In July 1932 Congress passed the Home Loan Bank Act in an effort to revive the economy during the Great Depression. The act established the Home Loan Bank Board to oversee the formation of 8 to 12 banks in different parts of the country. These banks received part of $125 million provided by the Home Loan Bank Act and were to make loans to banks and businesses. President Herbert Hoover chose to establish the Home Loan Bank Board and the area banks because, like many Americans at the time, he did not believe that the government should provide direct aid to individuals. Hoover felt that the government should try to stimulate the economy by providing loans to banks and businesses. This, in turn, would further stimulate the economy by expanding businesses and creating jobs. This approach, however, was not enough to overcome the economic crisis of the Great Depression. As unemployment rose, more Americans were unable to meet their loan payments, which caused more banks to fail. Hoover’s refusal to allow direct aid to individuals led not only to his defeat in the 1932 presidential election but also further worsened the economic crisis.
