crisis, and the crisis of 2008 all involved losses by financial institutions that were less regulated than banks. In the crises of 1907 and 2008, there was a widespread loss of confidence in the financial sector and collapse of credit markets. Like the crisis of 1907 and the S&L crisis, the crisis of 2008 exerted a powerful negative effect on the economy.
Question
Why did the creation of the Federal Reserve fail to prevent the bank runs of the Great Depression? What measures did stop the bank runs?
The creation of the Federal Reserve failed to prevent bank runs because it did not eradicate the fears of depositors that a bank collapse would cause them to lose their money. The bank run eventually stopped after federal deposit insurance was instituted and the public came to understand that their deposits were protected.