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07.2.A1 Lecture Slides Ch.12 - Banking Industry. Structure, Competition, and Regulation [x1].pptx

07.2.A1 Lecture Slides Ch.12 - Banking Industry. Structure, Competition, and Regulation [x1].pptx

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Historical Development of the Banking System Bank of North America chartered in 1782 Controversy over the chartering of banks. National Bank Act (1863) creates a new banking system of federally chartered banks Office of the Comptroller of the Currency Dual banking system Federal Reserve System is created in 1913. Francesco Marchionne 1 Primary Supervisory Responsibility of Bank Regulatory Agencies Federal Reserve and state banking authorities: state banks that are members of the Federal Reserve System. Fed also regulates bank holding companies. FDIC: insured state banks that are not Fed members. State banking authorities: state banks without FDIC insurance.
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Francesco Marchionne 2 FDIC (1933) Historical Development of the Banking Industry Outcome: Multiple Regulatory Agencies (priority) Authority Other State Bank (since 1782) National Bank (since 1863) FED State Bank (since 1913) Bank Holding Company (since 1933) Insured State Bank (since 1933) State Banking Authority (variable) 1 1 1 Office of the Comptroller and the Currency (1863) 1 FED (1913) 2 1 1 2 2 2 1
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Financial Innovation Francesco Marchionne 3 novation is result of search for profits. It responds to: Changes in Demand Major change is the increase in interest-rate risk from 60s examples: 1. Adjustable-rate mortgages 2. Financial derivatives Changes in Supply
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