the national banking system national bank requirements set up in 1863 use national or n.a. in its...
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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