UGA FHCE 3100 - Ch.13 (8 pages)

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Lecture number:
Lecture Note
University of Georgia
Fhce 3100 - Introduction to Personal Finance

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FHCE 3100 1st Edition Lecture 23 Current Lecture Credit Loans and Debt Warning Signs Debt collectors and Creditor Rights o Debts are what is owed Examples of debts are bonds notes mortgages and other forms of paper evidencing amounts owed and payable on specified dates or on demand o A debtor is a person who owes money Reasons for Bank Regulation Banks are less stable than other businesses because o Bank debts tend to be short term many depositors could withdraw their funds with little notice Remember consumer deposits are loans to banks thus they pay us interest on these loans Usually cash paycheck Friday withdrawal Monday o The behavior of depositors depends on their confidence that the bank is sound and this confidence can be easily shaken Bank regulation An overview Primary bank regulators in the US o Office of the Comptroller of the Currency OCC Part of the US Department of Treasury o Federal Reserve System the US central bank o Federal Deposit Insurance Corporation FDIC o State bank regulators Exam What year did OCC start What about Federal Reserve System and FDIC What President was in during the implementation of each of these Federal Deposit Insurance Exam 3 or more questions about role of FDIC in banking collapse The US Congress in the Federal Deposit Insurance Corporation FDIC in 1933 after the bank failures in the Great Depression Today the FDIC guarantees each bank depositor up to a maximum of 250 000 These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute FDIC Insurance is funded by a small fee paid by banks based on their deposits Banks cannot opt out of FDIC have to pay fee Exam Know how FDIC allows banks to be bad Incentive Effects of Deposit Insurance A Closer Look Deposit insurance increases the supply of deposits from consumers within the insurance coverage limits o Incentive to put money in the bank Banks attract deposits pay lower interest rates on

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