11/10/2009. Roaring 20’s 1920’s turmoil Banks were risky and reckless with their practices...
-
Upload
ellen-hodges -
Category
Documents
-
view
215 -
download
0
Transcript of 11/10/2009. Roaring 20’s 1920’s turmoil Banks were risky and reckless with their practices...
![Page 1: 11/10/2009. Roaring 20’s 1920’s turmoil Banks were risky and reckless with their practices frequently accepting high-risk loans. 1 - Businesses.](https://reader035.fdocuments.net/reader035/viewer/2022072011/56649dff5503460f94ae814f/html5/thumbnails/1.jpg)
THE HISTORY OF BANKING
11/10/2009
![Page 2: 11/10/2009. Roaring 20’s 1920’s turmoil Banks were risky and reckless with their practices frequently accepting high-risk loans. 1 - Businesses.](https://reader035.fdocuments.net/reader035/viewer/2022072011/56649dff5503460f94ae814f/html5/thumbnails/2.jpg)
SO WHY THE HISTORY LESSON IN ECONOMICS?
The current banking system that our country has, was shaped by drastic financial overhauls that happened in our past. This lesson will give
you a better understanding of what happened in our country’s past to
cause the financial restrictions, institutions and situation we have
now.
![Page 3: 11/10/2009. Roaring 20’s 1920’s turmoil Banks were risky and reckless with their practices frequently accepting high-risk loans. 1 - Businesses.](https://reader035.fdocuments.net/reader035/viewer/2022072011/56649dff5503460f94ae814f/html5/thumbnails/3.jpg)
BANKING AND THE GREAT DEPRESSION Roaring 20’s 1920’s turmoil
Banks were risky and reckless with their practices frequently accepting high-risk loans.
1 - Businesses collapse 2 - farmers have crop failures 3 - the stock market crash.
When the Stock Market Crashed panic spread Bankers rushed to withdraw their
money, this with the non-returned loans resulted in thousands of bank failures across the country.
![Page 4: 11/10/2009. Roaring 20’s 1920’s turmoil Banks were risky and reckless with their practices frequently accepting high-risk loans. 1 - Businesses.](https://reader035.fdocuments.net/reader035/viewer/2022072011/56649dff5503460f94ae814f/html5/thumbnails/4.jpg)
BANKING REFORMS FDR became president in 1932. In 1933, Congress passed the act that
created the Federal Deposit Insurance Corporation (FDIC)
The FDIC insures customer deposits if a bank fails - $250,000
![Page 5: 11/10/2009. Roaring 20’s 1920’s turmoil Banks were risky and reckless with their practices frequently accepting high-risk loans. 1 - Businesses.](https://reader035.fdocuments.net/reader035/viewer/2022072011/56649dff5503460f94ae814f/html5/thumbnails/5.jpg)
BANKING TODAY Savings accounts – pay a small amount of
interest – usually less then 1% annually Checking Accounts – place to save your
money without any interest, easy to take out money with checks/cards
Money Market Accounts – Usually have a minimum balance but have a higher interest rate then savings accounts
Certificates of Deposit (CD’s) – offer a guaranteed rate of interest over a certain period of time, they cannot be removed until that time is up or a fee must be paid.
![Page 6: 11/10/2009. Roaring 20’s 1920’s turmoil Banks were risky and reckless with their practices frequently accepting high-risk loans. 1 - Businesses.](https://reader035.fdocuments.net/reader035/viewer/2022072011/56649dff5503460f94ae814f/html5/thumbnails/6.jpg)
LOANS Banks often provide loans.
Loans allow for banks to make money.They earn money by charging interest on
loans. Principal – the amount of money that is borrowed Interest is the price paid for the use of a loan
Get a loan forHouseCarSchoolBoatBusiness
![Page 7: 11/10/2009. Roaring 20’s 1920’s turmoil Banks were risky and reckless with their practices frequently accepting high-risk loans. 1 - Businesses.](https://reader035.fdocuments.net/reader035/viewer/2022072011/56649dff5503460f94ae814f/html5/thumbnails/7.jpg)
TYPES OF INTEREST There are two types of interest, each
has its advantages Simple Interest – interest paid only on
your initial deposit If I deposit $100 in a savings account at 5%
simple interest, I will make $5 in annual interest forever
Compound Interest – Interest paid on both principal and accumulated interest In the example above, in the second year I
will be paid interest on $105
![Page 8: 11/10/2009. Roaring 20’s 1920’s turmoil Banks were risky and reckless with their practices frequently accepting high-risk loans. 1 - Businesses.](https://reader035.fdocuments.net/reader035/viewer/2022072011/56649dff5503460f94ae814f/html5/thumbnails/8.jpg)
MORE BANKING Debit ATM Direct Deposit Automatic Withdraw Safety Deposit Box