Chapter 11

1. Do you think that before the National Bank Act of 1863 the prevailing
conditions in the banking industry fostered or hindered trade across states in the United
States?

They hindered trade across states because there was no national currency and the

banknotes issued by the  state-chartered banks had become worthless.

2. Why does the United States operate under a dual banking system?

Throughout most of the history of banking in the United States, there has been a fear of
centralized banking power. As a result all banks had been chartered locally by each state.
Due to lax regulation by some states, banks regularly failed due to lack of sufficient capital
or fraud. To stabilize the banking system, the federal government introduced the National
Banking Act of 1863, which created a system of federally chartered banks which were
subject to greater regulation and scrutiny. Since federally chartered banks were less prone
to failure, they increased in number over the years. However, the skepticism of centralized
power in the banking system still allowed state banks to operate effectively. And although
there have been attempts over the years to force all banks to be federally chartered, due
to more uniformity in the chartering process, the distinctions between state and federally
chartered banks have diminished, and so the two standards are still in operation today. 

3. In light of the recent financial crisis of 2007–2009, do you think that the firewall
created by the Glass-Steagall Act of 1933 between commercial banking and the securities
industry proved to be a good thing or not?

Yes. In fact, the repeal of the Glass-Steagall Act is something that many
point toas a cause of the 2008 financial crisis. The firewall between
commercial bankingand the securities industry was a good thing
 

4. Which regulatory agency has the primary responsibility for supervising the
following categories of commercial banks?
a. National Banks ‘’’’’’’’’’’’’’’’’’’’’’’’’’’’’’ Comptroller of the Currency.
b. Bank holding companies ‘’’’’’’’’’’’’’’’’’’’’’’’’’’’’’ Federal Reserve System
c. Non-Federal Reserve member state banks ‘’’’’’’’’’’’’’’’’’’’’’’’’’’’’’ State banking
authorities.
d. Federal Reserve member state Banks ‘’’’’’’’’’’’’’’’’’’’’’’’’’’’’’ Federal Reserve
System.
e. Federally chartered savings and loan associations ‘’’’’’’’’’’’’’’’’’’’’’’’’’’’’’ Office of
Thrift Supervision
f. Federally chartered credit unions ‘’’’’’’’’’’’’’’’’’’’’’’’’’’’’’ National Credit Union
Administration.