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1791 Bank of the United States
The First Bank of the United States was needed to handle the huge war debt and to make a standard currency form. President Washington signed a charter from Congress to create this bank. It could collect fees and make payments for the government. State banks didn't like it because they thought it gave the government too much power, so it went away. -
1816 Second Bank of the US
The Second Bank of the United States was chartered in 1816, five years after the First Bank of the United States lost its charter. The Second Bank had its charter for 20 years, didn't get its charter renewed, then went bankrupt in 1841. It failed because it didn't regulate state banks or charter banks. State banks began making their own kind of money. -
Civil War currency problems
Prior to the Civil War, the US debt was $64.8 million. Once the war began, the financial cost of the war was about $5.2 billion. To pay off the war, the Legal Tender Act of 1862 was passed. This let the government print paper money known as greenbacks and sell $500 million in bonds -
1863 National Banking Act
The 1863 National Banking Act was created during the CIvil War and established a system of nationally chartered banks. The banks could have a state or federal charter, but money in the banks needed to be backed by government securities. This was known as dual banking, where state and national banks were supervised at different levels. The act was ammended so that state currency would be taxed, but not national currency. The banks then switched over national currency to uniformed monetary. -
Federal Reserve Act
On December 13, 1913, Woodrow Wilson signed the Federal Reserve Act into law. It created 12 national banks located throughout major cities. The act rerquired national banks to be part of the Federal Reserve and put a percentage of their savings in the Federal Reserve Bank. -
Great Depression (stock market crashed)
This day on Wall Street, known as Black Tuesday, resulted in millions of dollars being lost. The Great Depression was the roughest and longest-lasting economic downfall ever. All the banks closed and were allowed to reopen if they could prove they were financially stable. -
Grass-Stegall Banking Act
This was passed by Congress in 1933 and signed by FDR. It prohibits commercial banks from engaging in the investment business.It seperated banking according to the type of banking system; insurance, banking, and security. It also created the Federal Deposit Insurance Coporation. FDIC is a government corporation that insures the safety of people's money in case of bank closure. -
1970’s (regarding banking)
In the 1970s, the Glass-Steagall Act grew controversial when the banks complained that they would lose customers to other companies unless they provided more services. In turn, the government allowed more freedom to banks to offer more financial services. Many people were able to get S&L financing for buying their homes and the interest rates paid on deposits at S&Ls were kept low. However, plenty of Americans put their money in them because insurance and deposits made it safe to invest. -
Savings and Loans Crisis
This was when Congress allowed Savings and Loan banks to make many high risk loans and investments. Too much money in loans was given out, resulting in massive debt of savings and loans banks. The banks ended up failing and the federal government had a debt of $200 billion. -
1999 Gramm-Leach-Bliley Act
This act, signed by President Bill Clinton, allowed commercial banks, investment banks, securities firms, and insurance companies to consolidate. It allowed the banks to have more control. While this was a good thing, the cons include less competition, possible formation of a universal bank, and a reduction of privacy.
