Economics_370_Money_and_Banking

Economics_370_Money_and_Banking - Economics 370 Money and...

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Unformatted text preview: Economics 370 Money and Banking Instructor Ryan Herzog Chapter 10 Banking Industry: Structure and Competition Historical Development of the Banking System Financial Innovation and the Evolution of the Banking Industry Structure of the U.S. Commercial Banking Industry Bank Consolidation and Nationwide Banking Separation of the Banking and Other Financial Industries Thrift Industry: Regulation and Structure International Banking Historical Development - Banks 1782 Bank of North America charted in Philadelphia 1791 Bank of the United States was created Established a national bank separate from state Acted as a private and central bank 1911 charter was not renewed due to concern over a central bank, Alexander Hamilton 1816 The Second Bank of the US was created Helped finance the War of 1812 Again advocates, Andrew Jackson argued against a central bank in favor of states rights 1832 The Second Bank of the US lapses Historical Development - Banks State Banks Chartered by the state commission in which they operated, no interstate banking There was no national currency Banks issued banknotes which could be redeemed for gold Banks failed on a regular basis Historical Development - Banks National Bank Act of 1863 Created federally chartered banks Created the Office of the Comptroller of the Currency Introduced heavy taxes on state banks intending to dry up funds for state banks Dual Banking System State banks were able to raise funds through deposits and today we have state and national banks Historical Development - Banks Federal Reserve 1913 National banks were required to become members of the Federal Reserve System State banks had the option of joining the system Federal Deposit Insurance Corporation 1933 Steamed from the 9,000 bank failures during the Great Depression Members of the Federal Reserve System were required to purchase insurance. Historical Development - Banks Glass-Steagall Act 1933 Investment decisions by banks caused many failures Prevents commercial banks from underwriting and dealing in corporate securities, but allows for purchases of pre-approved debt securities Many commercial and investment banks seperated First National Bank of Boston spun of First Boston Corporation, which is now Credit Suisse First Boston J.P. Morgan discontinued investment banking and created Morgan Stanley. Historical Development - Regulation The Office of the Comptroller of the Currency Responsible for 1,850 national banks The Federal Reserve With state banking authorities oversee 900 banks The Federal Deposit Insurance Corporation With state banking authorities oversee 4,800 state banks not part of the Federal Reserve Evolution of the Banking Industry...
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This note was uploaded on 05/20/2010 for the course DOF AAf001-6 taught by Professor Changchungdo during the Spring '10 term at 카이스트, 한국과학기술원.

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Economics_370_Money_and_Banking - Economics 370 Money and...

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