Facebook Twitter Pinterest Instagram Youtube DnB US banking system Open Menu Emergence of the Fed 04/09/2021 04/09/2021 Lindsey Langworth Lindsey Langworth Since 1913, the Federal Reserve System (FRS) has been serving as the central bank of the United States. It is a private organization that does not depend on the instructions of the executive and legislative authorities, but obeys the adopted laws and acts in the interests of the United States. Many American banks have become members of the Fed, which has made the system more centralized. In 1915, the Fed accounted for 48% of all deposits, and in 1972 – already 78%. Great Depression and Reforms The next milestone in the development of the American banking system was the crisis of the 1930s – the Great Depression. Many banks went bust, closed, or were bought by other banks. This process continued after the Depression, so in 1931 there were more than 31 thousand American banks in America, and in 1972 – less than 14 thousand. In the United States, antitrust legislation developed, banks were deprived of the right to own industrial and commercial enterprises, and it became more difficult to unite banking structures. According to the law of 1935, banking institutions with deposits of $ 1 million were required to join the Fed. This required the bank to have certain reserves and strict rules for conducting operations. Modern US banking system The banking system finally took shape only in 1980, when the Laws “On the Federal Reserve System” and “On Deregulation of Depository Institutions and Monetary Control” were adopted. Currently, the banking system of the United States consists of three tiers of institutions: The first level is the Federal Reserve System, which includes: 12 federal banks in the regions; advisory and regulatory bodies under the FRS. The second level consists of: commercial banks of various specializations; financial companies and lending institutions that are not banks; mutual savings banks and savings and loan associations. The third level includes: mutual credit societies; credit unions. What is the Fed and what does it do? The US Federal Reserve System is, in fact, the central bank of the state. The United States studied the experience of the central banks of European countries, but did not copy it, but created a new structure for its own needs. The Fed became a compromise between large financiers who stood for a private central bank with minimal state participation, their opponents who favored a state bank and part of the conservative Democrats who wanted to return to a system of many private banks that would not fall under the control of big capital due to the lack of Leave a Reply You must be logged in to post a comment. Post navigation Prev Previous Post Next Next Post Related DOES THE BANK COVERED BY INSURANCE? DOES THE BANK COVERED BY INSURANCE? There was a rumor that the bank is covered by insurance, and some people said they got the reimbursement. However,[...] KNOW MORE KNOW MORE CAN YOU USE BITCOINS FOR ONLINE SHOPPING? CAN YOU USE BITCOINS FOR ONLINE SHOPPING? Bitcoin is a cryptocurrency, the first and one of the most popular. The initial idea was to create a currency[...] KNOW MORE KNOW MORE FEDERAL RESERVE BANKS FEDERAL RESERVE BANKS The Fed's decisions have a tremendous impact on the global financial and stock markets.[...] KNOW MORE KNOW MORE LINDSEY LANGWORTH Financial Consulting Phone: (601) 885-4080 Email: Lindsey.Langworth@oberbrunner.org It should be borne in mind that the banking act of 1933 prohibited commercial banks from acquiring shares in industrial and trading companies. However, this does not mean the elimination of the merger of banks with industrial companies. A typical form of such a merger is the entry of the largest banks and industrial companies into the same financial and industrial groups. Large commercial banks have close ties with industry through long-term loans. About 3/4 of the total amount of “commercial and industrial loans” falls on large commercial banks, and among these loans, loans for a period of more than one year play an important role, some of which are provided for long periods – up to 8-10 years – and serve as a typical form of merger banks with industrial and trading companies. LATEST POSTS Small Business Credit Card Benefits 10/21/2021 Can I Buy Bitcoin With a Credit Card? 10/21/2021 Does the bank covered by insurance? 10/08/2021 Can you use bitcoins for online shopping? 10/08/2021 Cooperation Between Government and Banks 09/07/2021 SUBSCRIBE Subscribe Financial Consulting Phone: (601) 885-4080 Address: 47794 Rebekah Crest West Tony, CO 68096 Subscribe Subscribe About In recent years, in the United States, as in other developed countries, there has been an increase in government intervention in the banking sector. True, the country’s central issuing banks (federal reserve banks) are not (unlike the UK) the property of the state. However, they are run by the state, they are closely connected with the Ministry of Finance and invest their funds mainly in government securities. 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