Banking System and Financial Services
Explain, in detail, the ripple effect that occurs if a bank lends money to a lady that wants to start a daycare.
- she starts her business - people go to her - the more people that go to her, the more workers that she hires - the workers get paid and they spend their money - other daycare businesses see how well her business is doing - the rates for child care goes down - the places that her daycare buys from get money, and they can hire more workers - it stimulates he economy
What are some things that we can do thanks to banks?
-build homes -start businesses -plant crops -go to college -have streets - build hospitals
Why can't a national bank be allowed to go bankrupt? Include AT LEAST 3 reasons in your answer.
1. people overseas are part of our banking system and it wouldnt go well if they were upset 2. there woud be mass chaos if everyone banking with them were to withdraw their money all once 3. there are too many customer being served by that bank, there is too much business
What are the 3 things the FDIC can do to a bank if it goes bankrupt?
1. sell the bank 2. close it and pay off the deposits 3. take it over
How do banks make money?
1.Interest -- Charging for loans 2.Investing our money 3. ATM fees 4. overdraft charges 5. safety deposit boxes
How many districts are in the US?
12- 13 banks- 1 in DC
mutual savings bank
A bank owned by depositors that mainly handles savings accounts and makes loans to home buyers.
commercial bank
A bank that offers a full range of financial services.
Federal Deposit Insurance
A federal agency that protects depositors' money in case of the failure of a bank or financial institution that is regulated by the FDIC.
consumer finance company
A financial institution that specializes in making loans for long-lasting or durable goods and financial emergencies.
savings and loan association
A financial institution that specializes in savings accounts and loans for mortgages.
Federal Reserve System
A nationwide banking plan set up by our federal government to supervise and regulate member banks.
Credit Union
A not-for-profit financial institution formed by people who have like occupations or live in the same community and that serves only its members.
safe-deposit boxes
A secured area in a bank vault for storing valuables.
electronic funds transfer
A system through which funds are moved electronically from one account to another and from one bank to another
Commercial banks (AKA-_____) EX:_____
AKA: commercial banks EX: central, providence They offer many services
Interest
An amount paid for the use of money.
ATM
Automatic teller machine- form of eft
What do people who want to start a bank need?
Charter & capital
Another name for a "full-service bank" is _ _.
Commercial Bank
An efficient way for a bank to transfer funds immediately from your savings account to another bank is with an _ _ _.
Electronic Funds Transfer
The federal agency that protects depositors' money in case a bank fails is the _.
FDIC
A customer of a bank is called a borrower.
False
A mortgage company is an example of a deposit-type institution
False
All banks must join the Federal Reserve System.
False
Anyone can bank with the Federal Reserve Bank.
False
The Federal Reserve Bank insures depositors up to $250,000 per single account.
False
FDIC
Federal Deposit Insurance Corporation- protect depositors money in case of the failure of a bank or financial institution govt agency but $$ to run comes from the banks it services
trust companies
Financial institutions that specialize in managing the money and property of others.
Who created the banking system?
Hamilton
The money earned on funds deposited in savings account is called _.
Interest
Savings that are put to work to earn more money are called _.
Investments
Why didn't may people like the idea of a centralized banking system?
It wasn't in the constitution
What does a mortgage company do?
Mortgage companies provide loans for homes, so people can buy homes.
When a bank is granted a charter by the federal government, the bank operates as a _ bank.
National Bank
Deposits in credit union accounts are insured by the _ _ _ _.
National Credit Union Administration
Where was the first bank located?
Philadelphia (old capital) - New England
All national banks are required to join the Federal _ System.
Reserve
Investments
Savings that are put to work to earn more money.
Explain, in detail, why the FDIC was formed in 1933.
The FDIC was created durring the Great Depression so that when the banks crashed the depositors money was safe. Almost all banks are a member of the FDIC. They take care of banks if they cannot pay.
What do Federal Reserve Banks do?
They accept deposits, lend banks money and provide other financial services.
A bank is a business as much as a clothing shop is.
True
A life insurance company is a nondeposit financial institution.
True
All national banks required to join the FED.
True
Many savings and loan associations are beginning to call themselves savings banks.
True
Most checking accounts have the ability to use electronic funds transfer.
True
safe deposit boxes
a place at the bank inside the vault that where you can store valuables you can rent a box each year, sizes vary
Financial Supermarkets
banks found in shopping centers and grocery stores EX: Walmart
Savings and Loan Associations
banks primarily offer savings opportunities and loans. In recent years they have expanded the services offered. Many have changed their name to bank instead of association. -- Deposit type
trust companies
business that manage peoples money and property for them usu. young and elderly
no deposit institutions
do not collect deposits- 1. Life insurance co. 2. Investment co. 3.consumer finance- making loans for car, appliances etc 4.mortgage co.- offer loans for homes 5.check cashing 6. pawnshops
EFT
electronic funds transfer- funds move electronically from one acct to another from one bank to another
FED
federal reserve bank- a bank for banks purpose is to supervise and regulate member banks in order to help the banks serve the public better
What are banks that join the FED
member banks
Mutual Savings banks
most of these type banks offer savings and loan opportunities the bank is owned by the depositors instead of one person. They are mainly found in the northeastern US
A good place to keep a list of insurance policies in is a bank's _ _.
safe-deposit box
if the charter is granted from the states government/ national government in which they will open the bank the bank will operate as a ____ ____/ ____ ____
state bank/ national bank
Deposit type institutions
they accept deposits from people
Credit unions
they are user owned not for profit cooperative financial institutions they are formed by people in the same company government agency labor union, profession, church, etc.
A bank that manages money and property for its customers is called an _ _.
trust company
