Overview of Financial Institutions

Overview of Financial Institutions

Commercial Banks

full range of services
checking, savings and NOW accounts
make loans to individual and businesses
issue credit cards
manage retirement accounts
have a department that helps customers manage property and investments
accounts are insured by a government agency called the Federal Deposit Insurance Corporation
each depositor is insured up to $100,000
owned by stockholders, like corporations who buy shares
shareholders receive cash dividends from the profits made by the bank

Savings and Loan Associations

began in the mid 1800ís to help people buy homes
still account for a large percent of home mortgage loans
have been allowed recently by federal regulations to expand services to include many of those offered by commercial banks
in the past, most were owned and operated by their depositors
now 1/2 are operated and owned by stockholders
until 1989, deposits were insured by the Federal Savings and Loan Insurance Corporation
during the 1980ís many of these banks were involved with risky loans and bad investments
as a result, hundreds of savings and loans failed
faced with this problem and these pay offs, the FSLIC ran out of money

most are located in northeastern United States

insured by the FDIC for $100,000 per depositor

were called mutual savings banks and passed their profits to the depositors in the form of interest

now most are owned by shareholders

a board of directors manages the daily operations

Credit Unions

established usually by people who work for the same company or belong to the same organization
when members make deposits, they buy shares in the organization
deposits are pooled to make low interest loans to members
depositors may write checks which are called "share drafts"
depositors are insured up to $100,000 by the National Credit Union Association