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Bank of the US
The Bank of the US received a charter in 1791 from Congress; signed by President Washington
This bank collected fees and made payments on behalf of the federal government.
Bank went away because state banks opposed it; thought it gave too much power to national government
It was needed because the government had a debt from the Revolutionary War, and each state had a different form of currency. -
Second Bank of the US
Was chartered in 1816.
Failed because it didn’t regulate state banks or charter any other bank
State banks were issuing their own currency
Federal government didn’t print paper currency until the Civil War -
Civil War (Printing Currency)
The Civil War led to the nationalization of United States currency. In financing its war effort, the Federal government also resorted to paper moneys, including national bank notes. These notes were printed by or for the government and were issued by private banks throughout the North and eventually, the reunited country.
Between 1863 and 1935, thousands of private banks were granted charters that allowed them to issue national bank notes. -
National Banking Act
Banks could have a state or federal charter (duel banking)
The original Act aimed to entice banks to buy federal bonds and taxing state bank-issued currency out of existence, but it proved defective and was replaced by the National Bank Act of 1864 just one year later. -
Federal Reserve Act
National bank
When President Woodrow Wilson signed the Federal Reserve Act into law, it stood as a classic example of compromise—a decentralized central bank that balanced the competing interests of private banks and populist sentiment. -
Great Depression
Caused banks to collaspe
FDR declared a “bank holiday” where banks closed
Only allowed to reopen if they proved they were financially stable -
Glass-Steagall Banking Act
Established the Federal Deposit Insurance Corporation
Ensures that if a bank goes under, you still have your money -
1970's (regarding Banking)
Congress relaxes restrictions on banks
Saw inflation skyrocket as producer and consumer prices rose, oil prices soared and the federal deficit more than doubled. By August 1979, when Paul Volcker was sworn in as Fed chairman, drastic action was needed to break inflation’s stranglehold on the U.S. economy. -
1982
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 debt: $200 billion
The FDIC took over the S&L -
Gramm-Leach-Bliley Act.
Allows banks to have more control over banking, insurance and securities
Cons: less competition, may form a universal bank; may lead to more sharing of information (reduction of privacy)
