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First Bank of the United States
President George Washington signed a charter from Congress in order for the bank to be established. It could collect fees and make payments. However, the bank went away due to state banks believing the federal government retained too much power. Our nation's Founding Fathers believed that in order to improve its credit, a central bank was vital in keeping order. -
Second Bank of the United States
The Second Bank of the U.S. was chartered in 1816. It failed due to the lack of regulation of state banks or charter any other banks. States were creating their own currency and the federal government had no control. -
Civil War
The federal government didn't print paper currency until the Civil War. It allowed demand notes to finance the war from 1861 o 1865. -
National Banking Act
The National Banking Act stated that banks could either have a state or federal charter. This is known as dual banking. The purpose of this act was to create a national banking system to assist the economic crisis during the Civil War, along with financing the war. -
Federal Reserve Act
The Federal Reserve Act created the Federal Reserve system as the Central Bank of the U.S. and was signed by President Woodrow Wilson. It was designed to ease the panic regarding the financial crisis of the early 1900s. Smaller banks could also stay in business with the Federal Reserve Act and did not go bankrupt. -
Great Depression
The Great Depression was an economic recession which caused banks to collapse during the 1930s. Franklin D. Roosevelt declared a "bank holiday" that only allowed stable banks with enough money to open while others deemed unstable remained closed for three days. There was a high poverty rate from the mass amount of unemployed Americans. -
Glass-Steagall Banking Act
The Glass-Steagall Banking Act established the Federal Deposit Insurance Corporation to combat the issues the Great Depression brought. It promised that customers would be given their money even if the bank falls. This act separated commercial and investment banking to prevent chaos. -
1970s
Congress began relaxing restrictions on banks which allowed inflation to increase, therefore leading to the economy slowly declining. President Nixon tried to turn the situation around by establishing a "New Economic Policy" in 1971. In addition to these monetary issues, the war with the Middle East and changing oil prices also gave the U.S. a hard time. -
1982
Congress permitted savings and loans banks to make high risk loans and investments. Instead of facilitating the process and helping the economy, banks failed because they were making high risk investments and loans. The federal government was in debt $200 billion to investors after they had to give their money back.The FDIC also took over the S&L. -
Gramm-Leach-Bliley Act
The Gramm-Leach Bliley Act is also known as the Financial Moderniztion Act of 1999 to alter how institutions handle private information. Banks could have more control over banking, insurance, and securities. This ended the Glass-Steagall Act and allowed normal, commercial banks to do the same as investment banks.
