The wave of bank failures during the Great Depression prompted the government to establish federal deposit insurance to protect the public from bank failures.

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Despite the presence of the Federal Reserve System to serve as a "lender of last resort," many banks failed during the early years of the Great Depression. Congress responded by passing legislation to strengthen the U.S. banking system in 1933 and 1935. One of the most important results of this legislation was the establishment of federal deposit insurance.

The Wave of Bank Failures During the Great Depression Prompted