-
Early Beginnings
The First Bank of the United States started in 1791 to serve as financial support for federal funds and as the government’s fiscal agent. -
Period: to
History of Banking
-
The Second Bank
The second Bank of the United States was opened in 1816 in Philidelphia, PA. The bank was privately owned, but it held public duties. Their duties were to handle all fiscal transactions for the U.S. Government, and be accountable to Congress and the U.S. Treasury. Unforfunatlely, the bank closed business and operations in 1832. -
A shift in duties
When the second bank of the United States closed down in 1832, the state governments took over the job of supervising the banks. The state government's supervision was proved inadequate. They made loans by issueing their own currency, and bank notes were inconvertable, and hundreds of banks failed. -
More Financial Dismay
By 1860, 10,000 bank notes were circulating throughout the country. As a result, commerce suffered, hundreds of banks failed, counterfeiting was widespread, and there was a high demand for a uniform currency. -
Time for Change
In 1863, congress passed the National Currency Act in 1863 in response to the financial dismay of the state government's supervision. -
Presidential Revision
In 1865, President Lincoln signed a revision of Congress' National Currency Act. This act was called the National Bank Act, and the act established a new system of national banks and a new government agency headed by a Comptroller of the Currency. The Comptroller would organize and supervise the new banking system through regulations and periodic examinations. -
Credit Unions
The first credit union in the United States was established in 1908 in New Hampshire. At the time, poor laborers were unable to get a loan from banks, and relied on loaned sharks. The idea was carried out by Businessman and philanthropist Edward Filene when he wanted to secure legislation for credit unions first in Massachusetts and later throughout the United States. -
Federal Reserve Notes
In 1914, National bank notes were the main supply of money in the United States. This was the mainstay until the Federal Reserve notes appeared in 1914. The complexity of these notes were to prevent counterfeiters from creating fake notes. -
The McFadden Act
THe Mcfadden Act was enacted in 1927. It was based on recommendations made by the comptroller of the currency Henry May Dawes. The act allowed national banks to be equally competitive with state-chartered banks by letting national banks branch to the extent permitted by state law. -
The Banking Crisis
The first incident of a worldwide crisis in 1929 started in the banking system when a lot of the banks in the American Banking system failed. -
More Diaster in the Banking System
In the final quarter in 1931, over 1000 banks in the U.S failed because borrowers defaulted and bank assets had declined in value. This disaster led to scenes of panic throughout the country, long lines of customers queuing up before dawn hoping to withdraw cash before the bank ran out of money to pay out. -
Federal Investagation of Problems
On March 5, 1933, President Franklin D. Roosevelt, one day after taking office, declared a bank holiday, which closed down all the country's banks until they could be examined and either be allowed to reopen or be subjected to orderly liquidation. -
Our Buts are Insured
In June 1933, Congress passed a bill that enacted federal deposit insurance. This insured every 2,500 per account at that time (now 250,000). -
The Banking Act of 1935
This Banking Act would strengthen the powers of the Federal Reserve Board of Governors in the area of credit management, tighten the existing restrictions on banks engaged in certain activities, and enlarge the supervisory powers of the FDIC. -
The Beginning of a Revolution
In 1969, Chemical bank introduced the first ATM in the U.S. at its branch in Rockville Centre, New York. Their initial finction was to dispense money when the user inserted a card. Customers were a little concerned because of the machines handling their money. -
The Nixon Shock
President Richard Nixon took a series of economic measures in 1971 that were ollectively known as the Nixon Shock. These measures included cancelling the direct convertibility of the United States dollar to gold that essentially ended the existing Bretton Woods system of international financial exchange. -
The Savings and Loans Crisis
In the 80s and and 90s, there was a failure of 747 out of the 3,234 savings and loan associations in the United States. At the same time, real estate value dropped to the lowest point since World War II. -
Expansion of FDIC Insurance
Before 1989, there was no requirement for a bank to be insured by the FDIC. It was until Federal Deposit Insurance Corporation Improvement Act of 1989, bank were then required to be insured bt the FDIC. -
The Great Recession
The liquidity of the US banking system resulted in a collapse some of the largest financial institutions. There were bailouts of banks by national governments, and downturns in stock markets around the world. -
The Dodd-Frank Act
Due to the financial crisis in 2008, the Obama administration resonded to the banking situation by regulating the banks with the Dodd-Frank Act. The act would help regulate and reconstruct the banks on Wall st. and protect consumers that bank with those banks.
