Changes to the Banking Industry

US Banking

1791 Bank of the US

The 1791 Bank of the US was the first national bank in the US. It was created to help states deal with the debt from the revolutionary war and create one unified currency, as each state had it's own currency. The downfall of the first bank in 1811 was caused by the lack of support by state banks.

1816 Second Bank of the US

The 1816 Second Bank of the US, and was the second attempt at a national bank. When the bank was first created, it was run terribly and there were two supreme court cases to try and take down the bank, but the bank remained until President Andrew Jackson vetoed the renewal bill for the bank. No other bills were presented to him, and the bank expired in 1836.

Civil War (Printing Currency)

During the civil war, both the confederates and the union created paper money to pay for the debt that had accumulated due to the war. The paper money was a piece of paper stating that they would be redeemed a certain amount of money by a certain time after the war. The confederate money started to lose a lot of value as war came to an end and the people started to realize they will most likely not get their money back.

1863 National Banking Act

The National Banking Act was created in 1863 by Abraham Lincoln. It was created to put the United States under one national currency by creating national banks that are backed by federal bonds. It allows banks to have a state or federal charter.

1913 Federal Reserve Act

The Federal Reserve Act is the third and final attempt so far to create a national bank. So far, this bank, which is known as the Federal Reserve, has been around for 100 years. The 12 districts the bank created, along with the physical banks themselves, opened on November 16, 1914.

1930's Great Depression

During the 1930's, the banking industry was quickly collapsing. As many as 9,000 banks failed during the 1930's. The current president, Franklin D. Roosevelt, saw the increase in collapsing banks, and required all banks to be closed for at least three days. The banks were only allowed to reopen if they were financially stable.

Glass-Steagall Banking Act

The Glass-Steagall Banking Act of 1933 was created to make the Federal Deposit Insurance Corporation. The FDIC was created to prevent some banks from failing. People would see how the bank was close to failing, and in an effort to try and get their money, would cause the bank to fail. The FDIC guaranteed that you will still have your money if your bank fails, but only insures up to $100,000.

The 1970's

During the 1970's, Congress relaxed their restrictions on banks. This eventually lead to lower interest rates.


In 1982, Congress allowed Savings and Loan banks to make high risk investments and loans, which turned out to be a bad idea. The investments went bad, and many banks failed. The Federal government had to give the money back to the people whose banks failed. The government ended up with $200 billion dollars in debt.

The 1999 Gramm-Leach-Bliley Act

The Gramm-Leach-Bliley Act allowed banks to have more control over banking, insurance, and securities. The problem with this is that it causes banks to have less competition. It also may cause the sharing of information, leading to reduced privacy.