CHANGES IN BANKING POLICY

NATIONAL BANKING ACT

• Created dual banking which allowed banks to have state or national charters• National banks issue banknotes which are backed

by U.S. government bonds

FEDERAL RESERVE ACT

• Serves as nation’s central bank with power to regulate reserves in national banks, make loans to member banks, and control the money supply• Prints Federal Reserve notes as the major form of

currency

GREAT DEPRESSION

• Stock market hit bottom in 1929-stocks and other investments lost value• Businesses and individuals were unable to repay

loans from banks• Thousands of banks collapsed• Franklin Roosevelt (president) closed all banks for

100 days• Only banks that could prove they were financially

stable could reopen

FDIC

• Congress passed the Glass-Steagall Banking Act which established the FDIC• Allows the FDIC to regulate the S&L industry

GRAMM-LEACH BLILEY ACT

• Allows bank holding companies freedom to have full range of banking services• Advantage-creation of universal banks• Disadvantage-weaken competition among banks

for services