Reconstruction Finance Corporation the Creation Research Paper

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However, the U.S. Congress extended the lending power and expanded the functions of the Corporation through including the powers to buy capital stocks of financial institutions, agricultural credit corporations, insurance firms, and national mortgage associations. Consequently, the Congress gave RFC the power to make loans to business enterprises, public school authorities, mining interests, agricultural improvement districts, and disaster victims. In addition, the corporation was also given the authority to help in funding the construction of public works. The Congress was further directed the Corporation to buy the securities of, provide loans, advances, and distributions of funds to several American governmental corporations and agencies.

In 1940, the Reconstruction Finance Corporation was given new responsibilities with regards to the national defense programs that were being undertaken following the enactment of legislation in that regard. These defense programs were mainly carried out by subsidiary corporations and they were significantly extended during the Second World War II period. In addition to providing these defense responsibilities, the Act expanded the Corporation's succession to January 22, 1947. There were subsequent extensions of the Corporation's succession with the final one extending it to June 30, 1956. Notably, before the final extension, the Reconstruction Finance Corporation Liquidation Act became effective.

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Nonetheless, the Corporation was abolished on June 30, 1957 as stated in the Reorganization Plan No. 1 of the same year.

Importance of RFC:

Even though the Reconstruction Finance Corporation was abolished, an understanding of the Corporation's history and organizational structure is crucial in helping policymakers in decisions about the attractiveness and efficiency of salvaging components of the financial services industry (Todd, n.d.). An understanding of the Corporation's history is also significant for policymakers since it predisposes them towards making government-funded debt rescue initiatives different from the Federal Reserve's monetary policy initiatives. Actually, the current search for a government-sponsored monetary rescue mechanism can benefit from reviewing lessons of the history that led to creation and eventual demise of RFC.

In conclusion, the Reconstruction Finance Corporation is one of the most significant government-instituted entities in the history of the United States. The history and eventual demise of this Corporation provides important lessons for policymakers in light of developing government-funded debt rescue initiatives......

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