Banking Industry in the US

By: Caroline Jenkins

1791 Bank of the US

  • In 1791 the bank received a charter from Congress which was signed by President Washington.
  • collected fees and made payments on the federal government's behalf
  • bank went away because states opposed it and thought too much power was given to the national government
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1816 Second Bank of the US

  • chartered in 1816
  • failed because it did not regulate state banks or charter any other banks
  • state banks ended up printing their own currency
  • paper currency was not printed until the Civil War
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1863 National Banking Act

  • banks could have a state or federal charter (duel banking)
  • passed the act to help resolve the financial crisis that emerged at the beginning of the Civil War
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1913 Federal Reserve Act

  • created and set up the Federal Reserve System which is the central banking system of the United States
  • hoped to establish a form of economic stability
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1930's Great Depression

  • the Great Depression caused banks to collapse
  • FDR created a "national banking holiday" where banks closed and were only allowed to reopen if they proved to be financially stable
  • caused many people to lose their trust and money in banks.
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Glass-Steagall Banking Act 1933

  • established the Federal Deposit Insurance Corporation
  • ensures that you still have your money even if a banker goes under
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  • Congress relaxes restrictions on banks
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1982 Congress allows S&L banks to make high risk loans and investments

  • investments went bad
  • banks failed
  • federal government was forced to give investors their money back
  • the federal government debt reached $200 billion
  • FDIC took over S&L
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1999 Gram-Leach Bliley Act

  • allowed banks to have more control over banking, insurance, and securities
  • result: less competition, and less privacy due to the sharing of information
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