The United States Banking History

A history of finances

A Time Line of Historical Events

1791 Bank of the US: The first United States bank put into effect by President George Washington and supported by the Federalist Party.

1816 Second Bank of the US: The second created United States bank. This bank later failed because it could not serve as a regulator of state banks or charter other banks.

Civil War (printing currency): First instance where the Federal government printing a nationwide currency; called greenbacks. Before this, state governments printed separate currencies.

1863 National Banking Act: The national Banking Act was established to ensure banks have a state or Federal charter, allowing duel banking to occur. This created more regulations for the operation of a bank.

1913 Federal Reserve Act: The 1913 Federal Reserve Act established a central, Federal bank to increase regualtion of state banks and the U.S. economy. This bank would become in charge of the monetary policy that governers our banking system.

1930’s Great Depression (regarding banking): The Great Depression caused a the U.S. banks to crash in response to the crash of the stock market. This caused president Franklin D. Roosevelt to call a bank holiday, allowing only banks that could prove they were financially stable to re-open.

Glass-Steagall Banking Act: The Glass-Steagall Banking Act was responsible for establishing the Federal Deposit Insurance Corporation. This corporation ensures public confidence in the current U.S. financial system by regualting and monitering banks, while reducing the effects if a bank happens to crash.

1970’s (regarding banking): In the 1970's, Congress began to relax the regulations place on banks based regarding interest rates.

1982 (regarding banking): In 1982, Congress gave permission for S&L Loans to make high risk loans and investments, which in the end turned out highly unfavorable. This in result caused the banks to fail, and the Federal government was required to pay Federal investors back their money resulting in two billion dollars of debt. This led to the FDIC taking over S&L Loans.

1999 Gramm-Leach-Bliley Act: The Gramm-Leach-Bliley Act gave banks more control over banking, insurance, and security. Despite the advantages, this Act caused less competition, the possibility of forming a universal bank, and a reduction of privacy from the sharing of information.