Banking evolution

The changes of U.S banks

1791 Bank of The US.

This was the first bank of the United States. The first banks charter was signed by George Washington. It was built because the US was in debt from the revolutionary war. The bank was controlled by the federal government and was made to collect fees and make government payments. A lot of people opposed the bank because they felt that it gave the federal government too much power, so eventually the bank collapsed and failed.

1816 Second Bank of The US.

The second bank was built because the US was in debt because of the war of 1812. They made this bank less powerful than the first bank in hopes to please the state banks. The bank failed and the state banks started to issue their own form of currency. The Federal government didnt print any money until the Civil War.

Civil war

The Civil war cause the US to be in a lot of debt. They did not have a central bank to help get them out of debt. Everything was controlled by the states. It was difficult to regulate everything and maintain control. They realized that they need a bigger power to help control the money supply.

1863 National Banking Act

In 1863 they decided that banks could have a state OR federal charter. That resulted in duel banking. Duel banking is when state and national banks are chartered at different levels. National banks are regulated by a federal agency and state banks are regulated by by a state supervisor.

1913 Federal Reserve Act

The Federal Reserve Act created the National Bank. The people realized that they need a higher power in order to maintain control of money.

1930's Great Depression

In 1930's all of the banks ran out of money to give out to people. All of the banks had to close because there was $0 in any bank account. People went to go take their money out of the bank, only to find it was all gone. FDR created a national bank holiday and only allowed them to open if they were financially stable to.

Glass-Steagall Act Banking Act

The Glass-Steagall Act was created because of the banks collapsing in the great depression. It created the FDIC, the Federal Deposit Insurance Corporation. This created an insurance policy that says if a bank goes under you still have your money. It made people feel more comfortable to put their money in a bank. It allowed banks operate again.

1970's Banking

In the 1970's congress relaxed the restrictions they had on banking. Inflation began. The Fed raised interest rates almost 20%.

1982 Banking

In 1982 congress allowed S&L banks to make high risk loans and investments. They were high risk because there was a high chance that the loans would not be payed back. In result of that all of their investments failed.

1999 Gramm-Leach-Bliley Act

This act allowed banks to have more control over their own banking, insurance, and securities. It also had less competition. It can also form a universal bank. Another downfall is that information becomes less private.