Folks as you are studying keep these thoughts in mind for the final:Chapter 5 is the review content:Know the people, the agencies, who oversees what, when did some of them begin, what events lead to policy changes....basically much of the same content from exam 1.For Chapter 13: saving and banking...........go through the book, bold and marginal terms matter, go through my notes....be prepared to know what lead up to the banking crises across all of the decades beginning with the great depression, the 1980s, current recession,.What policies were in place, what was changed, what was removed. how did housing/auto and banking collide? remember CAMELS, not the hump day one but the banking one. what does it mean, know the scales, who oversees banking now, who oversees investing. what huge impact did the FDIC have on banking behavior and consumer behavior. know the names of the laws/acts. my notes are laid out chronologically and the exam will ask about that. what happened in what order.....how does our behavior today (internet banking) impact what banks do today? Read and re read the book/notes. its only 2 chapters so the questions are likely to be very very specific!! Chapter Preview:In the US, about 7,500 commercial banks serving the businesses and consumer’s needs. This puts the US in a class by itself. In most other developed nations, only a handful of banks dominate the landscapeRoles of Banks in the Economy:1. Facilitate borrowing & lending2. Facilitate Payments3. Risk ManagementIssue financial assets that allow firms to share risksProvide guarantees and lines of creditFinancial Intermediaries“Banks” include:1. Commercial banks2. Savings & Loan Associations (S&L’s)Sometimes called “thrifts” or “thrift institutions”3. Credit UnionsOwnership of BanksMost US banks are privately ownedIn most cases, a bank’s stock is held by a large numbers of investors, so a bank has many “owners”It is relatively EASY to establish a new bank in the USBank Market StructureThere are a large number of banking firms in the US, but the number is falling due to mergers between banksThousands of US banks are very small, each having only a single officeMany banks today have multiple branches or officesA “bank holding company” is a firm that owns one ore more banking firmsHistorical Development of the Banking Industry1782 – Bank of North America charteredBeginning of modern commercial banking industry1791 – Bank of the United States chartered1811 – Bank of the Unites States charter is allowed to lapse1816 – Second Bank of the United States is chartered1832 – Andrew Jackson vetoes rechartering of Second Bank of the United States (charter lapses in 1836)1913 – Federal Reserve Act of 1913 creates Federal Reserve System1933 – Banking Act of 1933 (Glass-Steagall) creates Federal Deposit Insurance Corporation (FDIC) & separates banking & securities industriesBanking Act of 1933: Glass-SteagallGlass-Steagall allowed commercial banks to sell on-the-run government securities, but prohibited underwriting and brokerage services.Also prohibited real estate and insurance businessDid project commercial banks by not allowing other financial intermediaries to offer commercial banking activities.Historical Development of the Banking IndustryThe history had one other significant outcome: Multiple Regulatory Agencies1. Federal Reserve2. FDIC3. Office of the Comptroller of the Currency4. State Banking AuthoritiesBank Products: SavingsSavings provide a safety net and are also helpful for putting together money for future needs such as a down payment on a houseEmergency fund of 3-6 months of salary set aside as savings is recommended as a financial goalFunds should be kept in a liquid interest-bearing account such as a money market fund, short-term certificates of deposit (CDs) , or a savings account.Banks & Financials ProductsBanks & brokerage firms offer CDs with a maturity of at least 7 days, with penalties on early withdrawalsCDs  type of time deposit, are usually safe ways to store money from 7 days to several yearsBank or credit card companies offer debit cards & smart cards (also called chip cards or stored value cards), which may be worth $20 or $50 and can be used for placing phone calls or buying sodas or snacks from vending machines.Financial Innovation:1. E-MoneyElectronic money, or stored cash, only exists in electronic form. It is accessed via a stored-value card or a smart cardE-cash refers to an account on the internet used to make purchases2. Electronic BankingAutomatic Teller Machines (ATMs) were the first innovation on this front.Today, over 250,000 ATMs service the US aloneAutomated Banking Machines combine ATMs, the internet, and telephone technology to provide “complete” service.Virtual banks now exist where access is only possible via the internet.3. Electronic PaymentsThe development of computer systems and the internet has made electronic payments of bills a cost effective-method over paper checks or moneyE-Finance: Are we headed toward a cashless society?Predictions of cashless society go back to decadesBusiness Week predicted e-payments would “revolutionize…money itself (but reverse itself later).Things that work against this:1. Equipment to accept e-money not in all locations2. Security and privacy concernsFinancial Planner  person who looks at someone’s or a family’s total financial picture, helps that person or family define and prioritize goals, and then works out a plan to achieve those goalsDivorce Planner  specialist who is trained to focus on who gets the assets in divorces and who works alongside attorneys who handle legal documents and child custody issuesHelp couples divvy up retirement accounts and stock options, divide up businesses, calculate alimony, payments, and decide who keeps the primary house and vacation homeNew breed of financial plannerCredit, Loans, & DebtPeople borrow money through the use of credits and loansThe “buy now, pay later” philosophy is ingrained in American societyCredit can be used for luxury items or for longer-term investments such as education expensesCollateral  property used to secure loanThis is what you own at the end of the loan ORThis is what you lose if you can’t pay the loan offLien  legal rights to take and hold property if the person does not pay the debt…Example  your house can have a lien put on it if you are not paying your car off. When the house gets