The Changes to the Banking Industry
by Chris Breuer
1791 Bank of the US
- The bank collected fees and made payments on behalf of the federal government
- States apposed this bank because it gave the national government too much power and it went away
1816 Second Bank of the US
- It did not regulate state banks so states were issuing their own state currency and it failed
Civil War
- Paper currency was beginning to be printed out and distributed through the nation
1863 National Banking Act
This said that banks could have a state or federal charter; dual banking
1930’s Great Depression
- The Great depression caused banks to collapse
- They were only allowed to reopen if they were financially stable
- FDR declares "bank holiday" where all banks were closed
Glass-Steagall Banking Act
This act established the Federal Deposit Insurance Corporation (FDIC)
It ensures that if a bank goes under, you still have your money
1982
Congress allows S&L banks to make high risk loans and investments
Investments went bad
The FDIC took over the S&L
Federal government had to give investors their money back
Federal government debt: $200 billion
Many banks failed
1999 Gramm-Leach-Bliley Act.
Allows banks to have more control over banking, insurance and securities
It also brings cons such as, less competition, they may form a universal bank; may lead to more sharing of information (reduction of privacy)