Other Financial Institutions
Savings and Loan Associations Asavings and loan association (S&L)is a financial institution that primarily accepts savings deposits and provides home-mortgage loans. Originally, they were permitted to offer their depositors only savings accounts. But since Congress passed the Depository Institutions Deregulation and Monetary Control Act, which became effective on January 1, 1981, they have been able to offer interest-paying checking accounts (NOW accounts) to attract depositors. A NOW accountis an interest-bearing checking account. (NOW stands for Negotiable Order of Withdrawal.)
Credit UnionsAcredit union is a financial institution that accepts deposits from, and lends money to, only those people who are its members. Usually the membership is composed of employees of a particular firm, people in a particular profession, or those who live in a community served by a local credit union. Some credit unions require that members purchase at least one share of ownership, at a cost of about $5 to $10. Credit unions generally pay higher interest than commercial banks and S&Ls, and they may provide loans at lower cost. Credit unions are regulated by the Federal Credit Union Administration.
Mutual Savings BanksAmutual savings bank is a bank that is owned by its depositors. Located primarily in the northeastern part of the United States, mutual savings banks accept deposits and lend money for home mortgages. The approximately 375 mutual savings banks in this country have no stockholders. Their profits are distributed to depositors. They operate much like S&Ls and are controlled by state banking authorities.
Organizations That Perform Banking FunctionsThere are three types of financial institutions that are not actually banks but that are nevertheless involved in various banking activities to a limited extent.
Insurance companies provide long-term financing for office buildings, shopping centers, and other commercial real estate projects throughout the United States. They also invest in corporate and government bonds. The funds used for this type of financing are obtained from policyholders' insurance premiums.
Pension funds are established by employers to guarantee their employees a regular monthly income upon retirement. Contributions to the fund may come either from the employer alone or from both the employer and the employee. Pension funds earn additional income through generally conservative investments in certain corporate stocks,
corporate bonds, government securities, and real estate developments.
Brokerage firms offer combination savings and checking accounts that pay higher-than-usual interest rates (so-called money-market rates). Many people switched to these accounts when their existence became widely recognized to get the higher rates. In the last few years, however, banks have instituted similar types of accounts, hoping to
lure their depositors back.
I. VOCABULARY PRACTICE
Find the English equivalents for the following:
1. a corespunde cerinţelor apartenenţei/соответствовать требованиям членства;
2. a da autorizaţie/давать разрешение;
3. prima de asigurare/страховая премия;
4. la ieşire la pensie/при выходе на пенсию;
5. hîrtii de valoare de stat/государственные ценные бумаги;
6. credit ipotecar/ипотечный кредит;
7. stabilitatea monedei naţionale/стабильность национальной валюты;
8. a fi supus unei inspectări neanunţate/подвергаться неожиданной инспе-кционной проверке;
9. deţinător de poliţă/держатель полиса;
10. comercianţi care vindeau şi cumpărau bani/торговцы, которые продавали и покупали деньги.
II. COMPREHENSION
A) Give answers to the following questions:
1. What is the name for the central bank in the USA? Describe it. What is its mission?
2. Give the definitions of a commercial, national and state banks. How do banks earn most of their profit?
3. What is a Savings and Loan Association? What did they offer to their depositors originally and what do they offer now?
4. What is a NOW account?
5. What is a Credit Union? Who can become its member? What do some credit unions require?
6. What is a mutual savings bank? What are the similarities and differences between a mutual savings bank and S&L?
7. What other financial institutions do you know?
8. How do insurance companies obtain their funds? Give examples of insurance companies in our country. What are their functions?
9. What are pension funds established for? How do they get the money to be paid out to pensioners?
10. What accounts are offered by brokerage firms?
B) Mark the statements with TRUE or FALSE:
1. In the USA there are more national banks than state banks.
2. State banks must be members of the Fed.
3. Commercial banks own Federal Reserve District Banks, which are not under their control.
4. If you want to buy a flat but you don’t have money, you can apply to S&L.
5. Credit Unions are more advantageous than commercial banks.
6. There are approximately 375 mutual savings banks in the USA and they have stockholders.
7. Insurance companies, pension funds and brokerage firms are non-banking organizations.
8. Brokerage firms offer lower-than-usual interest rates.
III. FOCUS ON GRAMMAR
A) Fill in prepositions:
1. I want to open an account ______ your bank.
2. You have only $100 _______ your account.
3. Don’t borrow money _______ this bank. They charge very high interest ____ a loan.
4. When you paid the hotel bill, did you pay _____ cash or _____ credit card?
5. Banks also make their profits ______ the fees and commisions they charge ______ their services.
6. Yesterday the Dresdner Bank announced an interest rate increase ______ 0,5%.
7. As soon as we receive your cheque _____ 2500$ we will despatch the goods which will reach you within a few days.
8. Because some customers can’t afford to pay ____ cash, businesses sell goods and services _____ credit.
B) Choose the correct form of the verb:
1. She ... the bank to check her account.
a) has just phoned; b) just phoned; c) just has phoned; d) phones just.
2. When the secretary entered Mr.Black ... to foreign businessmen.
a) spoke; b) was speaking; c) has spoken; d) had spoken.
3. Our director ... the prices now.
a) are discussing; b) was discussing; c) discussies; d) is discussing.
4. This firm ... Model A-5 for 4 years before they started producing Model A-6.
a) produced; b) had been producing; c) has been producing; d) was producing.
5. He ... $100000 in Swiss bank account last spring.
a) deposited; b) had deposited; c) has deposited; d) was depositing.
6. I am awfully tired because I ... all day.
a) was working; b) had been working; c) have been working; d) have worked.
IV. FOCUS ON LANGUAGE
Choose the correct word for each sentence:
1. She works for an advertisement/advertisingagency.
2. How will the increase in interest rates affect/effect your sales?
3. My bank manager has agreed to borrow/lend me another $2000.
4. We’ve had to cancel/postpone the meeting until next Monday.
5. My plane was delayed/postponed by an hour due to computer failure.
6. Before coming here, I studied economics/economy at university.
7. I am interested/interesting in your buildings projects in the Middle East.
8. She applied for a job/work as a personnel officer.
9. The cost of life/living has gone up again.
10. Please send precise measurements/measures when ordering.
11. We expect prices to raise/rise by at least 5%.
12. We only exchange goods if you produce a receipt/recipe.
13. I must remember/remind the boss about that meeting this afternoon.
14. Can you say/tell the difference between these two products?
15. The company is extremely sensible/sensitive to any criticism.
16. There’s some more paper in the stationery/stationary cupboard.