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Simple English definitions for legal terms
banking
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A quick definition of banking:
Banking is when people use banks to keep their money safe and do things like depositing money, withdrawing money, and writing checks. Banks are regulated by laws made by the government to make sure they are fair and safe. The government also makes sure that people can get their money back if the bank fails. Banks used to have rules about how much interest they could pay on savings accounts and checking accounts, but those rules have changed. The government also has rules about how checks work and how long it takes for people to get their money after depositing a check. If someone puts their money in a bank, the government will insure it up to a certain amount so that people don't lose their money if the bank fails.
A more thorough explanation:
Banking refers to the industry and practice of managing financial transactions, such as deposits, loans, and investments. Banks and other financial institutions are regulated by both state and federal laws.
For example, the Depository Institutions Deregulation Act of 1980 eliminated interest rate controls on savings accounts, while the Garn-St Germain Depository Institutions Act of 1982 lifted restrictions on checking and money market accounts nationwide. The Uniform Commercial Code (UCC) governs the operation of checking accounts and defines rights between parties with respect to bank deposits and collections.
The 1930s banking crisis led to the development of federal insurance for deposits, administered by the Federal Deposit Insurance Corporation (FDIC). The FDIC guarantees a standard insurance amount of $250,000 per depositor, per insured bank.
Examples of banking services include:
- Opening a checking or savings account
- Applying for a loan or credit card
- Investing in stocks or mutual funds
- Using online banking to manage accounts and pay bills
These examples illustrate how banking involves a wide range of financial services that individuals and businesses use to manage their money and achieve their financial goals.