1791-1811 The First Bank of the United States is established as first central bank in America. The bank closed when Congress failed to renew the original 20 year charter.
1816-1836 The Second Bank of the United States is created as a central bank to help manage national debt and standardize currency. This bank also failed to exist beyond it’s initial charter.
1913 Woodrow Wilson signs the Federal Reserve Act into law. This establishes today’s Federal Reserve System, consisting of 12 Federal Reserve Districts and Federal Reserve Banks.
1929 The stock market crashes on October 29th. Many believe this event sparked the Great Depression, resulting in massive bank failures and driving the unemployment rate up. By 1933, 11,000 banks had closed and 25-30% of America’s work force were unemployed.
1944-1971 The Bretton Woods era started in a small place in New Hampshire that shares the era’s name. Forty-four delegates from various countries gathered there after the Second World War to construct a financial system and set financial standards that would stabilize the global post-war economy.
1971 President Nixon breaks away from the world gold standard set by the Bretton Woods system. Breaking away from the gold standard allows the U.S. dollar to determine value through market forces instead of being fixed to gold reserves.
2001-2007 The housing bubble starts after interest rates are lowered following the attacks on September 11th. The bubble begins to burst in the spring of 2007 when large financial companies slow or stop lending and begin to report heavy revenue losses.
2008 President Bush signs the Emergency Economic Stabilization Act to provide stability and continuity to a struggling U.S. economy. The bill called for financial bailouts of key financial companies.
2009 (February) House of Representatives member Ron Paul introduces H.R. 1027, also known as the Federal Reserve Transparency Act, in order to allow Congress access to information about Federal Reserve actions.
2009 (November) Senator Chris Dodd introduces a Financial Reform Bill that would create a single federal bank regulator, combining the Federal Reserve with other federal bank regulators.
http://www.federalreserve.gov/boarddocs/speeches/2004/200403022/default.htm This is text from an interesting speech given by current Federal Reserve Chairman Ben Bernanke. In the speech, he discusses how the Federal Reserve exacerbated the national financial crisis during the Great Depression. Bernanke had not yet been appointed as the Fed’s chairman at the time of this speech.
http://www.washingtonpost.com/wp-dyn/content/article/2009/12/07/AR2009120703908.html This Washington Post article discusses why House of Representatives member Ron Paul is unlikely to vote for the bill he introduced to the house. It shows Paul’s voting record and how he remains an outsider to the politics of Washington.
http://www.bloomberg.com/apps/news?pid=20601070&sid=al2H.fj3COFA This Bloomberg news article discusses Senator Chris Dodd choosing not to seek re-election. The article mentions Dodd’s work on the Financial Reform Bill and highlights other Congressional achievements. It also discusses his decrease in popularity.
http://docs.google.com/viewer?a=v&q=cache:0h-xIJAS0_MJ:ecedweb.unomaha.edu/ve/library/GFRT.PDF+Federal+Reserve&hl=en&gl=us&sig=AHIEtbSozpowCkZZ-qnhHqP34U9NmkLwag This is a reference document from the library at the University of Nebraska at Omaha. It is a list of glossary terms associated with the Federal Reserve.
http://www.nytimes.com/2008/10/24/business/economy/24panel.html This New York Times article reports on former Fed Chairman Alan Greenspan’s Congressional hearing. It discusses his fall from grace and speaks of him admitting errors he made while he was chairman.
The economic crisis experienced in 2008 created a recession severe enough to draw comparisons to the Great Depression experienced in the late 20’s and early 30’s. The Federal Reserve had been established prior to the Great Depression in order to prevent economic disasters like the Great Depression and our country’s current recession. During this current economic downturn, the Fed took unprecedented steps to jump-start recovery. Politics and the economy are also incapable of being separated. The Fed currently is battling to remain independent of politics. It maintains that unpopular choices have to be made to ensure that markets maintain stability. However, the current recession has the general public and politicians seeking answers. Current legislation looks to get those answers while walking the fragile line of political interference with a historically strong U.S. economy.