"Narrow Banks: An Alternative Approach to Banking Reform"

Recent banking problems have prompted a variety of proposals for reforming deposit insurance and the banking system. Nearly all of these proposals, however, suffer from a common flaw - they would fail to create a banking system that is both stable and free to respond to market forces and financial developments. Narrow banking offers a possible means for accomplishing these objectives. Narrow banking would create a stable payments system by backing transaction deposits with only those assets that are truly appropriate for this task - marketable securities with virtually no interest rate or credit risk. As a result, narrow banks would essentially be "fail-safe" institutions and could operate without the inherent weaknesses of the current system. They would not pose a risk to depositors, taxpayers, or federal authorities and, unlike commercial banks, would not require extensive governmental support and intervention. These features of narrow banks would allow market forces to guide everyday banking decisions and the activities of any affiliated firms, thus returning the market to its proper role in allocating financial services. In many respects, narrow banking mirrors another banking reform that took place in the 1860s - the use of U.S. Government securities to back national bank notes. This earlier reform and the following change to Federal Reserve Notes collateralized largely by U.S. obligations have produced a stable currency and ended any public concern about its acceptability. This success provides strong evidence that narrow banking is a workable system that could stabilize our deposit system and its transactions function. Narrow banking, much like this earlier reform, appears to involve a dramatic change in the banking system. However, recent financial trends are making narrow banking a less radical change than commonly believed. In addition, most of the other approaches to recent banking problems entail a movement toward greater regulatory and governmental control of our financial system and its credit allocation functions - a response that is unlikely to make banking a vibrant, competitive industry. All of these factors thus suggest that narrow banking deserves careful consideration in efforts to reform the financial system.

Cross-cultural impression management: a cultural knowledge audit model

Purpose – Many people moving into a new culture for work or study do so without prior cross-cultural training, yet successful cultural adaptation has important ramifications. The purpose of this paper is to focus on cross-cultural impression management as an element of cultural adaptation. Does cultural adaptation begin by paying strong attention to nonverbal cues in a host culture? How is that attention converted into knowledge, and how do people use such knowledge management during impression management within the new culture? Design/methodology/approach – The method was qualitative. In total, ten international students at an English university were recruited. All originated outside the European Union and each took part in a one-hour structured interview. The transcripts were analysed through thematic analysis. Findings – International students adopted cross-cultural impression management strategies in order to enhance successful adaptation to the new host culture. Students consciously processed knowledge about nonverbal behaviour norms through everyday interactions. They audited knowledge deficits by detecting differences between the host norms and their home culture's norms. The motives for this included desiring to maximise rewards from situations. Research limitations/implications – The findings imply that being in a new culture makes people “high self monitors”. They are more aware than usual about their own and others' nonverbal behaviours. The findings tell us about how cultural adaptation begins. Originality/value – This appears to be the first in-depth qualitative research examining cross-cultural impression management by international students and deducing implications for expatriates

House and home : the surge in Denver’s low and moderate-income mortgage lending

Mortgage loans

Industrial loan companies: a growing industry sparks a public policy debate

Industrial loan companies, or ILCs, are a small, but rapidly growing part of the financial industry. These state-chartered institutions operate in seven states and have nearly all of the same powers as commercial banks. However, ILCs differ greatly from banks in one characteristic--the type of companies that may own them. ILCs meeting certain conditions may be owned and operated by firms engaged in commercial activities, thus skirting the prohibitions on mixing banking and commerce that apply to virtually all other depository institutions. ; From a public policy standpoint, the proponents of commercially owned ILCs claim that such ownership will bring a new source of capital, innovation, and competition into banking, thus providing the public with a broader range of financial services. Critics, though, contend that ILCs owned by commercial entities may face significant conflicts of interest. Such ILCs, it is argued, would have strong incentives to lend to customers of the parent company on a favorable basis and without due regard for standards of creditworthiness. Another common argument is that the parent companies might be able to exploit their size and existing customer relationships in a manner that would give them a dominant role in banking markets, thereby reducing financial competition. ; Spong and Robbins examine the public policy issues that arise from mixing banking and commerce. First, they review the history of ILCs and the basic legal and supervisory frameworks under which they operate. Next, they look at the reemergence of ILCs under their new forms of ownership and take a close look at individual ILCs and the types of business they conduct. Finally, they explore the public policy issues.Industrial loan associations

Home financing in Kansas City and its contribution to low and moderate income neighborhood development

Loans ; Finance, Personal ; Loans, Personal ; Housing - Finance

Low and moderate-income home financing : what are the trends in Kansas City?

Over the last decade, many significant developments have influenced home lending. Among these developments are the longest expansion period in U.S. history, pathbreaking technological and financial innovations, new regulatory and legislative incentives for low- and moderate-income lending, and continued growth of community organizations and special home lending programs. ; This article takes a look at these trends and their possible effect on home purchase lending in the Kansas City metropolitan area between 1992 and 2001. The article examines changes in home financing across the entire metropolitan area, as well as among low- and moderate-income borrowers and within low- and moderate-income neighborhoods. Also analyzed are the contributions of different types of lenders—banks and thrifts with local banking offices, banks and thrifts with no Kansas City banking offices, and independent mortgage companies. ; Among the more noteworthy findings in this analysis is the substantial growth that has occurred in home purchase lending for the entire Kansas City metropolitan area, with an increasing share of this lending going to low- and moderate-income borrowers and neighborhoods. Of further interest is the growing importance of home lending by banking organizations without deposit-taking offices in Kansas City. In particular, the rapid emergence of such organizations in low- and moderate-income lending provides a strong signal that this lending is meeting many of the same market tests as other forms of lending, thus foreshadowing a more continuous flow of financing to lower income neighborhoods.Loans ; Federal Reserve District, 10th

The changing structure of banking : a look at traditional and new ways of delivering banking services

In the short span of just ten to fifteen years, Tenth District banking has made the dramatic leap from predominantly a unit banking or single office framework to one that encompasses both statewide branching and interstate banking. This article examines the major factors behind these changes and then looks at the District's evolving banking structure. Overall, the total number of banks operating in Tenth District states has declined by about 40 percent since 1985. This decline, though, has been accompanied by a significant increase in the number of bank branches and facilities. ; Other significant changes are also occurring. About one-third of all banking deposits in Tenth District states is now under the control of out-of-state organizations. In addition, banks are developing and expanding alternative ways for delivering services. For instance, the District's ATM population continues to grow rapidly and an increasing number of banks are opening branches in supermarkets and other retail locations. Moreover, the Internet Web sites of District banks have expanded quickly over the last year both in terms of number and the complexity of services offered. While all of these developments pose a variety of issues and challenges for District bankers and customers, this changing banking framework is opening up new opportunities and will likely lead to a more convenient and efficient banking system, with a broader choice of services.Federal Reserve District, 10th ; Banks and banking - Customer services

Master plan: banks can learn from Greensburg's recovery

As bankers rebuild after the May 2007 tornado that obliterated this Kansas town, the need for financial institutions' emergency preparedness is reinforced.