Financial system

To begin with, for under 40 years, banking was highly regulated industry and it created a fragmented financial system, but it worked just until inflation pushed interest rates to a double- dight level. Goverment responded with the series of deregulatory actions, so banks and thrifts started getting into many new business again (inclundng investment banking, real estate, insurance, financial counseling, tax preparation and credit) and this lend for people easily satisfy all their needs in one place. But, talking about financial institutions, deregulation cost a lose of earnings for them (so most some of banks started using mix of short and long-term loans.), that‘s why bankers began to scrable in founding borrowers, to save their profits. The competition caused a risikier loans ( for ex. To farmers, loans to third-world countries and ...), wich led to a many bank failures. Deregulation is also promting bankers to search for new ways to cut costs and raise revenues. They started more direct to customer approach, and tried to earn revenues from the float. Banks were also trying to expand geographically. What is important for a banks, there are some institunios, which, for a small percantages of deposits, can set a guidline for a safe bank policies.
The financial system is also monitored by no fewer than 6 federal and 50 state agencies. And the most powerful is federal reserve system. It containes 12 regional banks that controls country‘s banking system, each bank serves as a central bank and...

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