1. How Banks Operate

2. Banking Services Banks are started by investors. They pool financial investments, money, property, and even certificates of deposit to provide banking services to a community. If 10 investors put up $10,000, the new bank would have $100,000 in funds. Some of the money would be used to cover expenses: rent, furniture, and supplies and salaries of workers. A large portion would be available to lend to consumers or businesses

3. Accepting Deposits Banks hope to attract customers who make deposits. Checking Accounts- an account in which deposited money can be withdrawn at any time by checks or debit cards Savings Accounts- a account in which customers receive interest based on how much money they have deposited Certificates of Deposits- timed deposit that states the amount of the deposit, maturity, and rate of interest being paid

4. Making Loans One of the principal activities of banks is to lend money to businesses and consumers. Loans can actually increase the supply of money.

5. Changes in the Banking Industry The Bank of the United States (1791) receives its first charter from Congress and signed by George Washington. The 2 nd Bank of the United States (1816) was chartered with the same powers as the 1 st bank. The National Banking Act (1863)- created dual banking which the bank could have either a state or federal charter.

6. The Federal Reserve (1913)- The Federal Reserve Act of 1913 gave the Federal Reserve the power to act as the central bank. The Great Depression (1930’s)- the number of banks went from 26,000 in 1928 to 14,000 in 1933. The FDIC is created during the Great Depression. The Savings & Loans Crisis (1982)- This is where the FDIC was tested when banks failed in the 80’s. The Gramm-Leach-Baily Act (1999)- allows the banks greater freedom to engage in a full range of financial services