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First Bank of the United States established
In 1791 the First Bank of the United States was established. Its purpose was to collect fees and make payments on behalf of the national government. It later was shut down because the states felt it held too much power. -
Second Bank of the United States established
On this date the Second Bank of the United States was established. It had the same goals as the first bank, but failed for the exact opposite reasons. It did not regulate or charter any other banks, and thus state banks printed their own money (there was no printed national currency until the Civil War) and the bank was rendered obsolete. -
Civil War starts
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1863 National Banking Act
This Act created a system of national banks, established a national currency, and allowed banks to have either a national or state charter. Its goal was to help resolve some of the financial crisis stemming from the on-going Civil War. -
Civil War ends
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Federal Reserve Act
The Federal Reserve Act was made to create a set of National Reserve Banks which could help regulate the economy and oversee all other banking in the nation. It stimulates the economy and distributes currency, and helps maintain the overall economy. -
Great Depression starts
On this day, also known as "Black Tuesday", the Great Depression started in the United States. In a panic people nationwide tried to withdraw their money from banks. The banks did not have enough money on hand to give satisfy all customers, and thus ran dry. Banks all around the nation failed, and many peoples life-savings were lost. For about the next decade the effects of this were felt as unemployment skyrocketed and trade plummeted. -
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Great Depression
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"The Great Inflation"
In the 1970s, Congress had relaxed restrictions on banks, hoping that it would reduce unemployment. What happened instead, was that inflation skyrocketed. In order to counter-act the extreme inflation, the Central Bank raised interest rates to 20%. This priced out many Americans from buying interest heavy items, such as cars and homes. Professor Jeremy Single called it "the greatest failure of American macroeconomic policy in the postwar period." -
1982 Recession
In the years leading up to 1982, inflation and interest rates had steadly increased, but in the nearer years nearly doubled. According to FDIC data, 1,617 banks closed, resulting in a loss of nearly $206,179 billion. Because of this, the Federal Deposit Insurance Corporation (FDIC) took over all savings and loans. -
Gramm-Leach-Bliley Act
The Gramm-Leach-Bliley Act (GLBA) was an act which repealed some of the restrictions placed on banks by the 1933 Banking Acts. Also, it prevented a single entity from acting as any combination of an investment bank, commercial bank and insurance company. It gave banks more control over banking, however it also reduced competition between banks and led to less privacy.
