US Banking Timeline

Aurek Herbin

1791 Bank of the US

President George Washington signed the law starting the Bank of the US in 1791 when it was chartered by Congress. The first bank collected fees and made payments for the US government. The charter was not renewed because state banks opposed it because they thought it gave too much power to the federal government

1816 Second Bank of the US

The Second Bank of the US was chartered in 1816. The bank closed in 1836 because of the same distrust of a federal bank. It also did not regulate state banks or charter any other banks.

Civil War

One of the reasons the early banks failed was that state banks were issuing their own currency. The Federal government did not start printing paper currency until the Civil War.

1863 National Banking Act

It established a system of national banks and created the National Banking system. The first national currency was developed. Originally, state banks declined, but since banks could have a state or federal charter, state banks grew again (duel banking). Later legislation increased regulation on state banks, and eventually led to one national currency.

1913 Federal Reserve Act

This act created the Central Bank which would be in charge of monetary policy in the United States. This system continues to work today.

1930’s Great Depression

The Great Depression caused banks to collapse. President Roosevelt declared a “bank holiday” where the banks closed and they could only reopen if they proved they were financially stable.

Glass-Steagall Banking Act

Because banks failed during the Great Depression, the Glass-Steagall Bank Act created the Federal Deposit Insurance Corporation (FDIC). The FDIC guarantees deposits up to a certain amount if a bank fails. People trusted banks more after this act.

1970s

Because the Great Depression is just a memory, Congress relaxed many of the restrictions on banking put in place after that event.

1982

Congress changed regulations again so that Savings and Loan banks could make high risk loans and investments. The investments went bad and the banks failed. The Federal government had to give investors their money back and took on $200 billion in debt. The FDIC took control of Savings and Loan banks.

1999 Gramm-Leach-Bliley Act.

This act allows banks to have more control over banking, insurance and securities

The negative results of the act were less competition, it may form a universal bank, and it may lead to more sharing of information which is a reduction of privacy.