Chapter 20 – Money, Financial Institutions, and the Federal Reserve
PPT 20-18
Check-Clearing Process through
the Federal Reserve
TEXT FIGURE 20.3
Check-Clearing Process through
the Federal Reserve Bank System
(Text page 560)
(See complete PowerPoint slide notes on page 20.57.)
progress
assessment
(Text page 561)
PPT 20-19
Progress Assessment
(See complete PowerPoint slide notes on page 20.57)
2. MASSACHUSETTS issued its own PAPER
MONEY in 1690, and soon other colonies did
as well.
a. But CONTINENTAL MONEY, the first paper
Chapter 20 – Money, Financial Institutions, and the Federal Reserve
20–23
lecture link 20-8
GOLDSMITH BANKING
Economists believe that modern money and banking have
their roots in medieval Europe with the village goldsmith. (See
the complete lecture link on page 20.70 in this manual.)
Chapter 20 – Money, Financial Institutions, and the Federal Reserve
5. The cash shortage problems of 1907 led to the
formation of the FEDERAL RESERVE SYS-
TEM, designated as a “LENDER OF LAST
RESORT.”
closings in 1933 to gain time for a solution.
4. In 1933 and 1935, the federal government
passed LAWS to strengthen the banking sys-
5. The government also started an insurance pro-
gram to protect depositors from bank failures.
Classify the various institutions in the U.S. banking system.
PPT 20-20
The Establishment of the Federal
Reserve System
(See complete PowerPoint slide notes on page 20.58.)
bonus case 20-3
WHEN MONEY LOSES ITS
MEANING
This case explores what happens when hyperinflation erodes
the value of a country’s money. (See the complete case, discus-
sion questions, and suggested answers beginning on page 20.84
of this manual.)
PPT 20-21
Largest Bank Failures
(See complete PowerPoint slide notes on page 20.58.)
lecture link 20-9
RESPONSIBLE BANKING
WITH CDFIS
As small-business owners have struggled to find loans from
commercial banks, they’ve started turning to CDFIs. (See the
complete lecture link on page 20.71 in this manual.)
PPT 20-22
The U.S. Banking System
(See complete PowerPoint slide notes on page 20.58)
Chapter 20 – Money, Financial Institutions, and the Federal Reserve
als and corporations in the form of checking and
funds to make loans.
2. Commercial banks have two types of custom-
generated by loans exceeds the interest paid to
depositors.
BANKS
1. Individuals and corporations that deposit money
2. A DEMAND DEPOSIT is the technical name for
a checking account; the money in a demand
from the depositor.
PPT 20-23
Commercial Banks
(See complete PowerPoint slide notes on page 20.59.)
PPT 20-24
Commercial Banks’ Services
(See complete PowerPoint slide notes on page 20.59.)
social
media in
business
(Text page 564)
PPT 20-25
Banking on
Social Media
(See complete PowerPoint slide notes on page 20.59.)
MAKING
ethical
decisions
(Text page 565)
PPT 20-26
What to Tell the
Teller
(See complete PowerPoint slide notes on page 20.60.)
Chapter 20 – Money, Financial Institutions, and the Federal Reserve
posit.
4. Commercial banks may also offer OTHER
SERVICES, such as credit cards, brokerage
services, financial counseling, automatic pay-
IRAs, travelers’ checks, and overdraft privileg-
es.
D. SERVICES TO BORROWERS
1. Loans are generally given on the basis of the
carefully to make sure that the loan plus interest
E. SAVINGS AND LOAN ASSOCIATIONS (S&Ls)
1. A SAVINGS AND LOAN ASSOCIATION (S&L)
mortgage loans.
a. S&Ls are often known as THRIFT INSTI-
TUTIONS since their original purpose was
PPT 20-27
Savings and Loan Associations
(See complete PowerPoint slide notes on page 20.60.)
Chapter 20 – Money, Financial Institutions, and the Federal Reserve
GAINS taxes were raised, making invest-
ments in real estate less attractive.
Chapter 20 – Money, Financial Institutions, and the Federal Reserve
PPT 20-28
Credit Unions
(See complete PowerPoint slide notes on page 20.60.)
Chapter 20 – Money, Financial Institutions, and the Federal Reserve
20–32
a. Interest-bearing checking accounts at rela-
1. NONBANKS are financial organizations that ac-
cept no deposits but offer many of the services
a. NONBANKS include life insurance compa-
Chapter 20 – Money, Financial Institutions, and the Federal Reserve
lecture link 20–10
CONTROVERSIAL CREDIT
UNION LOANS
Some new loans issued by credit unions are almost identi-
cal to those issued by suspicious organizations. (See the com-
plete lecture link on page 20.54 of this manual.)
PPT 20-29
Nonbanks
(See complete PowerPoint slide notes on page 20.61.)
SPOTLIGHT ON
small
business
(Text page 567)
PPT 20-30
The Rise of the
Nonbank
(See complete PowerPoint slide notes on page 20.61.)
PPT 20-31
What Attracts Customers to Online
Banking
3. PENSION FUNDS are amounts of money put
aside by corporations, nonprofit organizations,
or unions to cover part of the financial needs of
members when they retire.
accounts and loans.
5. COMMERCIAL AND CONSUMER FINANCE
higher credit risks.
Chapter 20 – Money, Financial Institutions, and the Federal Reserve
progress
assessment
(Text page 566)
PPT 20-32
Progress Assessment
(See complete PowerPoint slide notes on page 20.62.)
Chapter 20 – Money, Financial Institutions, and the Federal Reserve
5. Under President Barack Obama’s administration,
Congress passed another $800 billion spending
Chapter 20 – Money, Financial Institutions, and the Federal Reserve
bonus case 20-4
REFORMING WALL STREET
After the recent recession, Washington is trying to do its
part in preventing another widespread collapse. (See the com-
plete case, discussion questions, and suggested answers begin-
ning on page 20.86 of this manual.)
Chapter 20 – Money, Financial Institutions, and the Federal Reserve
20–38
1. As a result of the depression of the 1930s, sever-
2. Three organizations protect your money: the
Federal Deposit Insurance Company (FDIC), the
2. The goal is to maintain CONFIDENCE IN
mostly commercial banks.
3. The FDIC and FSLIC were designed to CREATE
MORE CONFIDENCE in banking institutions.
FDIC (and renamed) to better control banking.
Chapter 20 – Money, Financial Institutions, and the Federal Reserve
PPT 20-33
Protecting Depositors’ Money
(See complete PowerPoint slide notes on page 20.62.)
TION (NCUA)
2. Additional protection can be obtained by holding
2. ELECTRONIC FUNDS TRANSFER (EFT) SYS-