Financial services

“ It is my strong belief that institutions that are fully integrated will be the true winners. In the past few years we have seen a trend of financial institutions seeking the ability to provide consumers all of their monthly financial services information on one statement. It is simplicity and convenience that consumers crave, and the institutions that are able to bundle and discount their services will prosper. ”

“ Where the bank has no branches, the financial institutions may take root and develop among a population which appreciates their services. Their profits come largely, it appears, from small towns, where competition is less keen. We have already said enough concerning the service of these institutions in the development of French credit to show the danger of inflicting upon them fresh injury. ”

“ There are more than 14,855 establishments, with arteries in more than 20,000 large business savings and investments. National and state banks and trust companies are located in all your large and small cities. Many of them are members of the Federal Reserve Banks. Your 300 large life insurance companies and all other lesser ones, your great number of private bankers, your financial investment, loan, and mortgage companies, your pawn and stock brokers, and your many other financiers control the loans of money. ”

“ One of those principles is what the President and the Secretary spoke about today, which was how do the American people feel confident in a financial system where they become -- through extraordinary assistance -- a lender to a bank in order to stay healthy in this financial system. ”

“ The organization of unlike and unrelated industries—manufacturing industries, public utilities, insurance companies, railroads, trust companies and banks brought under the financial control of Morgan and Company or of some other banking syndicate. ”

“ The work that you do – enhancing financial stability among consumers, providing investment counsel, and in many cases, educating consumers on something as basic as the need for a savings account – promotes the American dream of opportunity for all our citizens. ”

“ The banking department receives and disburses the funds of the government, manages the public debt, and serves as the government's agent in most of its other financial operations; receives on deposit from other financial institutions the money which comes into their possession, and supplies them with such money funds as they need from day to day in payment of checks drawn against their balances; discounts bills of exchange with a minimum maturity of four, and in exceptional cases six, months; and to a limited extent makes advances on and invests in high-grade public and other securities. ”

“ With the third method a permanent increase is secured in the capital funds available for use in the business. Financial policy, governed by the needs of the business and its markets, will always dictate the method to be used for extinguishing or contracting a debt. ”

“ That’s important. The fact is, financial firms play an essential role in our economy. They provide capital and credit to families purchasing homes, students attending college, businesses looking to start up or expand. ”

“ The unique powers of commercial banks to accept demand deposits, provide checking account services, and lend against fractional reserves permit the banking system as a whole to create a supply of 'money,' a function which is indispensable to the maintenance of the structure of our national economy. ”

“ All these various forms of banking are distinct in character and economically the funds of each perform a peculiar function that must be recognized and observed or we shall make a great fundamental error in constructing what we hope will prove a sound financial and banking system. We must provide that the commercial function, the savings function, the trust function shall be kept apart by separating the funds arising from each, and keeping them completely segregated, in order that the country may always know just what its commercial fund is, as distinguished from its investment fund. ”

“ The primary object of a manufacturing business is to produce, and if that objective is always kept, finance becomes a wholly secondary matter that has largely to do with bookkeeping. My own financial operations have been very simple. I started with the policy of buying and selling for cash, keeping a large fund of cash always on hand, taking full advantage of all discounts, and collecting interest on bank balances. I regard a bank principally as a place in which it is safe and convenient to keep money. The minutes we spend on a competitor's business we lose on our own. ”

“ The former mode involved an inquiry into the whole of the financial operations of the bank, its several liabilities, and its available resources; often a complicated and difficult undertaking, and, at best, of uncertain results. ”

“ In addition to these functions, the State Bank helps prepare the financial plans for the economy, is called upon to assist enterprises in completing their planned assignments, and is responsible for controlling all economic activities through the use of its financial levers. ”

“ The great financial institutions, of which the four most important are the Crédit Lyonnais, the Comptoir National d'Escompte de Paris, the Société Générale, and the Crédit Industriel et Commercial, have a much more important part in the distribution of credit. ”

“ Whenever makers of securities or investors require all or any of these three services, the investment banker is needed, and payment of compensation to him is proper. Where there is no such need, the banker is clearly superfluous. And in respect to the original issue of many of our state and municipal bonds, and of some corporate securities, no such need exists. ”

“ In general.— Where the Secretary determines that the purposes of this Act are best met through direct purchases of troubled assets from an individual financial institution where no bidding process or market prices are available, and the Secretary receives a meaningful equity or debt position in the financial institution as a result of the transaction, the Secretary shall require that the financial institution meet appropriate standards for executive compensation and corporate governance. ”

“ The financial organization is the medium by which the various parts of the industrial and commercial organism are held in harmony. It is by the financial organization that capital is collected and distributed, that the friction of exchanges is reduced to a minimum, and that time is economized, through credit, between production and consumption. The financial system furnishes three indicators—prices, the rate of discount, and the foreign exchanges—through which we may read the operation of economic forces now that their magnitude makes it impossible to inspect them directly. ”

“ The growth and development in fifty years has produced in the United States a banking unit, doing in a conglomerate way what it ought to be doing as a departmental business, with four distinct functions: viz., a commercial business, the manufacturing of credit; a savings bank business, accumulating the savings of the laboring [Pg 239] masses, which is a sacred trust fund that should be placed in high grade investments; a trust company business, executing trusts, and carrying on agencies of every kind ”

“ A bank which is caught short of cash during a crisis must apply for assistance to the Bank of England, and the Bank, which at so critical a time is the only market for securities in existence, would, before making it an advance, demand to see its securities. ”

“ No member bank shall act as the medium or agent of any nonbanking corporation, partnership, association, business trust, or individual in making loans on the security of stocks, bonds, and other investment securities to brokers or dealers in stocks, bonds, and other investment securities. ”

“ The accumulation of a nation's capital and its investment require the cooperation of numerous agencies of which banks are the chief. They collect the savings of the people, combine them into amounts of sufficient size for investment purposes, and invest them temporarily and sometimes permanently. Cooperating agencies in this work are insurance companies, societies of various kinds for the promotion of saving, stock exchanges, promoters, etc. ”

“ A large part of the business of investment banking in the United States is conducted by corporations and firms organized for the purpose of buying and selling investment securities, especially bonds and mortgages. ”

“ The Banking Corporation.—Very closely related to the growth of business enterprise on a large scale was the system of banking. In the old days before banks, a person with savings either employed them in his own undertakings, lent them to a neighbor, or hid them away where they set no industry in motion. Even in the early stages of modern business, it was common for a manufacturer to rise from small beginnings by financing extensions out of his own earnings and profits. ”

“ Our merchants and bankers owe unsettled balances or accounts, and large amounts of our securities are held there—National, State and municipal bonds, bonds and stock of our railroads, street railways and industrial corporations, and even mortgages on city property or farms, placed there by loan companies. ”

“ When banks lend on collateral security of corporation stocks to the buyers of those stocks, they are, in effect, financing the corporation itself. [483] Industries differ widely in the extent to which they depend on the money market for their finances. The difference depends often less on the nature of the industry than on the type of the industrial organization. An individual farmer cannot get the bulk of his credit that way! ”

“ In case subscriptions by the banks of a district are inadequate, stock is to be offered to the general public; and if the response of the public is inadequate, the stock is to be taken by the Government of the United States. ”

“ Thanks to their numerous agencies, to their attractive conduct of business, with the service of a courteous and attentive staff, they have gradually taught the people new habits in investment and confidence in credit, to such a degree that he who but yesterday hoarded in a stocking prefers to-day, if not to speculate on the Bourse, at least to make deposits in the savings banks. ”

“ The stockholders in every corporation or joint stock association for banking purposes issuing bank notes, or any kind of paper credit to circulate as money, shall be individually responsible to the amount of their respective share or shares of stock in any such corporation or association for all its debts and liabilities of every kind. ”

“ In the United States, banking institutions are very numerous. They are all established by companies, incorporated by the legislatures of the different states, or by the congress of the United States. The act which grants the privileges of banking, also fixes the amount of the capital stock, and divides it into equal shares. The holders of the stock choose the officers to transact the business of the corporation.
57. Our banks receive deposits from individual customers, loan money on notes of hand, acceptances, and drafts, issue notes of circulation, and purchase and sell bills of exchange. ”

“ Distribute your loans rather than concentrate them in a few hands. Pursue a straightforward, upright, legitimate banking business. Treat your customers liberally, bearing in mind that a bank prospers as its customers prosper. ”

“ The advantages of the Bank may consist in this: in the profits of the contracts made with Government, which should bear interest to be annually paid in specie; in the loan of money at interest, say six per cent.; in purchasing lives by annuities, as practised in England, etc. The benefit resulting to the Company, is evident from the consideration, that they may employ, in circulation, a great deal more money than they have specie in Stock, on the credit of the real property which they will have in other use. ”

“ In Chapter II, on the choice of a banker, an attempt was made to show why a customer should select a strong institution whose working resources are plentiful, and whose reserve of liquid assets is large enough to enable it to meet a drain of deposits during a run or a panic. The shareholder who guarantees the customers of a bank against loss to a limited extent will naturally take care that he is a partner in a company which maintains an adequate reserve of cash and securities as an insurance fund against those accidents which are quite beyond the control of the most able board of directors. ”

“ Banks shall: maintain adequate capital and liquidity; make adequate provision for
depreciation of assets, for discharge of liabilities, and for losses; maintain adequate
accounting and other records of business; observe sufficient and effective risk controls; and
ensure that their assets are diversified as to risk of loss.
3. The CBI shall, by regulation, prescribe detailed standards of conduct for banks which the
CBI shall apply in its prudential supervision in accordance with international standards and
best practices. ”

“ State banks and trust companies manage their reserve and surplus investment funds in substantially the same manner as national banks, using national banks in the reserve and central reserve cities as their reserve agents. ”

“ The third thing which I pointed out as necessary to lay the foundation for sound business and prosperity is a well-regulated and safe banking system, as a depository of business funds and a machinery for business exchanges. How supremely important a part of our economic organism banks have become I need not explain. ”

“ We are studying in order the forms of commercial Credits, and we have now come to that one which is central in the operations of Banking, and accordingly this is the place for us to understand clearly what a Bank is, who a Banker is, and what are the motives actuating at once the Banker and his Customers. A Bank is an institution for the Creation, Management, and Extinction of Credits. Money of any kind plays a very subordinate part in the general operations of banks, which live and move and have their being in the sphere of pure Credits. Bankers are buyers and sellers of credits. ”