BUS100_EM_20TMorrow - upon restrictive lending practices,...

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Essay Memo Chapter 20 Assignment: BUS100_EM_20TMorrow.rtf Chapter 20 -Understanding Money, Financial Institutions, and the Federal Reserve Memo To: Professor Gayle Haro From: Todd Morrow Date: May 2, 2010 Re: Intro to Business BUS100_EM_20 TMorrow. rtf 1. Why did the United States need a Federal Reserve Bank? The Federal Reserve, or FED, was created to provide stability for the US dollar. They do this by controlling interest rates, therefore controlling what a US dollar is actually worth on the world market. 2. What are the similarities and differences among banks, a savings and loan associations, and a credit unions? The main difference between these bodies is that banks are a profit seeking body while the others are customer run bodies that look out for the best interests of the customers. Banks charge fees for certain transactions while credit unions and savings and loans do not. Savings and loans promise a rate of return to the customers based
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Unformatted text preview: upon restrictive lending practices, similar to credit unions, while banks loan to nearly all for increased interest rates. 3. What roles do the FDIC and SAIF play? The FDIC, or Federal Insurance Deposit Corporation, is an independent government agency that insures bank deposits up to $250,000. They do this to build confidence in the banking institutions. The SAIF is the part of the FDIC that covers the holders of accounts in savings and loan institutions. This again builds confidence in the money industry. 4. What are the roles of the World Bank and the International Monetary Fund? The World Bank is responsible for financing economic development. The World Bank is also known as the International Bank for Reconstruction and Development. The international monetary fund is the organization that is responsible for the smooth transactions that occur between nations. Without them, chaos would be a regular occurrence....
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BUS100_EM_20TMorrow - upon restrictive lending practices,...

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