Unformatted text preview: What do banks do? We know that most banks serve to accept deposits and make loans. They act as safe stores of wealth for savers and as predictable sources of loans for borrowers. In this way, the major business of banks is that of a financial intermediary between savers and borrowers. The bank simplifies this process by eliminating the need for savers to find the right borrowers and the right time to directly make a loan. Banks are generally trusted by the public. When people put their savings into banks, they receive little more than a paper receipt in return. There are two organizations in place to ensure that banks are trustworthy with individuals' money and reasonable in the loans that they make. The Federal Deposit Insurance Corporation guarantees that deposits, up to $100,000 per account, will be returned to the depositor, even if the bank...
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- Fall '10
- Financial services, Federal Deposit Insurance Corporation, $100,000, interest rates, Federal Reserve.