1.  Doctors recommend that you eat banana peels, they are a good source of nutrition for you  If you search for askew in google, the content will tilt slightly to the right  In Greek mythology it was believed that redheads turned to vampires when they died  The founder of match.com lost his girlfriend to a man she met on match.com

2. Unit III: Financial Institutions Lesson 3

3. B: I can explain the role of financial institutions and compare and contrast the different types F: I can explain how certain historical events have influenced the banking system and other financial institutions

4.  Early on, banks were informal businesses that merchants managed in addition to their regular trade.  After the American Revolution, the new nation’s leaders decided that they needed to establish a safe, stable banking system. This led to a disagreement on how to organize the national banking system

5. ALEXANDER HAMILTONTHOMAS JEFFERSON  Federalists called for centralized banking  Alexander Hamilton was the Secretary of the Treasury and pushed for a national bank regulated by the federal government  Antifederalists, led by Thomas Jefferson, wanted decentralized banking  They favored a system in which states established and regulated banks within their borders

6.  In 1791 the Bank of the United States was set up.  It was the largest and most powerful bank in the US  It collected fees and paid the bills for the federal government. Antifederalists argued that the Bank was unconstitutional and that it did not benefit ordinary people, only the wealthy.

7.  The Bank functioned until 1811, when its charter ran out. State banks then took over for the Bank of the United States People no longer trusted the banks, causing chaos

8.  To eliminate the chaos, Congress charted the Second Bank of the United States in 1816  Stability was restored but many were still wary of the Bank’s powers. President Andrew Jackson vetoed the renewal in 1832  Jackson took all of the money out of the banks and put it in small state banks  These banks loaned all the money out to people who didn’t pay back their loans Led to the Panic of 1837

9.  As state-charted banks flourished once again from 1837 to 1863, the sheer number of banks gave rise to a variety of problems, including: Bank runs, panics, fraud, many different currencies Wildcat banks that were inadequately financed and had a high rate of failure

10.  During the war the north and south both printed money to pay their bills  Union money was fiat money nicknamed “greenbacks”- backed only by the government promising to pay it back  Banks in the Confederacy began to print so many bills they lost their value

11.  Congress passed the National Banking Acts of 1863 and 1864  They gave the federal government the power to: Charter banks Require that banks hold an adequate amount of gold and silver reserves Issue a national currency  In the 1870s the nation adopted the gold standard, which set a definite value for the dollar. The government could not print more money than it had in gold or silver

12.  Banks made many bad loans and people began losing trust in banks (Panic of 1907)  Too many people demanded their money from banks causing a bank run Bank run: A widespread panic in which many people try to get their paper money at the same time  This Panic resulted in the Federal Reserve System

13.  In 1913, the Federal Reserve Act established the Federal Reserve System, which reorganized the federal banking system to include: 12 Federal Reserve Banks that control regional districts The Federal Reserve Board Short-term loans Federal Reserve notes

15.  Look at the Letter and Number beneath the serial number A1: Boston G7: Chicago B2: New York City H8: St. Louis C3: Philadelphia I9: Minneapolis D4: Cleveland J10: Kansas City E5: Richmond K11: Dallas F6: Atlanta L12: San Francisco

16.  The Stock Market Crash of October 1929 led to the Great Depression where a failing economy led to people not able to pay back loans- results in bank runs  Created a bank holiday- all banks closed and could only reopen when declared safe

17.  President Franklin Roosevelt acted to restore the banking system in the 1930s by establishing the FDIC, which insured customer deposits if a bank failed. Insured up to $250,000 FDR also changed the American currency from the gold standard to being directly convertible to gold

18.  Subprime: loans made to borrowers with a bad credit history (more likely to fail to pay back the loan)  During the 1990s housing market boom banks began to take risks and make many subprime loans  Interest rates rose in 2006 causing many people to default on their mortgages, which led to foreclosures.

19.  Mortgage companies and banks lost millions, laid off thousands of employees, and the US was in its worst economic downturn since the Great Depression

22.  Countries, Companies, and people saving money  Was at $36 Trillion in the year 2000  Grew to $70 Trillion in 2006 because poorer countries like India, China, and Saudi Arabia became rich

28.  One hundred mortgage companies went bankrupt  Bear Stearns was forced to be sold/merge with JP Morgan Chase  Lehman Brothers declared Bankruptcy  Wells Fargo bought Washington Mutual  JP Morgan Chase bought Wachovia  Fannie Mae and Freddie Mac were on the hook for 5 trillion in mortgage assets and needs to be bailed out by the US Treasury

29.  Ability to purchase is down, therefore its harder to sell  Millions are out of jobs- unemployment rises  Stock Market begins to struggle as investments fall  National debts rise

30.  What type of money does the US use?  What are the six characteristics of money?  What are the three uses of money?  How is the money supply calculated  How is money really created in the US?

31.  What are the three main services of financial institutions?  What are the three types of loans?  What is the difference between simple and compound interest?  What are the five main types of financial institutions?

32.  Who were the leaders when debating over the First Bank of the US?  What led to the Panic of 1837?  What did the National Banking Acts of 1863 and 1864 do?  What was created after the Panic of 1907?  How is the Federal Reserve organized?  What did FDR create that insures your money in banks?