Final answer:
During the Progressive Era, unfair banking practices included selling assets at low prices and restricting credit, leading to widespread bank failures and public discontent. Legislation such as the Federal Reserve Act aimed to regulate the financial sector but full consumer protection, and federal insurance against bank failures didn't come until later. The populist anger and distrust in banks contributed to the push for more effective financial regulation.
Step-by-step explanation:
During the Progressive Era, banks often engaged in practices that were perceived as unfair to consumers. Amidst increasing economic turmoil, banks conditioned to sell assets at low prices and restricted credit. This resulted in them holding insufficient funds to meet depositor demands. With the failure of numerous banks, people lost their life savings, and public trust in the banking system deteriorated significantly. Efforts to assist banks, such as the Reconstruction Finance Corporation, were seen as aiding weak institutions, further eroding confidence.
Legislative responses to this unfair treatment included the Federal Reserve Act and the Clayton Anti-Trust Act, which aimed to prevent monopolies and regulate the financial sector to protect consumers and ensure economic stability. However, the full implementation of strict banking regulation and federal insurance against bank failures only materialized after the Progressive Era, particularly following the panic that helped trigger the Great Depression.
The lack of consumer protection and the visible economic disparity fueled populist anger and a distrust of the banking system, pushing Progressives to pursue more active government measures to stabilize the economy and regulate the financial industry. This era laid the groundwork for the significant banking reforms that would follow.