Module 13 Lesson 2 Assignment
The second bank of the US was chartered in 1816. It failed because it did not regulate state banks or charter any other bank. State banks were issuing their own currency. Federal government did not print paper currency until the civil war.
The 1863 National Banking Act was when banks could have state or federal charter (dual banking). The act had three purposes: 1. Create a system of national banks, 2.Create a national and uniform currency, and 3. Help finance the Civil War for the Union side.
In the 1930's, the Great Depression caused banks to collapse. Franklin D. Roosevelt declared a "bank holiday," where banks closed unless they proved financial stability.
Glass-Steagall Banking Act
The Glass-Steagall Banking Act established the Federal Deposit Insurance Corporation. The FDIC ensures that if a bank goes under, you do not lose your money.
In the 1970's, the congress relaxed the restrictions on banks.
In 1982, Congress allows S&L banks to make high risk loans and investments. The investments went bad and the banks failed. The Federal Government had to give their money back and the total debt was $200 billion. After that, the FDIC took over the S&L.
In 1999, the Gramm-Leach-Bliley Act was passed. This act allows banks to have more control over banking, insurance, and securities. There are cons to this act however; there would be less competition, it may form a universal bank, and it may lead to the sharing of more private information.