Colorado State University Global Campus | The Great Recession | The Repeal of Glass-Steagall | | Kevin P. Dugan | 12/19/2012 |

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Dear Mr. Speaker, Right up until October 29, 1929, most investors and speculators, many of whom worked for private financial institutions, were riding a Bull Market, believing that Wall Street would continue to rise and see gains indefinitely. This lead many of these speculators and banks to engage in high risk investments that exposed not only their private holdings to increased risk but also those savings of individual citizens who had deposited their money with these institutions because they believed their money to be safe. On September 18, that all changed as the stock market crashed, causing a large percentage of Americans to lose much if not all of their savings and investments. During the years prior to the onset of the Great Depression, the market was on what seemed to be a constant uptick, with gains being realized daily in most cases. During these years, many private banks began investing in the securities market. The Free Dictionary (2012) states that, “Beginning in the 1900s, commercial banks established security affiliates that floated bond issues and underwrote corporate stock issues. (In underwriting, a bank guarantees to furnish a definite sum of money by a definite date to a business or government entity in return for an issue of bonds or stock” (para. 3). While loaning money to business for the issuance of stocks and bonds in the company seemed like a good financial investment since the market had been making considerable gains for years, doing so without oversight was a mistake. Many of these companies were bogus entities; therefore, the stock they issued was worthless. This meant that these financial institutions were holding stock that amounted to zero return. Due diligence