The Pecora Commission got to the root causes of the Depression and the HOLC addressed the aftermath. Hopefully Obama's fraud task force and mortgage settlement are on the same course.

The news that President Obama has decided to establish a special new task force to investigate abusive and fraudulent lending practices during the housing boom, coupled with yesterday's announcement of a $26 billion settlement aimed at providing relief to struggling home owners, will certainly be greeted as welcome developments by the millions of Americans still struggling under the weight of the Great Recession. But with many of the details of the practical application of the settlement still to be worked out, and with the task force having just been established, it is too early to tell how much relief will actually reach desperate homeowners or how many banks and/or individuals will face prosecution.

Given the devastation caused by the reckless and often fraudulent behavior of many of the nation's leading banks, and the overwhelming need to stabilize the housing market and provide relief to millions of homeowners, one would hope that these measures would, at the very least, be as effective as the actions taken by the government roughly 80 years ago when we faced a very similar economic crisis.

Most Americans are well aware that the Great Depression was initiated by the collapse of the stock market in the fall of 1929. It was a collapse that came about in large part because of the bursting of a large speculative bubble that had built up over time in the reckless and virtually unregulated financial climate of the 1920s. What is less well known or understood are the many other factors that played a role in the onset of the Great Depression: the decline in agricultural prices, the maldistribution of wealth and income, the collapse of the banking sector, and an equally important urban mortgage crisis. Indeed, by the time Franklin Roosevelt took office in March of 1933, it is estimated that approximately 50 percent of all urban mortgages in the United States were delinquent or in foreclosure and that an average of 1,000 homes per day were being lost.

To deal with the housing emergency and to get to the bottom of what led to the economic crisis in the first place, FDR did two things. First, he fully supported the activities of the 1932 Senate Committee on Banking and Currency that was established to investigate the causes of 1929 crash. Once in office, he moved quickly to provide relief to home owners through the establishment of the Home Owners Mortgage Corporation (HOLC).

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Thanks in large part to the zeal of Ferdinand Pecora, who was appointed to head the Senate committee investigating Wall Street in January 1933 and was quietly encouraged to carry out his work with vigor by President-elect Roosevelt, the "Pecora Commission" would uncover a whole series of unscrupulous practices in the banking and financial sector. These included interest-free loans to top executives at National City Bank (now Citibank); National City's disposal of bad loans to Latin American countries by packing them into securities and selling them to unsuspecting investors; and J.P. Morgan's list of influential "friends," including former President Calvin Coolidge, all of whom were given the opportunity to purchase stock at sharply discounted prices.

These disclosures, coupled with additional revelations about excessive salaries, bonuses, and the fact that many financial elites -- including the head of National City Bank -- did not pay any income tax in the past year, outraged the public and helped inspire the Roosevelt administration and Congress to push through some of the most important banking and financial reforms in American history. These included the Glass Steagall Act, which separated commercial from investment banking and gave us the Federal Deposit Insurance Corporation, and the 1934 Securities and Exchange Act, which created the Securities and Exchange Commission.

In the meantime, to meet the urgent housing crisis, the HOLC, which was established within FDR's first 100 days in office, provided direct relief to families facing foreclosure by buying out their existing mortgages and replacing them with new ones. The new ones weren't based on the typical non-amortized loan of seven to ten years, but rather on the far more affordable amortized mortgage of between 25 and 30 years. Over the course of its brief three-year history, the HOLC refinanced over one million homes -- roughly 20 percent of all the urban mortgages in the U.S. In the process, it revolutionized American home ownership through the institutionalization of the 30-year mortgage. It also did not cost the American taxpayer any money, as the HOLC turned a small profit when it finally closed its books in 1951.

Taken together, the measures inspired by the Pecora Commission and the relief brought to millions of American homeowners helped restore investor confidence, resuscitate the financial sector, and lay the foundations upon which our banking, financial, and housing sectors rested from more than half a century.

In making yesterday's announcement, President Obama alluded to both the new task force and the bank settlement by stating that with these measures "we begin to turn a page on an era of recklessness that has left so much damage in its wake." Eighty years ago, the twin combination of a federal investigation and direct action by the government helped alleviate the anger and anguish of the millions of Americans who suffered as the result of the greed and avarice of the wealthy few. Let us hope that the president's new task force and the agreement with our nation's major banks will do the same.

David Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute. He is currently writing a book entitled Cordell Hull, Anthony Eden and the Search for Anglo-American Cooperation, 1933-1938.

By telling the story of post-War America's prosperity in the State of the Union, President Obama highlights a path we should take today: forceful government action.

In his annual State of the Union Address, President Obama spoke of the generation of Americans who "triumphed over a depression and fascism" to build "the strongest economy and middle class the world has ever known." He made reference to his grandfather, a veteran of World War II, who returned from combat and went college on the G.I. Bill. He also referenced his grandmother, who worked on a bomber assembly line as "part of a workforce that turned out the best products on earth." Together, he went on, they lived with "the basic American promise that if you worked hard, you could do well enough to raise a family, own a home, send your kids to college, and put a little away for retirement."

This story is typical of the millions of Americans who struggled through the twin crises of the 1930s and 40s, when the United States was transformed from a country brought to its knees by fear and economic paralysis to the single most powerful nation on the planet. But contrary to popular myth, this transformation -- which included the birth of the modern middle class -- did not take place by accident or miraculously emerge as the result of the initiative of millions of "rugged individualists." It came about because, under the leadership of Franklin Roosevelt, the American government pursued policies that directly benefited working Americans.

The G.I. Bill is an excellent example of this. Under its terms, returning veterans did not just receive a better shot at a job thanks to tax credits offered to companies which might hire them, but a host of concrete benefits. They included full tuition, books, and living expense payments for those veterans wishing to pursue a higher education; support for vocational training; guaranteed unemployment insurance; and low interest loans for the purchase of a home, small business, or farm. The impact of the G.I Bill on postwar America was enormous. Within the next seven years, for example, approximately 8 million veterans would take advantage of its education benefits. As a result, millions of Americans who might never have dreamed of going to college were able to do so; and millions more would enhance their earning power and job prospects through the vocational training and other educational benefits the act provided.

And what of the president's grandmother, who worked on a bomber assembly line in Wichita? Again, there is much more to this tale than merely the story of a woman trying to help the war effort and make a living by working the night shift in a factory in Kansas. The president's grandmother was in fact part of one of the largest aviation projects in world history: the construction of the B-29 Superfortress. The B-29 was no ordinary aircraft. Aside from its enormous size, it was one of the most advanced aircraft of its day, with high performance engines, a pressurized cabin, an electronic fire control system, and remote-controlled machine gun turrets. To assist with its rapid development, the federal government poured over three billion dollars into the project. At its peak, the manufacture of the B-29 employed hundreds of thousands of workers in four major facilities, including the Wichita plant where 40,000 workers -- whose wages and benefits were secured through their union, the International Association of Machinists (IAM) -- churned out an average of four bombers a day. But even this is only part of the story. Overall, American aircraft production represented the single largest sector of the wartime economy, employing over two million workers, who turned out a staggering 125,000 aircraft at a cost of $45 billion -- roughly one fourth of the $183 billion the federal government spent on war production.

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Conservative critics of the New Deal are fond of saying that it did not work, that it was the Second World War, not Roosevelt's programs, that finally brought the Great Depression to a close. What they ignore is the fact that government spending in the Second World War represents one of the greatest federal stimulus packages in American history -- in essence, the New Deal on steroids. Nor will these same critics ever acknowledge that the postwar economic boom that followed, which built "the strongest economy and middle class the world has ever known," came right on the heels of a period of massive government spending and borrowing. Federal expenditures accounted for no less than half of the country's Gross National Product during that period. Even more shocking, from the free market fundamentalists' point of view, is the fact both the war and postwar period of economic expansion came about at a time when union membership and wages were at an all time high.

So when the president calls on us to embrace the "American promise" -- that through hard work the average American can do well enough to raise a family, own a home, send his/her kids to college, and put a little away for retirement -- we should remember that it was not just "American values" that made this possible, but American law. It was the passage of the National Labor Relations Act in 1935, for example, that guaranteed the rights of workers to form unions that led the IAM drive to organize the aircraft industry and ultimately improve the wages and benefits of the B-29 workers in Kansas. It was the passage of the Social Security Act in the same year that provided a measure of support for working Americans' retirement and our first national unemployment insurance program. It was the G.I Bill that helped train the thousands of engineers, architects, technicians, and skilled workers needed to meet the demands of the expanding postwar economy. It was the passage of the Glass-Steagall Act and Securities and Exchange Act in 1933 and 34 that helped protect poor and middle class families from the vagaries and greed of the financial sector.

Taken together,  these measures transformed the basic structure of the American economy. American workers -- consumers in today's language -- did not have to go into debt to purchase the goods and services they desired. Rather, they earned a wage high enough to make it possible for them to contribute to the expansion of the economy. And with Social Security and the financial and banking sector properly regulated, these same workers could even invest a small portion of their income in the stock market or put aside a small amount of money to help pay for their children's education. It was this basic economic structure, backed not by socialism but by laws, meant to curb the excesses of unfettered capitalism, which provided the American people with the one thing they wanted more than anything else: economic security.

President Obama is right to demand that we need to return to an economy where "everyone gets a fair shot...everyone does their fair share, and everyone plays by the same rules." But as we have learned at great cost, the forces of greed and avarice that brought on the Great Recession -- like the forces that brought on the Great Depression -- will not disappear of their own volition. If he really wants to meet the urgent need to restore a sense of balance to the American economy, put the millions of unemployed back to work, and provide a better future for our children, then he should intensify his demand that Congress act quickly and forcefully to do so. He might take counsel from FDR, who, in the darks days of 1932, observed:

The millions who are in want will not stand by silently forever while the things to satisfy their needs are within easy reach. We need enthusiasm, imagination and the ability to face facts, even unpleasant ones, bravely. We need to correct, by drastic means if necessary, the faults in our economic system from which we now suffer. We need the courage of the young. Yours is not the task of making your way in the world, but the task of remaking the world which you will find before you. May every one of us be granted the courage, the faith and the vision to give the best that is in us to that remaking.

David Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute. He is currently writing a book entitled Cordell Hull, Anthony Eden and the Search for Anglo-American Cooperation, 1933-1938.