-
Bank of the US
The First Bank of the United States was created to handle the huge war debt and to make a standard currency form. President Washington signed a charter from Congress
in order 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. Picture: https://en.wikipedia.org/wiki/First_Bank_of_the_United_States -
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 was only chartered for 20 years, when it didn't get its charter renewed it then went bankrupt in 1841. It failed because it didn't regulate state banks or charter banks. Picture: https://en.wikipedia.org/wiki/Second_Bank_of_the_United_States -
Civil War
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. Picture: https://en.wikipedia.org/wiki/Greenback_(1860s_money) -
National Banking Act
It was created during the Civil War and established a system of nationally chartered banks. The banks had a state or federal charter, but money needed to be supported by the gov't. This was know as dual banking; banks were supervised at different levels. It was amended so that state currency would be taxed. The banks switched over from national currency to uniformed monetary. Picture: https://www.timetoast.com/timelines/history-of-money-and-banking-192a1a8e-12d9-403a-aeb0-2b49cdfbf521 -
Federal Reserve Act
Woodrow Wilson signed the Federal Reserve Act into law. It created 12 national banks located throughout major cities. The act required national banks to be part of the Federal Reserve and put a percentage of their savings in the Federal Reserve Bank. Picture: https://federal.laws.com/federal-reserve-act -
Great Depression
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. Picture: https://mtviewmirror.com/the-1930s-great-depression/ -
Glass-Steagall Banking Act
This was passed by Congress in 1933 and signed by FDR. It prohibits commercial banks from engaging in the investment business.It separated banking by type of banking system; insurance, banking, and security. It also created the Federal Deposit Insurance Corporation which is a government corporation that insures the safety of the money in case of bank closure. Picture: https://www.nytimes.com/2015/10/15/upshot/what-is-glass-steagall-the-82-year-old-banking-law-that-stirred-the-debate.html -
1970's
The Glass-Steagall Act grew controversial when banks complained that they would lose customers to other companies unless they provided more services. The government allowed more freedom to banks offer more financial services. Many people were able to get S&L financing for buying homes and interest rates paid on deposits at S&Ls were low. Plenty of people put money in them because insurance and deposits were safe. Picture: https://www.fdic.gov/bank/analytical/banking/2006sep/article1/index.html -
1982
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. Picture: http://www.econlib.org/library/Enc/SavingsandLoanCrisis.html -
Gramm-Leach-Bliley Act
This act was signed by President Bill Clinton and allowed commercial banks, investment banks, securities firms, and insurance companies to consolidate. It gave the banks more control. While this was a good thing, the cons include less competition, possible formation of a universal bank, and a reduction of privacy. Picture: https://abizinabox.com/gramm-leach-bliley-act/
