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Two Views of Banking
Federalists wanted a centralized banking system and Alexander Hamilton, as Secretary of the Treasury, proposed a national bank in 1789 -
The First Bank of the United States
Federalists won the first debate and in 1971, Congress established the Bank of the United States. Yet, disagreements over the Bank continued -
The Second Bank of the United States
To eliminate the chaos, Congress charted the Second Bank of the United States in 1816 -
The Free Banking Era
As state-charted banks flourished once again from 1837 to 1863, the sheer number of banks gave rise to a variety of problems -
Stability in the Later 1800s
The National Banking Act of 1863-1864 gave the federal government power; the 1870s the nation adopted the gold standard, which set a definite value for the dollar -
Banking in the Early 1900s
Problems persisted despite the stabilizing efforts of a national currency and adopting the gold standard -
Establishing the Federal Reserve System
The Federal Reserve Act establsihed the Federal Reserve System, which reorganized the federal banking system -
Banking and the Great Depression
The Fed, however, was unable to prevent the Great Depression. President Franklin Roosevelt acted to restore the banking system in the 1930s by establishing the FDIC, which insured customer deposits if a bank failed. -
The Savings and Loan Crisis
In the late 1970s and 1980s, Congress passed laws to deregulate several industries. -
The Abolishment of the Savings and Loan Industry
In 1989, Congress passed legislation that abolished the independence of the Savings and Loan Industry -
The Sub-Prime Mortgage Crisis
Mortgage companies and banks began to loan people money who could not afford to pay these loans back