The History of the Banking Industry

In the United States

1791 Bank of the US

-Bank of the US collected fees and made payments on the part of the federal government.

-Bank died because of the state banks' opposition.

-People believed that it gave too much power to the federal government.

1816 Second Bank of the US

-Failed due to the fact it didn't regulate the state banks or charter any other bank

-State banks began to issue their own currency

Civil War

-The federal government began to print paper currency during the time of the Civil War.

1863 National Banking Act

-Banks could have a state or federal charter, which is called duel banking.

1913 Federal Reserve Act

-Created a system of private and public entities

-After the act was passed, Congress required that all nationally chartered banks become members of the Federal Reserve System.

-Provided other functions and financial services for the economy such as a check clearing and collection for all members of the Federal Reserve.

-National Bank

1930's Great Depression

-Caused banks to collapse

-FDR declared a "bank holiday" where banks were closed until they proved they were financially stable.

Glass-Steagall Banking Act

-Established the Federal Deposit Insurance Corporation

-Ensured that if a bank goes under, the people still have their money.


-Congress relaxed restrictions on banks


-Congress allowed S&L banks to make high risk loans and investments.

-The investments went bad and the banks failed.

-The federal government had to repay the investors.

-The federal government debt was amounted to $200 billion.

-The FDIC overtook the S&L.

1999 Gramm-Leach-Bliley Act

-Allowed banks to have more control over banking, insurance, and securities

-The negative effects: less competition, may form a universal bank, and also may lead to more information sharing (reduction of privacy).