Answer:
C. the Great Depression.
Explanation:
The progressive development of the US financial sector has been repeatedly interrupted by crises that "indicated" the need to review the regulatory system that existed at that time: As a rule, crisis periods were preceded by periods of "regulatory deficits", which gradually weakened the legal framework for the functioning of financial institutions. Due to insufficiently rigid regulation, the financial sector, from an intermediary designed to serve the real production sector, has gradually turned into an independent, dominant segment of the US economy, not subordinate to the needs of the rest of the economy.
In the recent financial history of the United States, four episodes of tightening financial regulation aimed at eliminating imbalances arising in the financial sector can be distinguished: (1) the creation of the Federal Reserve System in 1913, (2) the adoption of system-forming laws in the financial sector in the 1930s, (3 ) increasing the requirements for the quality of financial reporting under the Sarbanes-Oxley Act 2002 and, finally, (4) the current reform of the US financial sector.
But, despite the emergence of the Fed, during the 1920s,, the US financial sector was characterized by a weak level of regulation, which provoked an increase in the level of risk in the banking system, the spread of speculative activity in the financial markets, manipulation of prices for financial assets and, as a result, bankruptcy in 1929 - 1933 over 9,000 banks (that is, more than a third of all banks that existed at the beginning of this period). In the 1930s, a number of laws were passed that defined the architecture of the US financial sector, which lasted until the early 1970s, and significantly tightened the regulation of the financial system, whose problems were recognized as the main cause of the 1929 crisis, which escalated into the Great Depression. In 1933, the Banking Act was passed and the Federal Deposit Insurance Corporation was established, which in 1935 received the status of a permanent government body. The Banking Act 1933 distinguished between investment banking and commercial banking operations, prohibiting commercial banks from initially offering, selling or distributing shares, bonds and other securities.
