Changes to the Banking Industry

Timeline:

1791 Bank of the US.

This was the first bank of the US that received a charter in 1791 from Congress and was approved by George Washington. It was primarily responsible for collecting fees and making payments on behalf of the Federal Government. However, state banks opposed it's power and it eventually went away.

1816 Second Bank of the US

It was chartered but eventually failed because it didn't regulate state banks or charter any other bank.

1930s Great Depression regarding banking

FDR declared a bank holiday where banks closed and only allowed banks to reopen if they proved they were financially stable.

Glass-Steagall Banking Act and 1970s regarding banking

The Glass-Steagall Banking Act established the Federal Insurance Corporation which ensured that if a bank goes under, you still have your money.


In the 70s, Congress relaxed restrictions on banks.

1982 regarding banking and the 1999 Gramm-Leach-Bliley Act

In 1982, Congress allowed S&L Banks to make high risk loans and investments. Investments were bad, so banks failed. The federal government had to give investors their money back. The Federal Government was in debt $200 billion. As a result, The FDIC took over the S&L.


The 1999 Gramm-Leach-Bliley Act allows banks to have more control over banking, insurance, and securities. There is a downside, however. Less competition may form a universal bank which made subsequently lead to more sharing of information (reduction of privacy.)