1. keep customers' money safe and stored in a vault
   make money transactions more convenient for customers
2. put customers' money to use by lending it out to others

The primary function of banks is to put their account holders' money to use by lending it out to others to do things such as buy homes, start businesses and send kids to college. Banks create money in the economy by making loans.

1. subsidized private insurance companies to take insurance on risky banks
   established the U.S. Government's Federal Deposit Insurance Corporation (FDIC) to insure bank deposits
2. did nothing and let the free market fix itself

The U.S. Federal Government established the Federal Deposit Insurance Corporation (FDIC) to back deposits in case the bank failed.

1. charging borrowers a higher interest rate than they pay out to depositors
   charging fees to those who use banking services
2. both of the above

Banks make money with fees they charge for services and from the interest they charge on loans. The interest they charge is higher than the interest they pay on depositors' accounts.

1. bank tellers
   the agency that charters the bank
2. the U.S. Congress

The agency that charters the bank is primarily responsible for protecting the public from unsafe banking practices. It conducts on-site examinations to make sure the bank's financial condition is good and that the bank is complying with banking laws.

1. credit histories
   education histories
2. romantic histories

The credit histories and relevant business histories of the bank's directors and CEOs will greatly affect the acceptance or denial of the bank's charter.

1. 10 to 15 percent
   50 to 55 percent
2. 70 to 75 percent

Bank organizers are typically responsible for 10 percent to 15 percent of start-up capital of a bank. The remainder is sold to shareholders.

1. warn depositors when they are in danger of failing
   banks to take on risky loans
2. keep a certain percentage of their money in reserve

The Federal Reserve Act requires banks to keep a certain percentage of their money in reserve. Despite this, if everyone came to withdraw their money from the bank at the same time, there wouldn't be enough.

1. money market account
   certificate of deposit
2. NOW account

A NOW (negotiable order of withdrawal) account is like a checking account that pays interest. Money market accounts and certificates of deposit have more limitations on when you can withdraw money.

1. a company holding a little stock with not much actual power over a bank
   a company holding a significant amount of stock who can control elections and other bank policy matters.
2. a company that is left holding the bag for a failed bank

A bank holding company is a company that holds a significant amount of stock in a bank and has a certain amount of control over the bank.

1. 10,000
   100,000
2. 250,000

Depositors are typically protected for up to $250,000 in FDIC-insured banks. The amount was increased fro $100,000 in 2008.