Changes to the Banking Industry

By: Madison Schandolph

1791 Bank of the US

It was one of the four major financial innovations proposed and supported by Hamilton, first Secretary of the Treasury. It is located in Philadelphia, Pennsylvania. After its charter expired in 1811, Stephen Girard purchased the bank, its furnishings, and most of its stocks.

1816 Second Bank of the US

After the 1791 Bank of the US's charter expired, lack of having a central bank led to the explosion of many small banks which put the US monetary system on unsteady ground. It was James Madison's idea to create another bank and even though many of the congress men opposed Madison's idea but he prevailed. It went into operation in January of 1817 and was chartered for 20 years.

1930’s Great Depression (regarding banking)

In 1930, banks started closing their doors due to lack of business, this caused a chain reaction that caused there to be less money in circulation. Producers/manufacturers started to lower prices on everything to try and get people to buy their goods. Due to the lack of business, producers had to let go of a lot of their employees; in turn more than 13 million American workers were unemployed. People started to take their money out of banks and hoard their cash and gold, this caused the banks to crash; By early the next year, more than 9000 banks had failed.

Glass-Steagall Banking Act

Usually refers to four provisions of the US Banking Act of 1933 that limited commercial bank securities activities and affiliations within commercial banks and securities firms

1970’s (regarding banking)

In the 70's the first payment systems started to develop that would lead to electronic payment systems for both international and domestic payments. The international SWIFT payment network was established in 1973 and domestic payment systems were developed around the world by banks working together with governments.

1982 (regarding banking)

Took place during the Chilean Military Dictatorship, was when non-neoliberals fixed the peso's exchange rate. After this event, Chile fell into the worst economic crisis since the 1930's. It caused Chile's GDP to fall 14.3% and for their unemployment rate to rise to 23.7%.

The 1999 Gramm-Leach Bliley Act

Was enacted November 12, 1999 by the 106th United States Congress. It repealed part of the Glass-Steagall act of 1933, removing barriers in the market among banking companies, security companies, and insurance companies that prohibited any one institution from acting as any combination of an investment bank, a commercial bank or an insurance company. The legislation was signed into law by President Bill Clinton.