47 Random Banking Facts

By James Israelsen, Associate Writer

Published May 31, 2020

In most countries, banks are legally obligated to keep legal tender (coin and paper money printed by the government) in reserve so that patrons can exchange “bank money” (checks and credit card payments) for actual currency whenever they request it._[13]
Most banks are profit-seeking corporations that make money by charging borrowers more money for loans than the bank pays customers who deposit their own._[13]
Colonial Americans either gave credit to each other or relied on credit from banks in England, so there were no banks in the United States until after the Revolutionary War._[13]
A private bank is a bank for which the owners of the organization are also the managers, or when a partnership of bankers manages the portfolios of extremely wealthy individuals._[2]
Created in 1914, the Federal Reserve System was organized to help stabilize US banking. Rather than being one central bank, the Fed operates through decentralized, regional Federal Reserve Banks in order to prevent the Fed from being under the power of either Wall Street or the federal government._[13]
The first bank founded in America, Philadelphia’s Bank of North America, was created by Congress in 1781, less than five years after the United States itself was founded._[13]
America’s first bank was chartered by Congress on the sole recommendation of Alexander Hamilton, who was in his twenties at the time. Hamilton went on to found his own bank, the Bank of New York, three years later._[13]

Hamilton is the godfather of American banking

In the year 1800, there were around 30 banks in the United States; ten years later, there were over 100. This number increased to almost 600 by the 1830s. By 1860, on the eve of the Civil War, there were between 1500 and 1600 banks in America._[13]
For more than 50 years after the United States was founded, businesses generally had to receive a charter from their state government in order to form a bank. The result of this was that banks became highly politicized organizations, backing certain politicians in hopes of receiving a charter, and state governments used their banks as a source of funding through charging dividends, fees, and taxes._[13]
In the early decades of the 19th century, American banks were each allowed to issue their own paper money, resulting in over 8,000 different types of currency being used across the United States._[13]
By the year 1907, the US banking system was the largest in the world._[13]
The creation of the Federal Reserve System greatly reduced the number of US banking crises: whereas there were seven major panics during the 78 years before it was organized, there were only two in the 90 years afterwards._[13]
In the final decades of the 19th century, the United States was subject to an average of at least one banking panic every ten years. This was a uniquely American occurrence; in most European countries, bankers’ banks had been established that lent commercial banks money before most crises could set in._[13]
In the early 1920s, there were over 30,000 banks in the United States, more than at any time before or since._[13]

Cosimo di Medici (pictured here) turned the family business into one of Europe's most powerful economic entities

Founded in 1397, the Medici Bank rapidly became the largest bank in Europe, after its founder took the risk of backing Baldassare Cossa, a one-time pirate, in his bid to become Pope of the Roman Catholic Church. Cossa succeeded; in return, he rewarded the Medici Bank with responsibility for handling all of the Curia’s finances._[10]
In addition to centers for religious worship, ancient Babylonian temples functioned as schools, law courts, mercantile centers, and banks._[1]
The first known bank to be created was an ancient Babylonian shrine to the sun god, Samas; the bank operated by using tithes paid by worshippers and pilgrims._[1]
The word “bank” comes from the Italian word “banco.” In late medieval Italy, banks consisted of a single, large room with a counter, or “banco,” in the middle, separating customers from clerks and bookkeepers._[10]
In Renaissance Italy, a bank clerk usually earned around 50 florins a year—enough to support a small family in a modest home._[10]
The Medici Bank, the largest and most prosperous bank in the world during the Italian Renaissance, used its power to enforce a unique banking code of practice, including such rules as, anyone purchasing a home through the bank’s aid must promise never to trade with Germans._[10]
The collapse of New York’s Bank of the United States in 1931 was the largest single bank failure in American history, with a loss of over $200 million dollars in deposits._[4]
The most damaging bank panic of the Great Depression began when a single customer, advised not to sell his stocks in the bank because they were still a good investment, spread a rumor that the bank was refusing to let people sell their stocks. This led to a mob of over 2,500 people withdrawing their funds in one afternoon, ultimately resulting in the largest bank failure in all of American history._[4]

Bank runs after the stock market crash made the depression exponentially worse

Although it originated with a stock market crash and the Dust Bowl, the Great Depression was greatly exacerbated by a series of “bank runs” in which disastrous numbers of people, responding to rumors that their money was in jeopardy, withdrew their deposits from banks, causing the banks to fail._[4]
After the stock market crash of 1929, around 650 banks throughout America failed. Over 800 more failed the next year._[4]
In order to prevent additional Great Depression bank panics, President Franklin D. Roosevelt declared a “bank holiday” that closed all banks so they could become solvent. In his first “fireside chat,” the president spoke about his decision to close all of the banks across America until he could be certain there would be no more wide-scale bank failures._[4]
In a fireside chat given by President Franklin D. Roosevelt in 1933, he assured his audience that “it is safer to keep your money in a reopened bank than it is to keep it under the mattress.”_[4]
Retail banking, also known as consumer banking or personal banking, is the part of banking that offers services such as checking accounts, savings accounts, credit cards, and loans to customers._[8]
Corporate banking is done by the division of a bank that deals with corporate customers, managing the accounts of businesses and providing loans and other financial assistance to help them grow._[8]

ICBC has 17,000 branches in China alone

The Industrial and Commercial Bank of China (ICBC) has been the world’s largest bank for almost a decade. The bank has around $4 trillion in assets and employs almost half a million people._[12]
Investment banking is the business of creating capital for other entities through underwriting old debt, facilitating mergers and acquisitions, and helping companies issue stocks._[5]
In 2019, of the ten biggest banks in the world, based on amount of capital, four were Chinese, four were American, one was Japanese, and one was in the United Kingdom._[7]
Although America’s largest banks are smaller, in terms of capital, than China’s four largest, American banks have been found by experts to be more efficient in their use of assets—a fact that is thought to be a result of the differences between America’s open-market economy and China’s system of greater government involvement._[7]
The housing bubble of 2006 and 2007 that triggered a financial crisis was caused in large part by an expansion of the mortgage financing market that resulted in loans to homebuyers who weren’t capable of repayment._[14]
In the housing bubble of 2006 and 2007, banks began to give “NINJA mortgages”—housing loans to people with No Income, No Job, No Assets._[14]
The German "Deutsche Bank" has been engaged in several scandals. During the Nazi Regime, the bank helped finance Hitler and purchased gold stolen from Jews. It has paid over nine billion dollars in punitive fines for such offenses as attempting to manipulate the the price of gold and silver, defrauding mortgage companies, and making trades contrary to US sanctions._[11]
The Rothschild family’s bank was the largest private bank for most of the 19th century, making them the wealthiest family in the world for several generations._[2]

The Rothschild family's fantastic wealth allowed them to commission portraits like this marriage portrait of Charlotte de Rothschild, painted in 1836 (Moritz Daniel Oppenheim)

According to the National Bureau of Economic Research, the recent growth of America’s banking systems, with their emphasis on expansion through investment banking, has resulted in a slow-down of actual productivity and is ultimately harmful for the economy._[3]
Decades ago, when banks were heavily regulated and were not allowed to offer extra interest rates or other inducements to draw customers, many banks began the practice of offering free toasters to customers who signed up for new accounts, as a way of attracting new business._[16]
When the German "Deutsche Bank" began to operate in London in the 1990s, management posted a sign in their office regarding pronunciation of its name because so many of its American employees called it “Douche Bank.”_[11]
Deutsche Bank of Germany was exposed in 2019 for aiding Russians in laundering money into accounts outside of Russia._[11]
In 2016, regulatory agencies discovered that thousands of Wells Fargo Bank employees had fraudulently created millions of checking and savings accounts for customers, without the customers’ knowledge, in response to an overly-aggressive sales mandate from the company’s leaders._[6]
When the British Investment Bank was found to have participated in a variety of financial crimes, rather than be charged, the bank got off with a fine of two billion dollars—the amount of profits the bank earns in four weeks._[11]

Corrupt banks often serve as key players in money laundering and other white collar crimes

London-based bank HSBC has laundered billions of dollars for Mexican drug cartels. It became such a common occurrence that one cartel even designed special cash boxes to fit more easily through HSBC teller windows._[11]
Despite the fact that a huge number of financial crimes have been discovered in recent years, federal prosecution of white-collar crime is at a twenty-year low._[11]
Popular movies about banks and investors include Margin Call, The Wolf of Wall Street, Boiler Room, and Rogue Trader._[15]
In financial circles, the “Big Bang” refers to a dramatic change in England’s banking laws that took place 30 years ago. The change deregulated many of England’s banking practices and is said to have created 1,500 millionaires as a direct result._[9]
Some historians speculate that part of what made the Rothschild banking family so successful for so long was their practice of intermarriage: 27 of the 48 members of the main family married each other, keeping family ties and, therefore, the family business as close as possible._[2]