- Successful and thus led to the opening of many other banks

- Proposed controversy - Who should charter banks: state or federal government?

1791 – Bank of United States is chartered

- Alexander Hamilton and the Federalists wanted a strong central bank (federal charter)

- As a result, the Bank of the United States was chartered

- Carried characteristics of both private and central banks

- Agriculturalists and others leery of centralized power of federal government and the wealthy interests on cities, wanted banks to be state chartered.

1811 - Bank of United States charter allowed to lapse

- Pro state interests pressured politicians to allow charter of Bank of United States to lapse

- Central bank needed to help fund War of 1812

1816 – Second Bank of the United States chartered

- Congress chartered bank under continued controversy: state vs. federal charter

- Supported state’s rights, vetoed national bank charter

- All commercial banks until 1863 chartered by state banking commissions

The FDCIA also gave the Fed increased powers to gain information about foreign banks through the FBSEA. It also allows the Fed to prevent operations if a foreign bank in the U.S. is not supervised adequately or practices are unsound.

- Limited service operations known as nonbank banks

3) Undercapitalized – fail to meet minimum capital requirements: must make corrective action such as submit capital restoration plan to FDIC, restrict asset growth and seek approval to open new branches or develop new lines of business

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