unit 4 commercial banks

Unit 4

Commercial Banks in the Financial System of U.S.A

导 言：在间接融资中，融资中介是资金需求者或投资者和资金富裕者或储户的桥梁，它包

括 商业银行、投资银行、保险公司或其它的金融公司。商业银行是我们最熟悉的，在这一

单 元里，我们就以美国商业银行为例，了解商业银行的种类、业务和其特点，并探讨其比

其 它金融机构具有抗风险性的原因。

The

importance

of

the

nation’s

banking

system

to

the

processes

of

a

modern

industrial

economy

can

hardly

be

exaggerated.

The

banking

system

is

an

integral

part

of

the

monetary

system, accumulating and lending idle funds, facilitating the transfer of money, and providing for

its

safekeeping.

The

banking

system

also

provides

part

of

the

long-term

financing

required

by

industry,

by

commerce,

and

by

agriculture.

It

plays

an

important

part,

too,

in

financing

the

construction of the nation’s millions of homes; and it is an important source for personal loans.

Although the various depository institutions of the nation, namely commercial banks, savings

and loan associations, credit unions, and mutual savings banks, display a trend toward providing

similar services, there remains enough of the unique character of each to distinguish easily among

them. Further, it is through the commercial banking system that the principal influence of fiscal

and

monetary

policy

is

carried

out.

It

is

for

this

reason

that

special

emphasis

is

placed

on

commercial banking in any discussion

of a nation’s financial system.

In the United States, a commercial bank can be chartered either by the state (state-chartered

banks) or by the federal government (national banks). Of all the commercial banks, more than half

were

state-chartered.

All

national

banks

must

be

members

of

the

Federal

Reserve

System

and

must be insured by the Bank Insurance Fund (BIF), which is administered by the Federal Deposit

Insurance

Corporation.

BIF

was

created

early

in

1989

by

the

Financial

Institutions

Reform,

Recovery, and Enforcement Act of 1989 (FIRREA).

State-chartered banks may elect to join the Federal Reserve System. Their deposits must be

insured by BIF. In spite of the large number of banks that elect not to be members of the Federal

Reserve System, banks that are members hold more than 70% of all deposits in the United States.

Moreover, with the passage of the Depository Institutions Deregulation and Monetary Control Act

of

1980

(DIDMCA),

the

reserve

requirements

that

apply

to

members

of

the

Federal

Reserve

System apply also to state-chartered banks.

Bank Services

Commercial banks provide numerous services in the U.S. financial system. The services can

be

broadly

classified

as

follows:

(1)

individual

banking,(

2)institutional

banking,

and

(3) global

banking. Of course, different banks are more active in certain of these activities than others. For

example, money center banks (defined later) are more active in global banking.

Individual banking encompasses consumer lending, residential mortgage lending, consumer

installment

loans,

credit

card

financing,

automobile

and

boat

financing,

brokerage

services,

student

loans,

and

individual-oriented

financial

investment

services

such

as

personal

trust

and

1

investment services. Interest and fee income are generated from mortgage lending and credit card

financing. Mortgage lending is often referred to as

from brokerage services and financial investment services.

Loans to nonfinancial corporations, financial corporations (such as life insurance companies),

and government entities (state and local governments

in the U.S. and foreign governments) fall

into the category of institutional banking. Also included in this category are commercial real estate

financing,

leasing

activities,

and

factoring.

In

the

case

of

leasing,

a

bank

may

be

involved

in

leasing

equipment

either

as

lessors,

as

lenders

to

lessors,

or

as

purchasers of

leases.

Loans

and

leasing

generate

interest

income,

and

other

services

that

banks

offer

institutional

customers

generate

fee

income.

These

services

include

management

of

the

assets

of

private

and

public

pension

funds,

fiduciary

and

custodial

services,

and

cash

management

services

such

as

account

maintenance, check clearing, and electronic transfers.

It

is

in

the

area

of

global

banking

that

banks

have

begun

to

compete

head-to-head

with

another financial institution-- investment banking firms.

Global banking covers a broad range of

activities

involving

corporate

financing

and

capital

market

and

foreign

exchange

products

and

services. Most global banking activities generate fee income rather than interest income.

Corporate

financing

involves

two

components.

First

is

the

procuring

of

funds

for

a

bank's

customers.

This

can

go

beyond

traditional

bank

loans

to

involve

the

underwriting

of

securities,

though

the

Glass-Steagall

Act

limits

bank

activities

in

this

area.

In

assisting

its

customers

in

obtaining

funds,

banks

also

provide

bankers'

acceptances,

letters

of

credit,

and

other

types

of

guarantees

for

their

customers.

That

is,

if

a customer

has

borrowed

funds

backed by

a

letter

of

credit or other guarantee, its lenders can look to the customer's bank to fulfill the obligation. The

second

area

of

corporate

financing

involves

advice

on

such

matters

as

strategies

for

obtaining

funds, corporate restructuring, divestitures, and acquisitions.

Capital

market

and

foreign

exchange

products

and

services

involve

transactions

where

the

bank

may

act

as

a

dealer

or

broker

in

a

service.

Some

banks,

for

example,

are

dealers

in

U.S.

government

or

other

securities.

Customers

who

wish

to

transact

in

these

securities

can

do

so

through

the

government

desk

of

the

bank.

Similarly,

some

banks

maintain

a

foreign-exchange

operation, where foreign currency is bought and sold. Bank customers in need of foreign exchange

can use the services of the bank.

In their role as dealers, banks can generate income in three ways: (1) the bid-ask spread, (2)

capital

gains

on

the

securities

or

foreign

currency

used

in

transactions,

and

(3)

in

the

case

of

securities,

the

spread

between

interest

income

earned

by

holding

the

security

and

the

cost

of

funding the purchase of that security.

The financial products that banks have developed to manage risk also yield income. These

products include interest rate swaps, interest rate agreements, currency swaps, forward contracts,

and interest rate options. Banks can generate either commission income (that is, brokerage fees) or

spread income from selling such products.

Bank Funding

In describing the nature of the banking business, we have focused so far on how a bank can

generate income. We will have a look at how a bank can raise funds. There are three sources of

funds

for

banks:

(1)

deposits,

(2)

nondeposit

borrowing,

and

(3)

common

stock

and

retained

earnings. Banks are highly leveraged financial institutions, which means that most of their funds

2

come

from

borrowing--the

first

two

sources

we

refer

to.

Included

in

nondeposit

borrowing

are

borrowing from the Federal Reserves through the discount window facility, borrowing reserves in

the federal funds market, and borrowing by the issuance of instruments in the money and bond

markets.

Deposits

--There are several types of deposit accounts. Demand deposits (checking accounts)

pay no interest and can be withdrawn upon demand. Savings deposits pay interest (typically below

market

interest

rates),

do

not

have

a

specific

maturity,

and

usually

can

be

withdrawn

upon

demand.

Time deposits, also called certificates of deposit, have a fixed maturity date and pay either a

fixed or floating interest rate. Some certificates of deposit can be sold in the open market prior to

their

maturity

if

the

depositor

needs

funds.

Other

certificates

of

deposits

cannot

be

sold.

If

a

depositor

elects

to

withdraw

the

funds

from

the

bank

prior

to

the

maturity

date,

a

withdrawal

penalty is imposed. A money-market demand account is one that pays interest based on short-term

interest rates. The market for short- term debt obligations is called the money market, which is how

these deposits get their name.

Borrowing at the Fed discount window

--

The Federal Reserve Bank is the banker’s bank

--or,

to put it another way, the bank of last resort. Banks temporarily short of funds can borrow from

the Federal at its discount window. Collateral is necessary to borrow, but not just any collateral

will

do.

The

Fed

establishes

(and

periodically

changes)

the

type

of

collateral

that

is

eligible.

Currently it includes:( l) Treasury securities, federal agency securities, and municipal securities,

all with a maturity of less than six months, and ( 2) commercial and industrial loans with 90 days

or less to maturity.

The interest rate that the Fed charges to borrow funds at the discount window is called the

discount rate. The Fed changes this rate periodically in order to implement monetary policy. Bank

borrowing at the Fed to meet required reserves is quite limited in amount, despite the fact that the

discount rate generally is set below the cost of other sources of short-term funding available to a

bank. This is because the Fed views borrowing at the discount window as a privilege to be used to

meet short-term liquidity needs, and not a device to increase earnings.

Continual borrowing for long periods and in large amounts is thereby viewed as a sign of a

bank's financial weakness or as exploitation of the interest differential for profit. If a bank appears

to be going to the Fed frequently to borrow, relative to its previous borrowing pattern, the Fed will

make an “informational” call to ask for an explanation for the borrowing. If there is no subse

quent

improvement in the bank's borrowing pattern, the Fed then makes an “administrative counseling

call in which it tells the bank that it must stop its borrowing practice.

Other

nondeposit

borrowing

--Most

deposits

have

short

maturities.

Bank

borrowing

in

the

federal

funds

market

and

at

the

discount

window

of

the

Fed

is

short- term.

Other

nondeposit

borrowing

can

be

short-term

in

the

form

of

issuing

obligations

in

the

money

market,

or

intermediate to long-term in the form of issuing securities in the bond market. An example of the

former

is

the

repurchase

agreement

(of

market,

example

of

intermediate

—

or

long-term

borrowing is floating-rate notes and bonds.

Bank assets

The principal assets of a commercial bank are cash, securities, and loans.

Cash

. Cash includes funds in the bank’s vaults, in a federal reserve bank, and in correspondent

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