The History of Banks!!!!!
Dates that are important to the set up of our banks.
In 1791, the Bank of the United States received a charter from Congress and it was signed by President Washington. This bank collected fees and made payments on behalf of the federal government. The bank went away though because the state bank opposed it; they thought it gave too much power to the national government.
The Second Bank of the United States was chartered in 1816. This bank failed because it didn't regulate state banks or charter any other bank. The state banks were issuing their own currency.
Civil War (1860's)
Before the Civil War, the states would print their own currency and the federal government did not have paper currency. At the Civil War though, the federal government started to print a national paper currency.
The National Banking Act was created in 1863. This act stated that the banks could have a state or federal charter. This also means duel banking.
In 1913, The Federal Reserve Act was put into practice. This created the national bank. The national bank is where smaller bank corporations can go to borrow money and put stock in to get more money. The Federal reserve is the 'head" bank and can print bills and currency.
In the 1930's, the Great Depression caused the banks to collapse. This called for President Franklin Roosevelt to declare a "bank holiday." This allowed for all the banks to close, and they could only reopen if they could prove that they were financially stable. The Great Depression caused many of the people to lose trust and faith in the banks. Since there was no insurance on the money at that time, if your money was in the banks, it was lost. It was a tough time for the people and for the banks.
Glass-Steagall Banking Act (1933)
The Glass-Steagall Banking Act established the Federal Deposit Insurance Corporation (FDIC). This was established because of the Great Depression. The FDIC ensures that if a bank goes under and no longer can pay you your money, you will still receive your money. Most people did not trust banks after the Great Depression, but this act helped to reinstate trust for the banks. Having the FDIC insures that you will get back the money that you put into the bank if the bank goes under.
In the 1970's, Congress relaxed the restrictions on the banks that were previously placed. There had been many rules and restrictions placed in the banks since the Great Depression. This allowed a little more freedom in the area of the banks.
In 1982, Congress allowed the S&L banks to make high risk loans and investments. The Investments went bad, the banks failed, and the government had to give their investors their money back. The federal government was then faced with a $200,000,000 debt. After that, the FDIC then took over the S&L banks.
In 1999, the Gramm-Leachey-Bliley Act was put into action. This act allows banks to have more control over banking insurance and securities. The bad thing is that there is less competition among the banks and that could lead to a universal bank. This may also lead to more sharing of information, which means a reduction of privacy.
As you can see, we have had a variety of acts in our past regarding banking and banking insurance. We have had very tough times regarding money as well, such as the Great Depression. Yet, we have tried to cope along the way and learn from our mistakes, which I feel has definitely benefited us in the long run.