Banks and Banking

Essay by 26677College, UndergraduateB+, July 2009

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IntroductionBanks have begun to use assetbuilding plans to stimulate assetbased development in areas of the United States such as lowincome and minority urban spaces. These plans have focused on creating more real estate development and removing urban "blight" (real estate based asset building). Banks' efforts have also encouraged communitybased financial and business enterprises.

There are two main types of banks in the United States: regional (and thrift) banks and major (mega) banks. The first type includes smaller financial institutions that primarily focus on one geographical area. In the U.S., there are six such geographical areas: the Northeast, Southeast, Central or Midwest, Northwest, Southwest, and Far West. Providing depository and lending services is the regional banks' primary line of business. The second type of bank includes banks that operate local or regional branches but whose main line of business is in financial centers; an example is New York City, where banks get involved with international transactions, underwriting, and so on.

The United States government is very involved in the banking industry, as it sets restrictions on borrowing limits and the amount of deposits that banks must hold in their vault. Also, the Federal Reserve Bank has a major influence on the bank's profitability, as it sets the interest rates which influence the credit market (loans).

A Short History of U.S. Banks and BankingThe history of the United States banking system has been largely influenced by the decisions of the American government. Initially, the banking industry was operated and regulated by the specific state where it resided and the banks required special authorization from the specific state government to open and operate.

The history of banking in the United States did not begin with the Federal Reserve Bank. Originally, an additional layer of oversight was provided by the Bank of the United...