National Banking Act

(noun)

The National Banking Acts of 1863 and 1864 were two U.S. federal banking acts that created the U.S. National Banking System.

Related Terms

Examples of National Banking Act in the following topics:

  • The First National Bank

    • Against opposition, the First National Bank was established to improve the nation's credit under the newly enacted Constitution.
    • Hamilton's proposed national bank would function purely as a depository for federal funds, rather than a lending bank.
    • After reading Hamilton's defense of the National Bank Act, Washington signed the bill into law.
    • The First Bank building is now a National Historic Landmark located in Philadelphia, Pennsylvania within Independence National Historical Park.
    • Analyze the debate surrounding the charter of the First National Bank

  • Banking and Finance Reform

    • The banking holiday thus closed the nation's banks (until new legislation was passed) without prompting panic.
    • On March 9, Roosevelt sent to Congress the Emergency Banking Act, drafted in large part by Hoover's top advisors.
    • The act was passed and signed into law the same day.
    • The Emergency Banking Act, also known as the Glass–Steagall Act, also limited commercial bank securities activities and affiliations between commercial banks and securities firms to regulate speculations.
    • Several provisions of the act sought to restrict "speculative" uses of bank credit.

  • The United States Banking System

    • Treasury Department, regulates national banks.
    • As of 2010, the United States had roughly 1,500 national banks and 50 foreign national banks.
    • U.S. government imposed another restriction upon the U.S. banking industry – the McFadden Act.
    • The McFadden Act prohibited a commercial bank from opening a branch in another state.
    • Banks contribute to a nation's money supply.

  • Becoming an International Bank

    • Method 1: The U.S. bank opens a bank branch in a foreign country.
    • Bank branches help the bank transfer money across nations' borders.
    • Method 3: The U.S. bank becomes an Edge Act Corporation.
    • Furthermore, the Federal Reserve System exempts the subsidiary from some U.S. banking regulations and has the authority to approve the Edge ActCorporation.
    • An international banking facility, similar to an Edge Act corporation, accepts deposits from foreigners and makes loans to foreigners.

  • The Structure and Function of Other Banks

    • The primary function of a central bank is to manage the nation's money supply (monetary policy), through active duties such as managing interest rates, setting the reserve requirement, and acting as a lender of last resort to the banking sector during times of bank insolvency or financial crisis.
    • Central banks in most developed nations are institutionally designed to be independent from political interference.
    • The banks borrow cash, and when the repo notes come due the participating banks bid again.
    • The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based.
    • It was established to act as the English Government's banker, and was privately owned from its foundation in 1694 until it was nationalized in 1946.

  • The Bank War and Economic Boom

    • In the presidential campaign of 1832, the Bank of the United States was the issue dividing Jacksonian Democrats from National Republicans.
    • Anti-BUS Jacksonian Democrats opposed the national bank's reauthorization on the grounds that the institution conferred economic privileges on financial elites, violating republican principles of social equality.
    • With the Bank charter due to expire in 1836, the president of the Bank, Nicholas Biddle, in alliance with the National Republicans under Senators Henry Clay (KY) and Daniel Webster (MA), decided to make rechartering a referendum on the legitimacy of the institution in the general election of 1832.
    • In the presidential campaign of 1832, the BUS served as the central issue in mobilizing the opposing Jacksonian Democrats and National Republicans.
    • Despite the Senate's refusal to confirm Taney's appointment, during his nine months as acting Secretary, he carried out Jackson's orders.

  • Strengthening the Monetary System

    • This national bank holiday, with banks closed and Americans having no access to their deposits, gave Congress enough time to propose banking reform legislation.
    • On March 9, 1933, the Emergency Banking Act was introduced to and passed by Congress.
    • In June of the same year, more long-term solutions were presented in the Banking Act of 1933 (also known as the Glass-Steagall Act although this term is not precise and usually refers to the provisions of the Banking Act of 1933 that dealt with commercial bank).
    • The most important provisions introduced by the 1933 Banking Act were:
    • Some of the provisions of the 1933 Banking Act are still in effect.

  • The Glass Steagall Banking Act

    • Thus, the United States government passed the Glass-Steagall Banking Act in 1933.
    • In practice, the Glass-Steagall Banking Act insulated investment banking from the competition.
    • The United States government repealed pieces of the Glass-Steagall Act in 1999 to allow U.S. investment banks to compete internationally as they moved into commercial banking and insurance.
    • The Glass-Steagall Act also created the Federal Deposit Insurance Corporation (FDIC).
    • Contagion is a bank run on one bank leads to bank runs on other banks.

  • The Panic of 1819

    • The new nation had previously faced an economic depression following the War of Independence in the late 1780s and 1790s, but nothing as severe.
    • In an effort to bring stability to the nation’s banking system, Congress chartered the Second Bank of the United States (a revival of Alexander Hamilton’s national bank) in 1816.
    • In an effort to stimulate the economy in the midst of the economic depression, Congress passed several acts modifying land sales.
    • The Relief Act of 1821 allowed people from Ohio to return land to the government if they could not afford to keep it.
    • The act also extended the credit period to eight years.

  • The Special Case of Banking

    • Determined to prevent that from happening again, Depression-era politicians enacted the Glass-Steagall Act, which prohibited the mixing of banking, securities, and insurance businesses.
    • Then, in late 1999, Congress enacted the Financial Services Modernization Act of 1999, which repealed the Glass-Steagall Act.
    • The S&L crisis in a few years mushroomed into the biggest national financial scandal in American history.
    • In 1989, Congress and the president agreed on a taxpayer-financed bailout measure known as the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA).
    • This act provided $50 billion to close failed S&Ls, totally changed the regulatory apparatus for savings institutions, and imposed new portfolio constraints.