Banks

Module 13 lesson 2

1791 Bank of the US

The First Bank of the United States, President, directors, and company charted for a term of twenty years. It was by the United States Congress on February, 25 1791. It followed the Bank of North America, the nations first de facto central bank. Alexander Hamilton believed it necessary to stabilize and improve the nations credit, and the financial business of the US government.

1816 Second Bank of the US, Civil War (printing curreny)

It was chartered with the same responsibilities and powers as the first, but the second bank could not enjoy the limited success of the first bank. Foreigners owned about 20% of the Banks stock, the Second Bank was plagued with poor management and outright fraud. It was suppose to keep it's specie/deposit ratio stable at about 20%, instead the ratio bounced around between 12% and 65%. It quickly alienated state banks by returning to the sudden banknote redemption practices as the first bank.

1863 National Banking Act

It was designed to create a national banking system, float federal war loans, and establish a national currency. The Congress passed it to help fix the financial crises that started during the early days of the American Civil War (1861-1865).The War was expensive and had no tax program had been drawn up to finance it. The Government passed the Legal Tender Act, and (1862) $150 million on national notes called Greenbacks.

1913 Federal Reserve Act

The Act was intended to establish a type of economic stability through the opening of the Central Bank, which would be in charge of monetary policy, into the U.S. It is perhaps one of the most influential laws in the U.S. financial system. Before 1913 investors were panicking , and unsure about the safety of their deposits. The Act gave the 12 Federal Reserve banks the ability to print money in order to ensure stability.

1930's Great Depressioon (regarding banking)

In the 1920's every small town had a bank or two struggling to take in deposits and loan out money to businesses and farmers. In the 1930's it got worse, and the farmers had less money to spend in town, in alarming rate, the banks began to fail. In the 20's 70 banks failing each year, after the first 10 months of the crash in the 30's, -1,930,744 banks failed, 10 times as many. 9,000 banks in all failed during the decade of the 30's.

Glass- Steagall Banking Act

The Glass- Steagall Act was a bill passed by President Franklin Roosevelt. It was made to provide for the safer more effective way for the banks assets to regulate interbank control, and to prevent the undone diversion of funds into speculative operations, and other purposes.

1970's (regarding banking)

The Bank Secrecy Act was made in 1970, it requires financial institutions in the U.S. to help U.S. Government agencies to find and prevent money laundering. It wants the financial institutions to keep record o cash purchases. The cash purchases of these negotiable instruments of more than $10,000 and they are told to report it.

1982 (regarding banking)

Congress allows Sand L banks to make high risk loans and investments. Investments went bad and banks failed. The federal government had to give investors their money back. The federal government was in debt $200 billion and the FDIC took over the S&L.

The 1999 Gramm-Leach-Bliley Act

The main reason of the act was to repeal the Glass-Steagall Act that said banks and other financial institutions were not allowed to offer financial services, like investments and insurance related services , as part of normal operations.Allows banks to have more control over banking,insurance and securities.