How did "fractional-reserve banking" impact the growing economic crisis in the late 1920s? [Select all that apply.] How did "fractional-reserve banking" impact the growing economic crisis in the late 1920s? [Select all that apply.] The system only worked when people remained confident in banks. The Federal Reserve would bail out any bank that became insolvent. Many businesses and individuals lost all of their money due to banks becoming insolvent from this practice. In the wake of the stock market crash, many people went to take their money out of the bank, only to realize that the bank was insolvent