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After the American Revolution, the leaders of the new nation agreed that one of their goals must be to estable a safe, stable banking system. Federalists wanted a centralized banking system and Alexander Hamilton proposed a national bank in 1789. Antifederalists, like Thomas Jefferson, opposed this plan
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Federalist won the first debate in 1791, Congress established the Bank of the United States. The bank function until 1811, when its charter ran out
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Stability was restored but many were still wary of the Bank’s powers
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As state-charted banks flourished once again from 1837 to 1863, the sheer number of banks gave rise to a variety of problems such as bank runs and panics, wildcat banks that were inadequately financed and had a high rate of failure, different in currencies, etc.
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The national banking act gave the federal government the power to charter banks, require that banks hold an adequate amount of gold and silver reserves, and issue a national currency
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In the 1870s, the nation adopted the gold standard, which set a definite value for the dollar
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The Federal Reverse Act established the Federal Reserve System, which reorganized the federal banking system to include 12 Federal Reserve Banks, The federal Reserved Board, short-term loans, and Federal Reserve notes
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The economic decline began in 1929 and lasted for more than a decade Banks loaned large amounts of money, businesses and farmers couldn't pay back loans, the stock market crashed, and then depositors came and withdrew their money
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President FDR acted to restore the banking system in the 1930s by establishing the FDIC ( Federal Deposit Insurance Corporation), which insured customer deposits if a bank failed
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Congress passed laws to deregulate several industries, high-interest rate and risky loans added to the crisis
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Congress passed legislation that abolished the independence of the Savings and Loan industry
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Mortgage companies and banks began to loan people money who could not afford to pay these loans back When interest rates rose, many people couldn’t afford to pay their mortgages, which led to foreclosures The ripple effect of the mortgage crisis hit banks and creditors hard and many economists worried that the crisis would send the U.S economy into a recession
