The Federal Reserve Bank and the Mtg Crisis

Detailed Outline – The Need for Centralized Banking in the United States

I. Introduction

a. Discussion of what the Federal Reserve System is in today’s economy.

b. Brief discussion of the United States history of banking in general.

II. The Panic of 1907

a. What happened?

b. The creation of the Federal Reserve.

III. Steps that the United States Federal Reserve is taking in present day to handle the

current financial crisis.

a. Mortgage Back Securities

b. Regulations on mortgage lending

c. Regulations on government agencies, Fannie Mae and Freddie Mac.

IV. Conclusion

In the past 200 years, the United States’ economy has become one of the largest and most developed economic and financial institutions in the world. Prior to the creation of the Federal Reserve Banking system, a network of banks implemented to preserve union and order among the states through monetary standardization, there were various currencies floating around in the United States serving the needs of commerce. Currency could be issued by almost anyone, as even drug stores issued their own notes. With no recognized official regulator to standardize currency worth, problems like the value of some currencies being worth more than others began to form. Some currencies were backed by silver or gold, while others by government bonds. Due to currency inconsistencies, there were even times when banks did not have enough money to honor withdrawals made by customers. One can only imagine going to the bank to withdraw money from your savings account and being told you could not, because they did not have your money. An unruly system, order had to come in through one form or another if things were to improve.

During the 1900’s, banks were collapsing and the economy swung wildly from one extreme to the next. In the unpredictable climate, the faith Americans had in the banking systems was not strong. This was the call...