Bank Confirmation Letter - BCL

finance a la shmoop what is a savings and loan versus a bank all right

savings and loan some savings and loans yeah it's a cleverly named you know like [Case of cash appears]

home loans car loans stuff like that banks issuer of credit cards and big

lines of credit for small to large business savings and loans the little

local retail gal banks the big fat cat corporate dude with big appetites and [Woman sitting behind savings and loans desk]

small fast red convertible cars with a stick-shift

savings and loans owned either by the lenders and borrowers of the savings and

loan itself you know kinda like a co-op or it can be set up like you know normal

ish corporation banks usually owned just by shareholders some are big like this

guy and that guy yeah and there's a whole bunch of other small fries too

savings and loans can loan up to 20% of their assets half of that for big [Savings and loans assets pie chart appears]

business half of that for small business loans at least these days and why did

delineation well because small business is default a whole lot more than big

businesses savings and loans are allowed to tap into the very liquid Federal Home

Loan Bank system Fannie Mae in the gang those guys and in order to do that ie [Man with savings and loans briefcase for head appears]

get cheaper money in return SNL's have to have at least 65% of their assets

invested in residential mortgages meaning most of their loans are you know

small home mortgages a lot of first-time buyers there all right well why is this

a thing well because the American Dream from a political perspective revolves in [A couple moving into house]

large part around owning your own home right not a bad idea the government has [Uncle Sam appears and boy walks away with pile of cash]

gone to a whole lot of effort to make it easy for the little guy to borrow money

and have his or her own little castle a little to start anyway banks those cold [Boy dancing outside castle]

cruel concrete walled things don't live under this same structure they don't get

to tap into the same cash fool reserves that SNL's do is not all the time but

they get to loan money a more or less wherever they want to loan money there's

way fewer strictures on banks than SNL's banks exist to make money for the

shareholders of the bank duh and they're financially Darwinian beasts [Charles Darwin beast appears in misty forest]

good at lending money that costs them low rates to rent and then they rent it

out at much higher rates to customers right and they live on that spread so

banks also get hot and heavy with other kinds of borrowings things like credit [Man and woman sitting in car looking at sunset]

card issuance like I think about how much money your credit cards charges and

so on they get a big piece of that and servicing a debt you know and wealth

and/or financial management services like they take a percent of year or so

for managing all your dough and to some extent merchants and investment banking

services as well you know for the big guys who are global so banks think big

loans big money big spreads wholesale savings and loans think small loans

small money small spreads retail banks mr. Potter savings and loans [Mr Potter appears]

George Bailey and the rest of the Bedford Falls gang did you hear that a

video editor just got his wings [Man grows wings]