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Safety and Soundness
Satefy and Soundness is the major focuses. The examiner uses the CAMELS rating system to help measure the safety and soundness of a bank. The examiner evaluates the overall health of the bank and the ability of the bank to manage risk. A simple definition of risk is the bank’s ability to collect from borrowers and meet the claims of its depositors. When a bank successful to collect money back from borrowers and meet the claims of its depositors, the bank is in good condition.
Consumer deposit money into the bank, and the bank make loans with these deposits. Banks are required to provide customers clear and accurate information about services, such as savings accounts, loans and credit cards. The information should be inluded like minimum balance required, monthly service fee and the average percentage yield. The bank also limits liability on lost or stolen credit cards. These laws ensure that consumers and banks make decisions based on the same information.
How Banks Earns Profits
Just like any other business, a bank earns money so that it can run its operations and provide services. Banks needs citizens to deposit money into the bank so it can operate. The bank provides safe storage and pays interest on customer's deposit. Banks can earn profit by loaning the money to burrowers. Burrowers will have to pay for the interest that they burrow and thats how Banks earn profit. Banks also make money from charging fees for other financial services, such as debit cards, ATM usage and overdrafts on checking accounts.