ShmoopTube

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

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

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

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

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

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small fast red convertible cars with a stick-shift

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

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

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

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

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

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

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

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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]

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

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

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

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

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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]

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

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

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

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

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

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

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

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

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

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

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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

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

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

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

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

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

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video editor just got his wings [Man grows wings]

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