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Departments of a financial institution that perform work out of sight of customers, including bookkeeping and the processing of checks and loan payments.
bad debt reserve
A reserve account maintained by thrift institutions and used to offset losses from foreclosed or uncollectable loans. Within certain guidelines, contributions to the bad debt reserve are deductible from the institution's taxable income. The deduction is known as the bad debt deduction.
The remaining amount credited to a customer's account, representing the amount the customer is entitled to withdraw, or conversely, the remaining amount of a customer's debt, which is the amount the customer is obligated to repay. The term also refers to the ratio of total credits to total debits.
A financial statement that contains the types and amounts of assets, liabilities and net worth of a company, institution or individual. Also called a statement of condition.
A mortgage that does not fully amortize by the end of the loan term. Periodic payments may be for principal and interest, or for interest only. At maturity, the unpaid principal is due in a lump sum.
The lump sum payment of the unpaid principal remaining at the end of the term of a balloon mortgage loan or other non-amortizing loan.
An early housing plan implemented in 1944 to upgrade and maintain inner city housing standards. It included building, zoning, fire protection, and housing laws; a citizens' advisory council; a housing bureau in the health department; rodent control and sanitation. The plan was enforced by a special housing court. The Baltimore Plan was a model and an example to other cities trying to solve similar urban problems.
A check drawn by a bank on itself and signed by an authorized bank officer. Also referred to as a cashier's check, officer's check, or treasurer's check.
A check written by one bank on its account with another bank.
Bank Insurance Fund
The fund that provides deposit insurance for commercial banks. It is administered by the Federal Deposit Insurance Corporation (FDIC).
Bank Merger Act
Popular nickname for a section of the Federal Deposit Insurance Act (FDIA).
A promissory note issued by an authorized bank that is payable on demand to a bearer and can be used as cash. Under law, such notes are redeemable as money and are considered full legal tender. Bank notes are also called bank bills or bank currency.
Bank Protection Act of 1968
A federal law that authorized the Federal Home Loan Bank Board and other federal regulators of depository institutions to set minimum standards to be met by financial institutions in installing security devices to discourage robberies, burglaries and larcenies.
A draft drawn on a bank, which when accepted by the bank, constitutes the bank's obligation to pay the draft writer's bills from a specified creditor when the bills are due. The bank literally stamps "Accepted for payment by (name of bank) on (date)" across the face of the draft. Acceptance converts a depositor's "order to pay" into an unconditional "promise to pay" by the accepting bank. Bankers acceptances are effectively a guaranty of payment for a purchase and are usually used in financing the import, export, transfer or storage of goods, and qualify as liquid assets when held by a thrift institution.
A negotiable draft without supporting papers drawn by one bank on its credit balance at a foreign bank.
Banking Act of 1933
The first major banking legislation of the Roosevelt administration, it created the Federal Deposit Insurance Corporation to provide insurance of deposits of member banks. The Act also provided for the regulation of banks, and limited branch banking. Also known as the Glass-Steagall Act.
The legal process in which a person or firm declares inability to pay debts. Any available assets are liquidated and the proceeds are distributed to creditors. A person or firm may be declared bankrupt under one of several chapters of the federal bankruptcy code: Chapter 7, which covers liquidation of the doubter's assets; Chapter 11, which covers reorganization of bankrupt businesses; or Chapter 13, which covers work-outs of debts by individuals. Upon a court declaration of bankruptcy, a person or firm surrenders assets to a court-appointed trustee, and is relieved from the payment of previous debts.
An electronic communications network owned by an association of banks and used to transfer messages between subscribing banks. BankWire also offers a clearing service called CashWire that includes a settlement facility.
An accord developed during a 1975 meeting in Basel, Switzerland of central bankers of the industrialized nations setting forth guidelines for the supervision of banks. Included are guidelines for minimum capital requirements. The agreement was reached by the Committee on Banking Regulations and Supervisory Practices (also known as the Cooke Committee after its chairman, Peter Cooke), meeting under the auspices of The Bank for International Settlements.
Another name for the standard program, under which the Federal Home Loan Mortgage Corporation purchases mortgages for cash.