This preview shows page 1. Sign up to view the full content.
Unformatted text preview: publishes the Federal Reserve Bulletin, a monthly publication that gives information on the state of the economy in the nation and the world. The board also publishes reports on studies or research done for or under the authority of the Fed. One of the important groups of figures released each week by the Fed is Federal Reserve Data.” These figures reflect the changes in the weekly averages of member banks' reserves and other related items. These weekly figures also report any change in the U.S. money supply. The board can set the interest rate that member banks will have to pay when borrowing monies from the Fed. This rate is very important to the real estate industry because banks use this rate to establish the base rate (the rate their most creditworthy customer would pay). The base rate is usually the basis for the cost of builders' interim funds and for the rate for car loans and business operations loans. Due to recent litigation, many banks are abandoning prime rates for base rates. The board may raise or lower the reserve requirements of the member banks. This requirement will affect the amount of money the banks will have available to ban: the
Dynasty School (www.dynastySchool.com) 5-3 REAL ESTATE FINANCE
lower the requirement, the more money the banks will have for loans: the higher the requirement, the less money the banks will have for loans. MONEY SUPPLY
The Fed provides an “elastic” currency supply (adjusts the money supply) within the United States. The Fed regulates the flow of money and credit by affecting their availability and cost. This is accomplished primarily through the exercise of three specific powers: Reserve requirements for banks Fed discount rate adjustments, and Federal Open Market Committee operations. MEMBER BANKS
How does a bank become a member of the Federal Reserve System? Any national bank must belong, and any state bank that wishes may join. For a bank to join, it must buy stock in the Federal Reserve Bank System, agree to abide by the rules of the Federal Reserve, and meet the reserve requirements estab...
View Full Document
This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.
- Spring '10