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Bank of the US
The First Bank of the US was chartered by Congress in 1791 and signed by President George Washington. It collected fees and made payments on behalf of the federal government. However, the state banks opposed the bank because they believed it gave too much power to the federal government, so it disintegrated. -
Second Bank of the US
The Second Bank of the US was another attempt at a national bank for the US government. It was chartered by President James Madison in 1816, but was unable secure recharter and became a private corporation in 1836. It failed because it didn't regulate state banks or charter any other banks. -
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American Civil War
During the Civil War, the federal government started printing paper currency. The federal government was on the verge of bankruptcy while trying to finance the war, so Congress authorized the Treasury to print papery money. -
National Banking Act
The National Banking Act of 1863 authorized duel banking, which meant that a bank could have either a state or a federal charter. The Act's main goal was to create a single national currency. It established national banks that were able to distribute currency that had been printed by the government. -
Federal Reserve Act
The Federal Reserve Act created the Federal Reserve, which was the third attempt at a national bank and the only successful attempt. The Act also required that all nationally chartered banks became part of the Federal Reserve System and had to purchase non-transferable stock in their regional Federal Reserve banks. -
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Great Depression
The Great Depression caused the national government to tighten regulation on banking. During the 1930s, the depression caused many banks to collapse. President Franklin D. Roosevelt declared a federal bank holiday, where all banks closed. They were only allowed to reopen if they proved they were financially stable. This helped consumers to have a more stable investment. This crisis led to the Glass-Steagall legislation in the Banking Act of 1933. -
Glass-Steagall Banking Act
The Glass-Steagall Banking Act (also known as the Banking Act of 1933) sought to reform commercial banking and protect the assets of citizens. It separated commercial and investment banking, and it established the Federal Deposit Insurance Corporation. The FDIC ensured that if a bank failed, the investors' assets would be protected. Some provisions of the Act were repealed in 1999 by the Gramm-Leach-Bliley Act. -
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1970s
The 1970s brought about a change in banking policy. Congress passed a series of bills that relaxed regulation on banks in the US. This deregulation helped the economy to grow. -
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Savings and Loans Crisis of 1982
In 1982, Congress decided to allow Savings and Loans Banks to make high-risk loans and investments. This idea ended up failing dramatically. Many investments went bad, so many banks failed. The federal government had to give investors their money back, which ended up costing the federal government $200 billion. As a result, the FDIC took over Savings and Loans banks. -
Gramm-Leach-Bliley Act
The Gramm-Leach-Bliley Act of 1999 sought to deregulate banks by repealing parts of the Glass-Steagall Act. It allowed banks to have more control over their own banking, security, and insurance. However, it lessened competition and may lead to the formation of a universal bank and lessened privacy. Many believe that the G-L-B Act and its support of "trickle-down" economics was a precursor to the 2007 subprime mortgage crisis.
