FIN4324Midtermnotes - Chapter 1 Define Bank A bank can be...

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Chapter 1 Define Bank: A bank can be defined in the terms of (1) the economic functions it serves, (2) the services it offers its customers, or (3) the legal basis for its existence. They are involved in transferring funds from savers to borrowers (financial intermediation) and in paying for goods and services. {Page 2} Different kinds of financial services firms calling themselves banks {Page 3} chart A bank is a financial intermediary that offers the widest range of financial services-especially credit, savings, and payment services-and perform the widest range of financial functions of any business firm in the economy. Government definition: A bank is any business offering deposits subject to withdrawl on demand (seek as writing a check or making an electronic transfer of funds) and making loans of a commercial or business nature (such as granting credit to private business seeking to expand the inventory of goals on their shelves or purchasing new equipment) {Page 5} Congress definistion: A bank as any institution that could qualify for deposit insurance administered by the federal deposit insurance Corporation (FDIC) {Page 5} The Many different Roles Banks and their closet Competitors Play in the Economy {Page 9} chart Traditional Services Offered By Banks o Carrying Out Currency Exchange o Discounting Commercial Notes and Making o Business Loans o Offering Savings Deposits o Safekeeping of Valuables o Supporting Government Activities with Credit o Offering Checking Accounts o Offering Trust Services More Recent Services Offered by Banks o Granting Consumer Loans o Providing Financial Advice o Managing Cash o Offering Equipment Leasing o Making Venture Capital Loans o Selling Insurance Policies o Selling Retirement Plans Chapter 2 Reasons for the Regulation of Banks Protection of the Safety of the Public’s Savings Control of the Supply of Money and Credit Ensure Equal Opportunity and Fairness in Access to Credit Promote Public Confidence in the Financial System
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Avoid Concentration of Power Support of Government Activities Help for Special Segments of the Economy Goals and Functions of Bank Regulations Laws Limiting Bank Lending and Risk Laws Restricting and Expanding Services Banks and Other Depository Institutions Can Offer Laws Prohibiting Discrimination in Offering Services Laws Mandating Increased Information Transparency and More Accurate Financial Reporting Laws Regulating Branch Banking Laws Assisting Federal Agencies in Dealing with Failing Depository Institutions Riegle-Neal Act 1994 Riegle-Neal Interstate Banking and Branching Efficiency Act repealed provisions of the McFadden Act of 1927 Bank Holding Company Can Acquire Banks Nationwide Consolidation of Interstate BHCs into Branches Major provisions of act seek {Page 39} bullet points Gramm-Leach-Bliley Act 1999 {Page 40-41} Permits Banking-Insurance-Securities Affiliations (with regulator’s
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FIN4324Midtermnotes - Chapter 1 Define Bank A bank can be...

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