E.6.3+Explain+the+role+of+banks+and+other+financial+institutions+in+the+economy+of+the+United+States.



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//Focus Question: What is a bank and how does it operate?//

 * Topics on the Page **
 * History of American Banks and Banking **
 * Banking in the United States Today **
 * ** Special Topic Page on ** **The 2008 Financial Crisis**
 * Federal Deposit Insurance Corporation **
 * Credit Unions **
 * Federal Reserve Banking **
 * ** Discrimination in Banking Practices **
 * ** Redlining and Housing Discrimination Against African Americans **
 * Teaching Students about Banking **

**History of American Banks and Banking**

 * Click here for background information on [|What Is A Bank?] from ThinkQuest.**


 * Click [|here] for a Crash Course on Banks.**


 * [[image:http://upload.wikimedia.org/wikipedia/commons/thumb/7/7a/Hebrew_timeline.svg/200px-Hebrew_timeline.svg.png width="140" height="10"]]Timeline of the US Banking System**

Check this link out: History of American Banks
 * U.S. Banking System: Origin, Development, Regulation

The official beginning of the American Banking system came with the Articles of Confederation in **1781**.
 * Alexander Hamilton wanted a Federal Banking system, which all states would use, instead of creating an individual system for each state.
 * Prior to this, only States were allowed to create and charter banks.
 * In **1791** the US government charted the First Bank of the United States, which replaced the bank established in ** 1781 **.
 * After the end of the Revolutionary War, a number of state banks were chartered.
 * The First Bank of the United States expired in **1811** when Congress failed to renew the charter.
 * The Second Bank of the United States was chartered in **1816**, and shut down in **1836** . This started the rise of commercial banking, which is the banking that we are familiar with today.
 * After the Great Depression, the regulation que was created- banks were required to keep a certain percentage of assets to protect from a rush.

[[image:http://upload.wikimedia.org/wikipedia/commons/2/2f/2011-11-22_Wells_Fargo_ATMs_lit_at_night.jpg width="366" height="238" align="right" caption="Wells Fargo walk up ATMs "]]

 * **See USI.24 for information on Andrew Jackson's veto of the National Ban**k.


 * **See USII.11 for more about economic issues, the Wall Street Crash of 1929 and the Great Depression.**

**Banking Today in the United States**
For information about how banks affected the American economy, see the 2008 Financial Crisis.

Role of Banking system: 1) operate payment systems: checks, bank cards, credit cards

2) Financial Intermediation: lending or investing money into the economy, housing or investments.

US Banking Today


 * Top 10 Biggest Banks in America, Forbes**

FDIC: Federal Deposit Insurance Corporation
Click [|here] for a Crash Course on the Great Depression and why the FDIC is important. A FDIC protects a portion of your money so that if a bank run would happen, part of your money would be protected, attempting to keep from a depression.

** Credit Unions **
The first Credit Union was founded in **1908** in New Hampshire.

 **Define Credit Union** : Credit unions worldwide offer members much more than financial services. They provide members the opportunity to own their own financial institution and help them create opportunities such as starting small businesses, building family homes and educating their children. Credit unions are democratic, member-owned financial cooperatives. Credit unions exist to serve their members and communities. Credit unions are safe, convenient places to access affordable financial services. (Definition from the WOCCU)

[|The Three Agencies with the Power to Make or Break Economies] is a TED Talk about the power of private credit rating agencies.

Redlining
Redlining, Still a Thing, 2015

Red Lining Syracuse, NY, 1930s

Home Owners' Loan Corporation

Chicago's Racial Restrictive Covenants

**Federal Reserve Banking**

For more on the Federal Reserve, see Economics E.6.4.

Check this link out: Federal Reserve Bank.

- In short: the Federal Reserve Bank is the bank for banks and the US.

- US Treasury collects taxes, and the taxes are deposited in the FRB.

- It plays a key role in the economy, and has the ability to spur the economy by adjusting the interest rates. The interest rates affect how much the banks pay and ultimately their customers

[[image:multicultural.png]]Discrimination in Banking Practices
Bank to Pay 10.6 million over Loan Discrimination


 * See United States History II.22 for background on redlining**

**Teaching Students about Banks and Banking**


Lesson Plan on banking in the 20th and 21st centuries.

Teaching students how credit cards work.

Learn about individual borrowing, mortgages and the role of consumers from Inside the Meltdown from PBS.

Alexander Hamilton vs. today's banking system

=** Click [|here] for The Most Powerful Women in Banking from //The American Banker.// **=