Module 13 Lesson 2 Assignment
By: X'zavier McDaniel
1791 Bank of the US
This was the first bank of the US and was created by a charter that was signed by George Washington. This bank was able to collect fees and make payments for the national government. State banks thought this gave too much power to the national government and that is why it went away.
Civil War (printing currency) 1861
The US started issuing a paper currency (sometimes called demand notes) around the time of the Civil War. They did this in an attempt to help pay for the funds needed for war because of a lack of coin. This paper currency in the south started to become more a loan or an "IOU" note. This paper wasn't really redeemable in many places and as things started looking darker in terms of victory for the south during the war their trust in the money went down as well and as a result there was a lot of heavy inflation during this time.
1913 Federal Reserve Act
Signed by Woodrow Wilson, this act was made in an attempt to gain some kind of economic stability during this time. There were also a lot of investors that wanted to be sure that their money would be safe. This act gave the Federal Banks the power to print money so that investors could be reassured.
1930’s Great Depression (regarding banking)
The Great Depression was a terrible time for our economy. Everything was starting to fall apart (things like stocks etc.) and when people starting noticing this it basically resulted in bank runs in the 1930's where many people tried to go and withdraw their money out at various banks but it just simply wasn't there. Once FDR was elected he declared a "bank holiday" and gave banks a three day period to settle and try and get their things straight and one famous quote from him during this time is "The only thing we have to fear is fear itself"
The 1970's was a time of relaxed restrictions placed on banks. However, even with these restrictions the economy was still in a mess. Especially the stock market since many people didn't want much to do with it because of rather recent events. There wasn't much economic growth which basically caused the levels of unemployment to shoot up. There were also easy money policies in place in an attempt to get more people employed but this simply caused there to be a lot of inflation.
During the year of 1982, a lot of things went bad for our banking system. Banks and investments failed, the federal government had to give investors money back, and the debt of the federal government was at an eye popping $200 billion. A lot of this probably had to do with the fact that Congress allowed S&L banks to venture forth with high risk investments and loans which ultimately backfired.
1999 Gramm-Leach-Bliley Act
Signed by President Bill Clinton, this act gave the banks more control over things like insurance, banking, and securities. However, there were a couple of drawbacks with this act. A few of these beings a reduction of privacy, less competition, and even the possibility of a universal bank forming.