Banking Industry in the US
1791 Bank of the US
The First Bank of the United States was needed because the government had a debt from the Revolutionary War. This bank collected fees and made payments on behalf of the federal government.
1816 Second Bank of the US
Chartered in 1816, failed because it didn't regulate state banks or charter any other bank.
Civil War (printing currency)
The Federal government didn't print paper currency until the Civil War. To pay for the war, the Confederate government issued paper currency.
1863/1864 National Banking Act
Banks could have a state or federal charter, known as dual banking. Encouraged Development of a national currency.
1913 Federal Reserve Act
Enacted on December 23, 1913. Signed into law by President Woodrow Wilson. This created the Federal Reserve. Intended to establish a form of economic stability.The Federal Reserve system is the central banking system of the USA.
The Great Depression caused banks to collapse. FDR declared a bank holiday where the banks were closed, and were only allowed to reopen if they proved they were financially stable.
Glass-Steagall Banking Act 1970’s
Established the Federal Deposit Insurance Corporation. Ensured that if a bank went under, people would still have their money.
Congress allows S&L banks to make high risk loans and investments. These investments went bad and banks failed. The Federal government then had to give investors their money back and the government was $200 Billion in debt. The FDIC then took over the S&L.
1999 Gramm-Leach-Bliley Act
This Act allowed banks to have more control over banking, insurance, and securities. A problem with this was less competition, it could form a universal bank and lead to less privacy.