Chapter10 - History and Structure of the Banking Industry...

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History and Structure of the Banking Industry Chapter 10
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Overview History of U.S. banking Commercial Bank Structure Thrift Industry Structure and Regulation The Rise of International Banking The Decline of Traditional Banking
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The History of the National Bank Combination between central bank and ‘national bank’ 1st National Bank: 1791-1811 Alexander Hamilton First charter allowed to lapse 2nd National Bank: 1816-1836 Abuses of state banks War of 1812
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The Battle of New Orleans
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No Central Banking Period 1836-1863: no central control! Farmers distrust, advocate state charters Jackson, proponent of ‘states rights’ (before civil war) State banknotes become popular currency Problems with state currency Lax regulations on bank capital Moral hazard and adverse selection Banknotes become worthless Fraud widespread
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National Bank Act of 1863 Attempt to address state currency issue Creation of Comptroller of Currency New federal chartered banking system Taxed state banknotes Civil War funding Dual Banking system States get around taxing by inventing checking accounts and demand deposits! Both state and federal banks survived, creating unique system
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Increasing Regulation Bank crashes and great depression Federal Reserve System - 1913 Not the same as a 3rd National Bank Required national banks to become members Members must follow tighter set of regulations McFadden Act: 1927 Restricts interstate branching Required national banks to follow state rules
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This note was uploaded on 04/07/2008 for the course ECON 4130 taught by Professor Springer during the Spring '08 term at Rensselaer Polytechnic Institute.

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Chapter10 - History and Structure of the Banking Industry...

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