Module 13 Lesson 2
1791 Bank of the US
- In 1971, Bank of the US received a charter from Congress. It was signed by President Washington.
- The bank collected fees and made payments on behalf of the federal government.
- Because the states believed the bank gave the national government too much power, they opposed it and the bank went away.
1816 Second Bank of the US
The Second Bank of the US was chartered in 1816. It failed once more because it did not regulate state banks or charter other banks.
During the Civil War, the federal government began printing paper currency.
1863 National Banking Act
This act stated that banks could have a state or federal charter. This is called duel banking.
1913 Federal Reserve Act
This act established a national bank. This central bank is called the Fed (Federal Reserve).
- The bank loans to banks that needs money.
- Banks can buy stock in the Fed and earn dividends.
- Controlled by a Board of Governors
- Oversees commercial banks.
- Acts as a governments bank by: holding money, selling bonds and treasure bills, and issuing and controlling the circulation of currency.
- Can manipulate the money supply.
1930's Great Depression
During the Great Depression, banks collapsed. FDR declared a "bank holiday", closing banks. he only let banks reopen if they had proof they were financially stable.
Glass-Steagall Banking Act
- Established the Federal Deposit Insurance Corporation (FDIC).
- The FDIC ensures that if a bank fails, you will still have your money.
During the 70s, Congress began relaxing restrictions on banks.
Congress allows S&L banks to make high risk loans and investments...
- Investments went bad.
- Banks failed.
- Federal government had to give investors their money back.
- Federal government ends up with a $200 billion debt.
- FDIC took over S&L.
1999 Gramm-Leach-Bliley Act
This act allows banks to have more control over banking, insurance, and securities.
- Less competition.
- May form a universal bank.
- May lead to more sharing of information.