A review of the history of US banking covers the period from the 1819 financial panic to 2023.
1819-1821:
Cause: Financial panic. After Britain and France ended their fighting, the market for American goods collapsed, triggering US bank failures. Also there was excessive speculation in public lands driven by loose government issuing of paper money. The result: Many banks failed.
1837 to mid-1840s:
Cause: Speculation. There was a land price bubble, speculative lending practices in western US states, and rapid decrease in cotton prices. Result: Out of 850 banks then, 343 banks failed; and an additional 62 banks “partially failed”.
1873:
Cause: Financial panic. The bankruptcy of a railroad company, Jay Cooke & Co, which started selling railroad bonds in September 1873, led to the 1873 panic.
1907:
Cause: Speculation. Two speculators named F. Charles W. Morse and Augustus Heinze tried to corner the United Copper stock, but they failed and suffered significant losses. Depositors started taking their money out of banks connected to these two men.
1929 to 1930s:
Cause: Stock market crash and “Great Depression”. The “Black Tuesday” stock market fall on October 29, 1929, marked the formal beginning of the Great Depression. Bank runs in the 1930s saw the failure of around 9,000 US banks.
FDIC
• The Federal Deposit Insurance Corporation (FDIC) is a US government organisation that provides deposit protection to depositors in commercial and savings banks in the United States.

• It was established by the Banking Act of 1933, which was adopted during the Great Depression to restore trust in the American banking sector.

• FDIC’s role: It guarantees deposits, audits and supervises financial institutions for safety, soundness, and consumer protection, facilitates the resolution of large and complex financial institutions, and oversees receiverships.
1980s and 1990s:
Cause: Savings and Loan (S&L) crisis. Following the 1970s “stagflation”, S&Ls found themselves at the losing end. Significant profits in 1980 fuelled speculation but and by 1982, S&Ls were losing up to $4 billion annually.
More than 1,000 S&Ls had failed, a trend that persisted into the early 1990s.
2008:
Cause: Economic contagion. Lehman Brothers and Bear Stearns, two investment banks, went bankrupt in March 2008. The trigger: widespread speculation and “liar loans” in the housing markets.
2020:
Cause: COVID-19 pandemic. The exceptional “stimulus” during this time led to significant growth in bank deposits. These factors contributed to the failure of only four banks in 2020 and none in 2021.
2023:
Cause: High interest rates and crypto asset plunge. California’s SVB failed because it held huge amounts of government bonds that plunged in value as the US central bank (Federal Reserve), raised rates.
When the bank announced it was trying to raise money, it sparked a “run” from depositors, and the bank collapsed.
New York’s Signature Bank took deposits of crypto assets in 2018. The collapse of FTX and an ensuing criminal investigation led to a collapse in Signature’s assets.
Silvergate Bank, established in California, eventually folded due to huge losses on asset sales at the end of the previous year, when the bank sold securities at fire sale prices to keep afloat during a bank run. “Short” selling attacks were also thought to have aided in the acceleration of the bank run.