Wildcat banking was born of the lax attitude toward small-time banking that was present during a period known as the Free Banking Era. During this period of time (1837-1865) banks were established in locations that were often far removed from any sort of government oversight. This lack of oversight and regulation made it easier for these banks to engage in speculative and risky practices, such as granting credit to poor-quality assets. These practices led to instability in the financial system, as banks sought to obtain assets that could be sold or used as collateral for loans.

The period of wildcat banking ended in 1865 when the National Bank Act was passed, creating a system of uniform national banking regulations and oversight. The aim of the act was to reduce fraud and create stability within the banking industry. This act established the Office of the Comptroller of the Currency to establish and enforce banking rules, and it required banks to buy federal bonds, receive a charter from the government, and limit their activities to those approved by the Comptroller.

While the National Bank Act helped create stability in the banking industry, some of the practices associated with wildcat banks lingered. For example, a number of secondary national banks were authorized by state legislatures in the late 19th century, and these banks adopted many of the practices of wildcat banking. These practices included issuing their own currency and engaging in speculative loan practices. Eventually, the Federal Reserve System was established in 1913 to provide oversight and regulation of the banking industry and eliminate the dangerous practices of wildcat banking.

While the period of wildcat banking has long since passed, the financial system has not been free from speculation and risk since then. Banking regulations have continued to evolve, and new regulations have been introduced from time to time to reduce fraud and ensure stability in the banking system. Despite this, there is still the potential for banks to engage in speculative and risky practices, which is why careful oversight and regulation of the banking industry remain vital.