Bank Regulation Of The Modern Day Economy

One of the biggest arguments in favor of a national bank was that of paying of the debts to the soldiers of the revolutionary war. The government owed a lot of money to soldiers that had fought in the revolutionary war and had not been payed what they were promised. Jefferson was worried about setting up a national bank to pay them back because he thought that the ‘I owe yous’ created had depreciated in value. He did not want to set up a system of banking that would cheat war veterans out of the money they had rightfully earned. (1)

The Bank of the United States was designed to make money and build an economy. It was designed by men like Alexander Hamilton and Robert Morris, but did not benefit the common citizen as much as wealthy investors. Why did a fledgling government need to borrow millions from overseas in order to invest in a “national” bank, to turn around and then borrow the same money back and pay interest on it? The banking system developed by Alexander Hamilton and Robert Morris was prime pickings for speculators, and laid the groundwork for a history of unscrupulous activity regarding our nation’s money supply that continues to this day. The signatures on the Constitution were barely dry before corruption and

The Bank of the United States had the most power out of all the banks in America and it was the primary depository for the funds of the Washington government. Although, it controlled and minted much of the nation’s gold and silver, it did not distribute paper money. Unlike many smaller banks, the national bank was stable in value and vital to expanding the nations economy. However, the Bank of the United States was a private institution, not accountable to the people rather just to its wealthy moneyed investors. Nicholas Biddle, the banks president, held an immense and unconstitutional amount of power over the nations financial affairs. Some, including Jackson believed that the bank’s existence was against the equality advocated through American democracy. The Bank War began in 1832, when Daniel Webster and Henry Clay presented Congress with a bill to renew the Bank’s charter, even though it was not set to expire until 1836. Clay’s motive for pushing the bill four years earlier was to cause an election issue, however many had the same views on the bank as Jackson. The bill was passed and immediately vetoed by Jackson. His veto message resonated with constitutional consequences and increased the power of presidency, yet Jackson vetoed this bill because he believed the federal government did not have the power to control the nations

The Federal Reserve was not established until 1913. During the Revolutionary war, the federal government printed the United States first printed money. However after the war ended, the U.S. had a substantial amount of debt and there was no common currency at that time. In 1790 the First Bank of the U.S. was established to help deal with war debts that the United States had accumulated. Alexander Hamilton, the United States treasury secretary at the time, designed the bank. The bank had a main office in Philadelphia, and a branch in each of the nation’s 8 major cities.Though originally designed to help with the government’s finances, it also served as a commercial bank. This bank lasted from 1791 to 1811. As the debt from the War of 1812 piled

There have been many controversies since the United States declared independence in 1776. One of the many domestic issues that divided American citizens was developing the First National Bank in the late 1700s. Hamilton was in favor, while Jefferson opposed and American citizens chose their side based on what they believed what was best for the country. Hamilton proposed a Report on a National Bank in December of 1790 announcing what the National Bank would include. Hamilton’s proposal included, “The bank’s stock would be worth $10,000,000. 20,000 shares would be sold privately at $400 per share ... 5,000 shares or $2,000,000 of bank stock would be bought by the U.S. government. The bank would be run by a 25-man board of directors - 20 chosen by the shareholders and 5 by the government. The bank’s president would be elected by the board of directors. Notes and bills (money) issued by the bank would be redeemable on demand ... and would be accepted by the U.S. government for all payments due. The bank’s charter would run for 20 years and would be subject to renewal by Congress. The bank would be allowed to establish branch offices in other cities; its main branch would be in Philadelphia, the nation’s capital” (http://www.digitalhistory.uh.edu/teachers/lesson_plans/pdfs/unit3_ 4.pdf). Although the first part of the bank bill, establishing a national mint, did pass with ease, supporters and opposers debated the rest of the bill, which included the development of

Congress granted the charter for a national bank that would be for 20 years in 1791. It was most likely because George Washington supported the bank, it got the charter which would be headquartered in Philadelphia. However, the president hesitantly signed the charter in realization that a bank was essential for the nation's economic

This would help to stabilize the nation’s economy. The First Bank of the United State was established, allowing the regulation of credit and banking facilities nationwide. However, this bank did not have complete support and in 1811 when the bank’s charter was up for renewal, it was not approved by the Senate and the First Bank of the United States was closed. The war of 1812 highlighted that without a central bank, the Treasury Department struggled to finance the war. It was because of this struggle that in 1816, the Second Bank of the United States was established. Over the next twenty years, the Second Bank reduced the national debt, stabilized exchange rates and aided in national economic growth. As with its predecessor, the Second Bank of the United States closed at the end of its 20-year charter in 1836 due to lack of support in the Senate. Another Federal bank, the Federal Reserve, would not be established until 1913. It is with this third establishment of a national bank that economists recognized that Hamilton’s design was sound. The Federal Reserve continues to regulate the U.S. banking system

The banking industry consists of almost sixty-five hundred banks that are insured by the Federal Deposit Insurance Corporation (FDIC). Out of these, there are eighty-one substantially large banks in the United States that are publically traded, which is where the market structure and industry information will be based. However, as with the rest of the country, these banks are very concentrated, with the largest banks accounting for over half of the market as well as accounting for the largest amounts of revenue.

This necessitated the need for development of regulatory measures for the industry. Bank regulation is a legal structure by which all financial

Looking back to the outset of the 19th century, it is impossible to say that any real banking system had really been developed in the US. This is to say that, though there were roughly 120 private commercial banks that had been chartered by new state governments, the so-called system was scarcely organized. It was ad hoc in nature and directly linked to the merchant banking practices of the pre-independence period. The years preceding the turn of the century were important because they brought a central banking authority onto the scene. In 1789 the new federal government established a position for the Secretary of the Treasury. As we know, the first to hold this prestigious title was

After Congress refused the national bank before the war of 1812, the states started their own banks with their own currency. This made things difficult for the American people. There more than 400 different banks by 1818, with each of them having their own currency. Investors were losing and winning by just by picking different currency to follow. This left America in trouble. “To end the mayhem and strengthen the national government, proponents of the American System designed the Second Bank of the United States” (Shultz, 2014, p. 168). The new bank began in 1816. The start of the bank caused a major economic recession; when it first started it was loose with credit and then suddenly they changed to strict

The first central bank, First Bank of the United States, was first proposed by Alexander Hamilton. Hamilton wanted to use the bank to pay off Revolutionary War debts and to raise future money for the government. The First bank of the United was signed in 1791 and ran until 1811. During its function, Stephan Girard purchased majority shares and ran the bank. Congress refused to renew the bank at the end of its 20- year charter.

The First Bank of the United States lasted until 1811. In 1804, President Jefferson, who despised the bank, removed any money that the government had from its vaults. When the issue of

Financial regulation is necessary and without an efficient set of regulations a country could see rises in unemployment, interest rates, and the deterioration of financial intermediaries. With the globalization of the financial industry, it becomes more and more common for businesses to seek financing outside of their county 's boarders. These innovations in the financial industry stress why it is so important for regulations to be created and changed to reduce risk and asymmetric information in financial systems.

The United Kingdom banking industry, in the seventies and eighties, was a competitive and fairly unregulated market. These two factors in most industries implies that there is room for companies to grow. However, the market of personal banking was saturated - all customers that needed personal banking already belonged to a bank. The Big Four clearing British banks - Lloys, Midland, Barkleys, and National Westminster - dominated the retail banking industry. In this industry, where the players joke that, “people are more likely to switch partners than banks,” entry into this market would be very difficult. Only 1 in 30 people switched banks every year. It would take a superb value proposition and business model to acquire customers from other banks.