Kenneth R. Szulczyk
- A state bank has a charter from a state government, while a federal bank has a charter from
the U.S. federal government. - The Comptroller of the Currency, FDIC, and the Fed regulate the national banks. A state
bank could be regulated by one or more regulatory agencies, depending upon the state where
the bank is located. - The U.S. government wants a stable financial system that protects banking customers,
encourages homeownership, promotes efficiency in the intermediation process, and controls
the money supply. - The FDIC insures bank deposits up to $250,000 per person and not by the account.
- The FDIC liquidates a bank’s assets and refunds the deposits to the depositors, or the FDIC
finds another bank to merge with the failed bank. Then the FDIC will grant low-interest
loans or buy the bad loans to make a bank merger more attractive. - A bank run is depositors show up at their bank at once and demand their deposits back. A
contagion is one bank run leads to other bank runs, even for financially healthy banks. A
financial panic is a wave of bank failures that push a society into a severe recession. - Countries repealed laws that allow international businesses to operate within their borders.
Furthermore, growing incomes allow people and businesses to invest more funds into
international markets. Finally, corporations and banks are global as their activities spread
across borders. - A government wants a stable financial system and financial institutions to disclose accurate
information. Regulations help a central bank exert more control over monetary policy. - First, a bank acquires stock in another bank, allowing it to cross a state line. Second, bank
can issue commercial paper on itself and transfer funds between subsidiaries. Finally, banks
could acquire nonbanks and enter other spheres of activity. - A nonbank bank stops one function like accepting deposits or granting loans, thus it is no
longer a bank. Furthermore, Automated Teller Machines allow customers to bank at some
distance from the bank, even in foreign countries. - Banks offer MMDA while financial companies offer MMMF. Thus, the MMDA is covered
by deposit insurance.