Financial Institutions

List the various types of U.S. financial institutions and the primary function of each.

Financial institutions can fall into 2 major categories:

1. Banking Financial Institutions

? Commercial Banks – accepts deposits from the public and lends money in the form of loans and advances to the public, including the business community. They also give short term financial assistance such as overdraft and provide internet banking services. Other functions may include: processing payments and safekeeping documents.

? Savings and Loans Association – finances long-term residential mortgages. They accept deposits and pay interests on savings accounts. They make loans available to residential home buyers. They can also provided indirect business financing for owners. For example, homeowners can take out a second mortgage on the equity of their home

? Credit Unions – encourage savings and provide loans/credits at reasonable rates to its members. They educate members on how to manage their money and provided investment payment services for its members.

2. Non-banking Financial Institutions

? Mutual Fund Companies – pools money from several investors and invests the money for them in stocks, money market and bonds.

? Brokerage