The Federal Reserve has been a driving force in the economic history of the United States for a century. It’s taken the economy through wars, terrorist attacks, bank runs, Wall Street crashes, oil shocks, runaway inflation, recessions and the Great Depression — sometimes with greater success than others.

This timeline shows how the Fed evolved through history — how it gained influence and became the main force in the monetary policy of the U.S.


1700s

First Bank of the United States

1791

First Bank of the United States

Congress creates the First Bank of the United States in Philadelphia to help the government deal with war debt. Alexander Hamilton is the architect of the bank. The bank starts with a capital of $10 million.


1800s

Bank charter renewal fails

1811

With the government's war debt largely paid off, Congress refuses to renew the bank's charter by one vote, when it expired in 1811.


Second Bank of the United States

1816

Federal debt begins to accumulate again with the War of 1812. Congress agrees to charter the Second Bank of the United States.


State banks take hold

1836

Andrew Jackson

The Second Bank's charter expires with opposition from Andrew Jackson. State-chartered banks and unchartered "free banks" take hold during this period, issuing their own notes.


Clearinghouse formed

1853

The New York Clearinghouse Association is created so that the city's banks can exchange checks and settle accounts.


Uniform currency in offing

1863

National bank note

The National Banking Act is passed. One amendment to the act requires taxation on state bank notes but not the national bank notes, leading to the formation of a uniform national currency.


First depression triggered

1893

A bank panic partially triggers the worst depression in the United States. The economy stabilizes only with the intervention of financial mogul J.P. Morgan.


1900s

Second bank panic occurs

1907

Panic on Wall St.

Speculation on Wall Street triggers another bank panic. By then, there is a growing consensus among Americans that a central banking system is needed.


Law provides emergency currency

1908

The Aldrich-Vreeland Act passes to provide emergency currency issues during crises. The National Monetary Commission also is created to seek a long-term solution to the nation's banking problems.


Federal Reserve created

1913

President Woodrow Wilson signs the Federal Reserve Act into law, creating a decentralized central bank.


District banks open

1914

Twelve Federal Reserve district banks open for business.


Fed helps war financing

1917

World War I

The Fed indirectly assists in financing World War I by aiding the flow of goods to Europe.


Strong named Fed chair

1923

Benjamin Strong becomes head of the New York Fed. His aggressive actions promote the use of open market operations as a monetary policy tool.


Stock market crashes

1929

In October 1929, the U.S. falls into the worst depression in its history after a stock market crash. Nearly 10,000 banks fail in the first three years of the 1930s.


Glass-Steagall passed

1933

President Franklin Roosevelt

President Franklin Roosevelt announces a four-day bank holiday starting on March 6. The Glass-Steagall Act is passed in the wake of the Great Depression, calling for the separation of commercial and investment banks. The act also created the Federal Deposit Insurance Corp. Roosevelt takes the nation off the gold standard.


FOMC created

1935

The Banking Act of 1935 creates the Federal Open Market Committee. The Treasury secretary and comptroller of the currency are removed from the Fed's governing board and board members are given 14-year terms.


Fed goal -- Max. employment

1946

The Employment Act adds the goal of promoting maximum employment as one of the Fed's responsibilities.


Korean War erupts

1951

Fed Chairman William McChesney Martin

As the Korean War breaks out, the Fed faces pressure to maintain low interest rates to support the war. Fed Chairman William McChesney Martin breaks with the practice, helping the Fed become more independent in its use of open-market operations.


Fed becomes regulator

1956

The Bank Holding Company Act names the Fed as the regulator of bank holding companies.


Fed chairman testifies

1978

The Humphrey-Hawkins Act requires the Fed chairman to testify before Congress twice a year.


Volcker becomes Fed chair

1979

Paul Volcker

Paul Volcker takes over as Fed chairman. He brings double-digit inflation of the early 1980s under control.


Reserve requirements kick in

1980

The Monetary Control Act of 1980 requires the Fed to establish reserve requirements for all eligible institutions. It marks the beginning of modern bank reform, as interstate banking expands.


Greenspan takes over

1987

Fed Chairman Alan Greenspan takes office. The stock market plummets on Oct. 19, 1987. Greenspan issues this statement the following day:

"The Federal Reserve, consistent with its responsibilities as the nation's central bank, affirmed today its readiness to serve as a source of liquidity to support the economic and financial system."
-- Fed Chairman Alan Greenspan

New law replaces Glass-Steagall

1999

The Gramm-Leach-Bliley Act is passed, overturning Glass-Steagall and allowing banks to offer a menu of financial services.


2000s

Sept. 11 attacks

2001

The Fed issues this statement after terrorist attacks on Sept. 11 at the World Trade Center and elsewhere:

"The Federal Reserve System is open and operating. The discount window is available to meet liquidity needs."

Fed lends to banks

2003

The Federal Reserve changes its discount window operations to have rates set above the prevailing federal funds rate and provide rationing of loans to banks through interest rates.


Bernanke: New Fed chair

2006

Ben Bernanke

Ben Bernanke takes office as chairman on Feb. 1, and also begins a 14-year term as a member of the Federal Reserve Board.


Banks stung by mortgage securities

2007

Standard and Poor's places 612 securities backed by subprime residential mortgages on a credit watch. Bear Stearns liquidates two hedge funds that had invested in mortgage-backed securities. And, American Home Mortgage Investment Corp. files for bankruptcy. Fitch Ratings downgrades Countrywide Financial Corp. The Fed cuts the federal funds rate.


Fed bails out Bear Stearns

2008

Bank of America buys Countrywide Financial. The Fed bails out Bear Stearns. BofA buys Merrill Lynch. Lehman Brothers files for bankruptcy. Regulators close Washington Mutual. Wells Fargo buys Wachovia Bank. President George W. Bush signs law setting up the $700 million Troubled Asset Relief Program. The Treasury buys into AIG. The Fed cuts key rate to near zero and begins its first round of quantitative easing, buying $600 million in mortgage-backed securities.


140 banks fail

2009

Fannie Mae © Frontpage/Shutterstock.com

The Fed continues to buy mortgage-backed securities insured by Fannie Mae, Freddie Mac and Ginnie Mae, and introduces bank stress tests. Dow Jones industrial average hits 12-year low and 140 banks fail.


QE2 kicks in

2010

Fed announces QE2, buying $600 billion in longer-term Treasury securities. The Dodd-Frank financial reform law becomes law. Bernanke begins second term as Fed chairman.


CFPB opens

2011

The Federal Reserve ends QE2. The Consumer Financial Protection Bureau opens.


QE3 begins

2012

The Fed announces QE3. In this round of easing, the Fed says it will buy $40 million in mortgage-backed securities per month. It later expands it, adding $45 million per month in longer-term Treasury securities.


Yellen nominated as Fed chair

2013

Janet Yellen

The Dow hits all-time high. The Fed keeps interest rates near zero. Janet Yellen approved as new Fed chair.


Fed tapers economic stimulus

Dec. 18, 2013

The Fed begins to taper its asset purchases from $85 billion per month to $75 billion, but keeps the federal funds rate at 0 percent to 0.25 percent.


New leader takes Fed helm

Feb. 3, 2014

Janet Yellen becomes Fed chair, one day after Ben Bernanke steps down after eight years.

March 19, 2014

Yellen chairs first FOMC meeting, and continues Bernanke’s tapering of asset purchases.


Source: The Federal Reserve and the Federal Reserve Banks of Philadelphia, Minneapolis and St. Louis.

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