Bank Timeline

1791 Bank of the U.S.

The First Bank of the United States was a central bank, chartered for a term of twenty years, by the United States Congress on February 25, 1791. Establishment of the Bank was included in a three-part expansion of Federal fiscal and monetary power (along with a federal mint and excise taxes) championed by Alexander Hamilton, first Secretary of the Treasury. Hamilton believed a central bank was necessary to stabilize and improve the nation's credit, and to improve handling of the financial business of the United States government under the newly enacted Constitution

1816 Second Bank of the U.S.

The Second Bank of the United States was chartered in 1816, five years after the First Bank of the United States lost its own charter. Like the First Bank, the Second Bank was also chartered for 20 years, and also failed to have its charter renewed. It existed for 5 more years as an ordinary bank before going bankrupt in 1841.

Civil War (printing currency)

The Legal Tender Act of 1862 helped the U.S. government pay for the Civil War by authorizing the printing of paper currency. It authorized the printing of $450 million dollars in federal paper currency.

1863 National Banking Act

The National Banking Act of 1863 was a United States federal law that established a system of national charters for banks. It encouraged the development of a national currency based on bank holdings of U.S. Treasury securities. This was to establish a national security holding body for the existence of the monetary policy of the state. The Act, together with Abraham Lincoln's issuance of "greenbacks," raised money for the federal government in the American Civil War by enticing banks to buy war bonds. See photo below.
Big image

1913 Federal Reserve Act

Established in December of 1913, this act created the Federal Reserve System, the central banking system of the United States. It was signed into law by Woodrow Wilson and designed to regulate banking to help smaller banks stay in business and keep customers secure and their finances safe.

Big image

1930's Great Depression

Throughout and directly after the Great Depression of the 1930's, banking structure was weak. Distrusting banks and feeling that they were unsafe, customers wanted to take all of their money out of the banks. This caused banks to fail, furthering people's distrust of banks. In an attempt to resolve this crisis, the Emergency Banking Relief Bill put poorly managed banks under the control of the Treasury Department and granted government licenses (which functioned as seals of approval) to those that were solvent.

Big image

Banking in 1982

Bank failures began to increase in 1982 and continuing forward until a slight alleviation of the issue in the early 1990's. 1982 also saw the passing of the Garn-St. Germain Act, which expanded FDIC powers to assist troubled banks and established the Net Worth Certificate program for savings and loans to assist these institutions in acquiring needed capital.

Big image

1999 Gramm-Leach-Bliley Act

Also known as the Gramm-Leach-Bliley Financial Services Modernization Act, this was a regulation that Congress passed on November 12, 1999, which attempts to update and modernize the financial industry. The main function of the Act was to repeal the Glass-Steagall Act that said banks and other financial institutions were not allowed to offer financial services, like investments and insurance-related services, as part of normal operations.

Big image

Glass-Stegall Banking Act

This act forbade commercial banks from engaging in excessive speculation, added roughly $1 billion in gold to economy, and established the Federal Deposit Insurance Corporation (FDIC). It made the 750 million dollars that had once been kept in the governments gold reserves able to be used in the creation of loans. This allowed the banks to reopen and it gave the President the power to regulate banking transactions and foreign exchange. It also took the U.S off the gold standard.
Big image

Banking in the 1970's

Starting in the late 1970s, banks grew fast, with lots of loans to businesses. They gave out poor quality loans, loaned money to too many risky firms, all with a large share of the funds having been borrowed from other banks. As a result of financial innovators in both the 1960's and 1970's, banks faced more competition from other financial firms and new kinds of financial assets made it possible for investors (including banks to take on more risk. Inflation soared as a result.
Big image
Big image