The National Banking System National Bank Requirements Set up in 1863 Use National or N.A. in its name Pass stiff inspections by the Comptroller of the.

The National Banking The National Banking SystemSystemNational Bank Requirements

Set up in 1863Use National or N.A. in its namePass stiff inspections by the Comptroller of the

CurrencyTreasury Department Official

Banks had to purchase government bondsUsed to back the national currency

Dual BankingSome banks did not want to join National System

Had to pay a 10% tax on privately issued bank notesmany started checking accounts

Could not be taxedLed to a dual banking system

The National Banking The National Banking SystemSystemNeed for Further Reform

Banking system was not designed for checksTake too long for checks to clear from bank to bank

Currency backed by bonds was difficult to maintainBanks had no place to go for help in times of need

The Federal Reserve SystemPassed in 1913Nation’s first central bankMember banks own the FedIssue Federal Reserve notes

Replaced all other forms of currency

Banking During the Great Banking During the Great DepressionDepressionBanks grew rapidly until 1921Bank Failures

No banks had insurance, so people pulled their money

March 5, 1933 FDR called for a bank holidayFederal Deposit Insurance

Banking Act of 1933 (Glass-Steagall Act)Created the FDICNow insured up to $250,000

Helped people feel safe about putting money in banks

Other Depository Other Depository InstitutionsInstitutionsCommercial Banks

Chartered by states or the National Banking System

2 characteristicsCatered to commercial and business interestsIssued demand deposit accounts

Thrift InstitutionsMutual savings bank

Depositor-owned financial institutionMSBs sold stock to raise additional funds

Became savings banksIntroduced the first Negotiable Order of

Withdrawal (NOW) accounts

Other Depository Other Depository InstitutionsInstitutionsSavings and Loan Associations

Invest majority of funds in home mortgages

Credit UnionsOwned and operated for their membersSponsor provides managementContributions are generally deducted

from paychecksAlso offer share drafts

Similar to NOW accountsAssets of credit unions are loans they

make to members

The National Banking System National Bank Requirements Set up in 1863 Use National or N.A. in its name Pass stiff inspections by the Comptroller of the.

Documents

The National Banking System National Bank Requirements Set up in 1863 Use National or N.A. in its name Pass stiff inspections by the Comptroller of the.