Which institution was created in the United States after the Panic of 1907 to provide a more flexible banking system?

The Federal Reserve System was created after the Panic of 1907 to provide the United States with a more flexible banking system.

Congress passed the Federal Reserve Act in 1913, creating a central banking system with a Board of Governors and regional Reserve Banks. Its responsibilities included supplying an elastic currency, supervising banks, and serving as a lender of last resort within the financial system.

The Panic of 1907 had shown the weaknesses of a system that lacked a permanent central bank. A run on the Knickerbocker Trust Company in New York helped trigger a broader crisis. Financier J. P. Morgan organized private assistance to stabilize institutions, but reliance on one private individual was widely viewed as inadequate.

The Federal Reserve was not a direct replacement for every later financial agency. The FDIC was created in 1933 to insure deposits, while the SEC was established in 1934 to regulate securities markets. The Fed’s structure and powers have changed, especially during later crises, but its creation remains a major legacy of the 1907 panic.