Banking in the United States

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United States Banking began in 1781 with an act of United States Congress that established the Bank of North America in Philadelphia. During the American Revolutionary War, the Bank of North America was given a monopoly on currency; prior to this time, private banks printed their own bank notes, backed by deposits of gold and/or silver.

Robert Morris, the first Superintendent of Finance appointed under the Articles of Confederation, proposed the Bank of North America as a commercial bank that would act as fiscal agent for the government. The monopoly was seen as necessary because previous attempts to finance the Revolutionary War with paper currency had failed; after the war, a number of banks were chartered by the states under the Articles of Confederation, including the Bank of New York and the Bank of Massachusetts, both of which were chartered in 1784.

The Bank of North America was succeeded by the First Bank of the United States, which the United States Congress chartered in 1791 under Article One, Section 8 of the United States Constitution, after the Constitution replaced the Articles of Confederation as the foundation of American government. However, Congress failed to renew the charter for the Bank of the United States, which expired in 1811. Similarly, the Second Bank of the United States was chartered in 1816 and shuttered in 1836.

Contents

1 The era of free banking
2 The dual banking system
3 The federal reserve system
4 Deregulation
5 Bank mergers and brands
6 Bank size information

6.1 Top ten bank holding companies in the U.S. ranked by assets
6.2 Top ten bank holding companies in the U.S. ranked by deposits
6.3 Top ten Commercial Banks and Savings Institutions in the U.S. by Total Domestic Deposits

7 See also
8 Notes

The era of free banking

Prior to 1838, a bank could only be chartered by a legislative act. However, when the state of New York adopted the Free Banking Act in that year, anyone could charter a state bank simply by complying with certain charter conditions. This method of chartering banks was quickly adopted by other states. In 1863, Congress passed the National Bank Act, which created a national bank charter. Today, new banks may choose either state or national charters; the choice determines whether the state or Federal government regulates the new bank.

The dual banking system

The National Bank Act of 1863 created a system of banks throughout the United States that were chartered by the federal government. In 1865, an amendment to the act placed a tax on state bank notes, bringing all banks in the United States under federal supervision. However, a number of banks were exempt from the tax and continued under their state charters until the Federal Reserve Act of 1913. This was known as the "dual banking system."

The federal reserve system

The Federal Reserve Act of 1913 established the present day Federal Reserve System and brought all banks in the United States under the authority of the federal government, creating the twelve regional Federal Reserve Banks which are supervised by the Federal Reserve Board. Notwithstanding the Glass-Steagall Act of 1932 and the Banking Acts of 1933 and 1935, which were attempts to reform various banking abuses, the federal reserve system has remained more or less unchanged through to the present day. The Glass-Steagall Act was repealed in 1999, whereas the Banking Act of 1933 simply strengthened the supervisory powers of federal authorities and created the Federal Deposit Insurance Corporation (FDIC).

Deregulation

Legislation passed by the federal government during the 1980s, such as the Depository Institutions Deregulation and Monetary Control Act of 1980 and the Depository Institutions Act of 1982, diminished the distinctions between banks and other financial institutions in the United States. This legislation is frequently referred to as "deregulation," and it is often blamed for the failure of over 500 savings and loan associations between 1980 and 1988, and the subsequent failure of the Federal Savings and Loan Insurance Corporation (FSLIC) whose obligations were assumed by the FDIC in 1989. However, some critics of this viewpoint, particularly libertarians, have pointed out that the federal government's attempts at deregulation granted easy credit to federally insured financial institutions, encouraging them to overextend themselves and (thus) fail.

Bank mergers and brands

Some brands in the banking/financial services industry today are the result of a merger where the acquiring bank assumed the brand name of the bank it took over. This happened in the case of these mergers:

The Nations Bank/BankAmerica merger
The Norwest/Wells Fargo merger
The Firststar/US Bank merger
The Travelers/Citibank merger
The Chemical Bank/Chase merger
The Travelers Group/Citicorp merger
First Union/Wachovia merger

Bank size information

Top ten bank holding companies in the U.S. ranked by assets

Figures as of March 31, 2006, in U.S. dollarshttp://www.ffiec.gov/nicpubweb/nicweb/Top50Form.aspx Federal Financial Institutions Examination Council, National Information Center

Citigroup Inc. — 1.586 trillion
Bank of America Corp. — 1.375 trillion
J.P. Morgan Chase & Co. — 1.273 trillion
Wachovia Corp. — 541 billion
Wells Fargo & Co. — 492 billion
HSBC North America Holdings Inc. — 441 billion
Taunus Corp. — 391 billion
U.S. Bancorp — 209 billion
SunTrust Banks, Inc. — 178 billion
Countrywide Financial Corp. — 177 billion

Top ten bank holding companies in the U.S. ranked by deposits

As of June 30, 2005 in U.S. dollars. These are U.S. deposits only. This is not a ranking of the largest U.S.-based global banks.http://www2.fdic.gov/sod/sodSumReport.asp?barItem=3&sInfoAsOf=2005 fdic.gov, Analysts, Summary of Deposits, Summary Tables, Top 50 Bank Holdings Companies by Deposits

Bank of America Corp. — 577 billion
J.P. Morgan Chase & Co. — 406 billion
Wachovia Corp. — 286 billion
Wells Fargo & Co. — 262 billion
Citigroup Inc. — 207billion
U.S. Bancorp — 117 billion
SunTrust Banks, Inc. — 107 billion
Royal Bank of Scotland PLC — 99 billion
National City Corp. — 76 billion
BB&T Corporation — 69 billion

Top ten Commercial Banks and Savings Institutions in the U.S. by Total Domestic Deposits

As of June 30, 2005 in U.S. dollars. These are U.S. deposits only. This is not a ranking of the largest U.S.-based global banks. http://www2.fdic.gov/sod/sodSumReport.asp?barItem=3&sInfoAsOf=2005 fdic.gov, Analysts, Summary of Deposits, Summary Tables, Top 50 Commercial Banks and Savings Institutions by Total Domestic Deposits

Bank of America Corp. — 577 billion
J.P. Morgan Chase & Co. — 384 billion
Wachovia Corp. — 284 billion
Wells Fargo & Co. — 256 billion
Washington Mutual Inc. — 186 billion
Citibank — 131 billion
U.S. Bancorp, Inc. — 117 billion
SunTrust Banks — 106 billion
HSBC Bank USA NA — 62 billion
World Savings Bank — 58 billion

Notes