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State Charter Bank vs. Federal Charter Bank

I need a few paragraphs that explain the difference between State Charter Bank and Federal Charter Bank.

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A bank is an organization, usually a corporation, chartered by a state or federal government, which does most or all of the following: receives demand deposits and time deposits, honors instruments drawn on them, and pays interest on them; discounts notes, makes loans, and invests in securities; collects checks, drafts, and notes; certifies depositor's checks; and issues drafts and cashier's checks.

A State Chartered bank is a bank that is organized under state laws, not federal laws. State banks have their deposits guaranteed by the Federal Deposit Insurance Corporation (FDIC), and have the option of joining the Federal Reserve System. If they don't use that option, they still can purchase services from the Fed, such as check processing and clearing. For a consumer, there is little detectable difference between a state-chartered bank and a federally chartered bank.

Two Federal agencies share responsibility for State banks.

The Federal Deposit Insurance Corporation insures State-chartered banks that are ...

Solution Summary

This solution discusses the differences between state charter banks and federal charter banks.