Landmark Banking Bills of the Past Two Centuries
Signed by Abraham Lincoln, the National Banking Acts created the federal bank charter, the Office of the Comptroller of the Currency and a uniform national currency. "The national system will create a reliable and permanent influence in support of the national credit, and protect the people against losses in the use of paper money," Lincoln said in his 1864 State of the Union address.
There were precursors to the U.S. central bank up through the early 1800s. But following a series of financial panics starting in 1907, the Federal Reserve Act - signed by Woodrow Wilson - created the Federal Reserve, the Fed's system of regional district banks, the seven-member Federal Reserve Board and the Federal Reserve notes now known as the U.S. dollar.
Though the Depression-era "Glass-Steagall" law commonly refers to the separation of commercial and investment banking that existed until the late nineties, the law championed by Sen. Carter Glass, D-Va., and Sen. Henry Steagall, D-Ala. also created the FDIC to insure deposits, imposed new rules on banks' transactions with affiliates and established new regulatory powers to remove officers and directors.
The law governing the Federal Reserve's oversight of bank parents made it illegal for a firm registering as a bank holding company to be engaged in nonfinancial activities. Yet permitted activities of bank holding companies were broadened in future bills, with provisions allowing them to operate in multiple states, and most notably in Gramm-Leach-Bliley, to let BHCs own both banks and securities firms. (Image: Bloomberg News)
The CRA - signed by Jimmy Carter - created new requirements for regulators to promote lending in a bank's local market, including in low- and moderate-income areas. Yet the law is sometimes targeted by critics who say CRA loosened lending standards.
Congress passed two laws - the 1989 Financial Institutions Reform, Recovery, and Enforcement Act and the 1991 Federal Deposit Insurance Corporation Improvement Act - to deal with the aftermath of the savings and loan debacle. The Office of Thrift Supervision was created, the FDIC had to accept the "least costly" solutions for resolving failures and "prompt corrective action" was established.
Today, multi state branching networks are commonplace. But it was not until Congress passed the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 that federally-chartered banks were permitted to operate across state lines. Before enactment, some states had already allowed such activities for their banks through state-by-state agreements.
The Gramm-Leach-Bliley Act of 1999 was passed with much fanfare at the time, a triumph for deregulatory advocates that had pushed to break down the walls separating the banking, insurance and securities industries. In retrospect, however, critics would see it - fairly or not - as the bill that helped enable the financial crisis. (Image: Bloomberg News)
It was hard to predict just a few years earlier, when real estate prices were soaring, that Congress would rewrite the rules for financial consumer protection and large bank oversight following the worst crash since the Depression. The OTS, created just couple of decades earlier, was gone. Deposit insurance limits were doubled. And regulators were given authority to create their own wind-down regime for failing behemoths. (Image: Bloomberg News)
From the National Banking Act signed by Abraham Lincoln all the way to the 2010 Dodd-Frank Act, the structure of the bank regulatory system has been a work in progress. Here are some of the biggest laws of the last 150 years.
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