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The US Financial System – Course Syllabus
The intention of this finance course is to provide the student with an overview of the history of the Federal Reserve, its purpose and effect on the national and global economies as well as local real estate across the country.
The benefit to the consumer when a licensee has successfully completed this finance course is that the agent will be able to summarize and share with the consumer how the federal government and government agencies influence the economy of the United States and the functions of the various agencies controlling the flow of money. The agent will also be able to assess indicators that may be useful in determining the rise or fall of future mortgage interest rates and explain to the consumer the role of traditional direct lenders in the primary market and the role mortgage brokers, bankers and individuals play in lending.
Course objectives:
| The role of the Federal Reserve | Summarize how the federal government and government agencies influence the economy of the United States |
| Post WWII | Discuss the history of the secondary mortgage market following WWII |
| Agencies and their roles | List and discuss the history of the agencies involved in the secondary market. |
| Control of the monetary system | Define and discuss the definition of ‘money’ and how it functions in the economy |
| Federal Reserve System | Explain the history and functions of the various agencies controlling the flow of money. |
| U S Treasury / Interest Rates | Assess indicators that may be useful in determining the rise or fall of future mortgage interest rates |
| Traditional market lenders | Discuss the individuals and institutions that make loans directly to borrowers |
| Commercial banks | List and discuss the money capabilities of lenders other than those that are traditional and commercial |
| Credit Unions and indirect lenders, Brokerages / Investors | Discuss the role of mortgage brokers, bankers and individuals play in lending |
| Deeds | Explain the role of states, real estate laws and the bundle of rights |
| Promissory Notes | Summarize the purpose of various financial instruments |
| Mortgages | Define and discuss the components of a mortgage |
| Contract clauses | Summarize various contract clauses including advantages and disadvantages |
Sample of the finance course content:
The Role of the Federal Reserve
The passage of the Federal Reserve Act of 1913 attempted to solve the existent problems of the banking system. The original purpose of the system was to discount commercial paper and provide additional bank regulation. A positive aspect of this law was that it allowed the member national banks of the system to engage in mortgage lending.
For the first time since the demise of the Bank of the United States in 1837, the nation had a central banking system. The system would slowly begin to assume a centralized control over the economic life of the nation. It would really commence its modern functions during the Great Depression.
The Federal Reserve is a central bank. For its member banks, it is the “lender of last resort” or “the banker’s banker.” The Federal Reserve is made up of thousands of member banks. The full impact of the Federal Reserve on our monetary system has broadened over time to include influence over the availability and cost of money and credit (interest rates).
As our central bank, the Federal Reserve attempts to ensure that money and credit growth over the long term is sufficient to provide a rising standard of living. For the short term, the Federal Reserve seeks to adapt its policies in an effort to combat deflationary or inflationary pressures. As a lender of last resort, it may attempt to forestall national liquidity crises and financial panics.
It is the Federal Reserve’s monetary policies that most influence the cost and availability of mortgage money.
What is it that the Federal Reserve controls when charged with monetary policies? Besides striving to maintain an economical balance, which fosters better living conditions in the U.S., the Federal Reserve’s actions now affect a global economy. Global economics, in turn, affect the U.S. and Federal Reserve policy, so the Federal Reserve must function within global constraints.
There are 12 Federal Reserve Districts across the nation. A District Federal Reserve Bank represents each.
