There are two kinds of banking institutions in the USA: a savings bank and a commercial bank. Savings banks primarily serve the consumer, commercial banks primarily serve businesses. One of the main differences between them is in the kind of loan they can grant. Savings banks can lend money to home buyers and home builders. Commercial banks can lend money for any purpose, such as buying a new car or starting a business.
Commercial banks are classified into national banks (chartered and supervised by Federal Government) and state banks (chartered and supervised by the state in which they are operated). All commercial banks can make loans to borrowers.
The Unites States has about 14 000 banks, of which 6000 belong to the system operated by the Federal Reserve Board. Through its member banks the Federal Reserve issues money, acts as a financial clearinghouse and establishes required cash reserves that banks must maintain. By increasing and decreasing these reserve requirements, and by changing the interest rate for loans to banks from 12 regional Federal Reserve Banks, the Federal Reserve Board can regulate the money supply and thereby attempt to control the rate of inflation in the economy.
Individual savings are usually deposited in interest-bearing accounts to several types of institutions banks, savings and loan associations and credit unions that are usually established by employee groups. Americans also have the opinion of placing part of their money in savings bonds and treasury bills issued by the federal government, or in privately operated mutual funds that invest the money in the stock market.
Almost all private banks and savings institutions have insurance offered by the federal government to protect individual savings accounts up to $ 100 000.
IV. Say whether the following statements are true or false. If a statement is false, change it to make it true.
1) Savings banks primarily serve businesses, commercial banks primarily serve the consumer.
2) State banks are chartered and supervised by Federal Government.
3) National and state banks make loans to borrowers.
4) The Federal Reserve Board can regulate the money supply by increasing and decreasing the reserve requirements.
5) Americans do not place their money in savings bonds and treasury bills.
6) Americans invest their money in the stock market.
V. Look through the text and find English equivalents of the following words and word combinations:
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VI. Write down possible headlines which best express the main idea of each paragraph.
VII. Speak about kinds of banking institutions of the USA.
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