Which law allowed the federal government to inspect and reopen stable banks to restore confidence?

• A. Glass-Steagall Act
• B. Banking Act of 1933
• C. Emergency Banking Act
• D. Fisher Act

Answer: (C)

When banks were collapsing during the early 1930s, the quickest way to stabilize the system and restore public trust was to identify which banks were solvent and could safely reopen under federal supervision. The Emergency Banking Act gave the federal government authority to inspect banks, close those that were insolvent, and reopen the sound ones, often after a short bank holiday, to stop runs and reassure depositors. This immediate, targeted action directly addressed the crisis by restoring confidence in the banking system.

The Glass-Steagall aspects of later reforms separated commercial and investment banking and created the FDIC, but that was part of broader reform rather than the specific measure to inspect and reopen solvent banks. The Banking Act of 1933 encompasses broader banking reforms, not the immediate bank-inspection and reopening power. The Fisher Act isn’t the banking crisis legislation in question.