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
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
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
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
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.
Glass-Steagall Banking Act 1933
- established the Federal Deposit Insurance Corporation
- ensures that you still have your money even if a banker goes under
1970's
- Congress relaxes restrictions on banks
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
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