Bank Endorsement

  

A bank endorsement is a guarantee by a bank that a negotiable instrument (for simplicity, a check) is good. This assures the other party in the deal that the payment is in good order.

For example, Tom buys a motorcycle via the internet. The two parties don't know each other. The seller wants to make sure the deal doesn't end up a regrettable experience, e.g. a bad check. Therefore, the seller requests a bank endorsement to guarantee he gets his money. For a fee, the bank endorses the payment (again, for simplicity, a check).

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Finance: What is a Savings & Loan v. a B...187 Views

00:00

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

00:09

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

00:15

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

00:20

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

00:25

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

00:31

small fast red convertible cars with a stick-shift

00:34

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

00:39

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

00:43

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

00:49

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

00:52

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

00:57

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

01:01

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

01:06

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

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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]

01:16

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

01:22

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

01:27

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

01:30

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

01:35

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]

01:40

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

01:44

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

01:49

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

01:54

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

01:59

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

02:02

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

02:07

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

02:12

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

02:16

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

02:21

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

02:25

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

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

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

02:37

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

02:41

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

02:45

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

02:50

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

02:55

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

02:59

video editor just got his wings [Man grows wings]

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