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The National Bank Act of 1863 was passed on February 25, 1863, and was the first attempt to establish a federal banking system after the failures of the First and Second Banks of the United States, and served as the predecessor to the Federal Reserve Act of 1913.
Ever since the National Bank Act, national-chartered banks were effectively prohibited from interstate banking. This prohibition was further enshrined in the McFadden Act of 1927. The restriction on interstate banking prevented banks from achieving geographic diversification, making them especially vulnerable to local economic disruptions.
National bank notes were not however "lawful tender", and could not be used as bank reserves under the National Bank Act. The Federal government issued greenbacks which fulfilled this role along with gold. [12] Congress suspended the gold standard in 1861 early in the Civil War and began issuing paper currency (greenbacks).
George Washington. The President, Directors and Company of the Bank of the United States, commonly known as the First Bank of the United States, was a national bank, chartered for a term of twenty years, by the United States Congress on February 25, 1791. It followed the Bank of North America, the nation's first de facto national bank.
The banks each had the power to issue standardized national bank notes based on United States bonds held by the bank. The Act was totally revised in 1864 and later named the National-Bank Act, or National Banking Act, as it is popularly known. The administration of the new national banking system was vested in the newly created Office of the ...
A national bank is a bank that is nationally or federally chartered and is allowed to operate throughout the country in any state. An advantage of holding a National Bank Act charter is that a national bank is not subject to state usury laws intended to prevent predatory lending. [15] (However, see also Cuomo v.
The advantage of holding a National Bank Act charter is that a national bank is not subject to state usury laws intended to prevent predatory lending. [6] However, in Cuomo v. Clearing House Association, L. L. C. , the Supreme Court ruled that federal banking regulations do not preempt the ability of states to enforce their own fair-lending ...
To correct such conditions, Congress passed (1863) the National Bank Act, which provided for a system of banks to be chartered by the federal government. The National Banking Acts of 1863 and 1864 were two United States federal laws that established a system of national charters for banks, and created the United States National Banking System.