The history of Wall Street started over a century ago. Wall Street is the Primary financial district in USA and New York. It is a 8 block street located in lower Manhattan. Alot of major brokerages and investment institutions are located on Wall Street with the most well known being the New York Stock Exchange (NYSE). It has primarily been known for being the home of these businesses. The term Wall Street is now used as a collective term for the financial community ( mainly in America). It is considered as the financial mecha of the United States.
The history of wall street-the Buttonwood agreement
The Buttonwood agreement was signed under a Buttonwood tree in 1792. The agreement was made when 24 of the first and most prominent brokerages in the United States came together under one single agreement. The major outline of the agreement was the common commission based form of trading securities. War Bonds were Among the first securities that were traded along with banking stocks from some of the most prominent banks in America, at the time.
The agreement made Wall Street the most famous financial district in the World. The Buttonwood agreement eventually lead to the formation of The New York Stock and Exchange Board . The New York Stock Exchange is still located on 11 Wall Street, today. The NYSE came later in the year of 1817.
The agreement was named the Buttonwood agreement because the agreement occurred under a Buttonwood tree and was later revised and renamed The New York Stock and Exchange Board. They rented out space for the organization in several locations for trading securities. They found their current location at 11 Wall Street in 1865. The term Wall street is current synonymous for being a term used to describe the larger, global investment and financial community. Wall Street serves as a base of operations for many of the largest investment banks and brokerages in America.
How Wall Street works
The foreign exchange market, The stock market , commodities market, futures market, and bond market are all included on Wall Street. The securities market was originally created with the purpose of raising funds for companies to be profitable, grow, and create employment for the unemployed. Securities trading has become so profitable by itself that traders have been established for anything you can think of and many things that you could never imagine.
It all changed for Wall Street when the Glass Steagall Act was abolished in 1999. The abolition of the act allowed any bank to use depositors savings and invest in complicated securities which are called derivatives. The value of these investments were based upon different types of loans which included but were not limited to corporate bonds, mortgages and credit card debt. Derivatives were not a regulated form of securities, unlike stocks and bonds.
What did Wall Street do when the stock market crashed?
Lack of regulation and deregulation were the main reasons for the 2008 financial crisis. Mortgage backed securities was the name of the derivatives that were based on mortgages. All of these security types were traded on the secondary market until housing prices fell in 2006. All underlying mortgages started to default. There wasn’t anyone who knew how to price the market backed securities, at the time. Companies like AIG, who guaranteed the debt, ran out of cash because there were too many defaults.
Global stock markets dropped and banks stopped lending to each other, which caused Wall street to panic. This panic, along with other underlying factors, lead to the worst financial crisis since the great Depression. The TARP program was the only thing that helped to stem the panic when the Federal Government used this program the bail Wall street out. The economic stimulus package would help to restore further confidence in the financial market, in 2009. The stock market crash started on October 24, 1929 and it was what kicked off the Great Depression. The day is now commonly known as, Black Thursday and the crisis worsened on Black Tuesday due to the fact that the Dow lost all its gaining’s for the year in just a few hours.
Wall Street bankers had failed to stop what was then, plummeting stock prices. Alot of individual investors had invested their life’s savings into the stock market. After they were wiped out, they lost all their confidence in the stock market and the American economy. Other persons withdrew their savings from banks that eventually ended up calasping. It was the view of many persons that Wall street was the economy. World War II and massive Government spending were the two main factors, which revived economic growth.
The Dodd Frank Wall Street Reform Act was passed in 2010 in order to prevent another financial crisis, by giving federal government more oversight of Wall Street. This allowed them to require non-bank financial firms like hedge funds to register with the securities and exchange commission. The non-bank financial firms are also required to provide information about their trades and total holdings.
The evolution of Wall Street
As was mentioned before, the name Wall Street is considered to be a representation of the international financial community. No one knew that it would become the global financial district that it is today. It took over a century of financial planning, economic collapses, growth and build for Wall Street to become a Global leader in the Financial market (particularly banking and investments). The history of Wall street has seen it developing from an mainly unregulated financial district to a strictly regulated one. Most persons see the global economy as a Wall Street vs Main street battle, with Wall Street representing the big companies and investment firms while main street represents the smaller businesses and corporations. The history of Wall Street has a foundation built with many tested, tried, failed and eventually successful agreements and policies.
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