ECON 320- test 3 material
Chapter 13
To start a bank, one needs permission in the form of a bank charter.
What is a unit bank? Banks without branches; banking carried on by individual banks without branches or corporate relationships with other banks. Developed because agricultural society had no need for multiple banks. Federal government left banking to individual states and issued their own money. Didn’t want a strong central government or strong central bank.
What is dual banking system? A system where state banks and national banks are regulated at different levels. National banks are chartered and regulated under federal law and standards, and supervised by a federal agency.
What are bank holding companies? Created because of banks reaction to branching restrictions. These are corporations that own a group of other firms. Can be thought of as a parent firm for a group of subsidiaries. Initially these were created as a way to provide nonbank financial services in more than one state. IN 1956, act passed to allow these companies to provide various nonbank financial services. A bank holding company can purchase a controlling interest in a foreign bank. Simply a bank that holds controlling interest in other banks but are not necessarily involved in the banks activities.
What is a financial holding company? Created by an act in 1999, it allowed a commercial bank, investment bank, and insurance company to merge and form this type of holding company which many bank holding companies are now converting to. Financial institutions engaged in nonbanking activities that offer customers a wide range of financial services, including the opportunity to purchase insurance products and invest in securities; created by changes in legislation in 1999 that first allowed bank holding companies to affiliate with securities firms and insurance companies.
Universal Banks?