Money is an economic tool created to measure ownership and development activities, giving rise to many opportunities for countries, groups and individuals to measure net worth (the difference between the value of what is owned against what is owed) with the same tool, money. Tracking the exchange of property, goods and services is therefore the function of the financial system compiling many complex entities.Financial Institution, in a free market system and in most of the developed world, is a legal status given to an organization holding a license from the relevant and recognized regulatory body to operate depository accounts on behalf of a public. Ideally, this license grants the right to the issuer and regulator to examine and step in and take any necessary action to protect depositors’ accounts, most of which are protected to a specified limit by depositor’s insurance backed by taxpayers and the regulator’s statutory deposits from the pertinent financial institution as a percentage of all deposits held.
The financial services provided to the public by credit unions, commercial banks, investment banks, merchant banks, insurance companies, trust companies, mutual fund issuers, real estate holdings companies are all delivered by license individuals, agents or brokers. Trained and experienced to advise clients as to their best course of action in their particular circumstances toward increasing their particular net worth. It is also these highly skilled and motivated persons that generate fees and interest revenue for the financial institutions they represent, earning much more than any one individual client can or would pay. The financial individuals, agents or brokers loyalty is clearly defined.
Financial Institutions major source of revenue is interest income and fees, to off-set operational expenses and generate profits. Interest Income on credit cards balances, overdrafts, loans and mortgages are the main stay of lending institutions. While, fees for services range from financial advice, mergers and acquisitions fees, off-schedule account statements, letters of credits, fund transfers, early withdrawals, recoveries, stock and bond transfer fees, credit card fees, loan and mortgage fees, legal fees to late payment fees.
Investment Assets produce investment income and expenses across the whole financial sector. These assets can be in the form of real estate (land, commercial and residential buildings), stocks and bonds (private or public companies’ equity or debt instruments, Government-backed bonds or treasury bills), royalties and copyrights to special processes, noting that all these investment assets are exposed to market values and recessions. Some more than other Financial Institutions depend heavily on these investment assets to strengthen their balance sheet and to generate investment income to meet regulator’s statutory deposits and if insufficient, selling the asset seeking capital gains is the next step, but when these investment assets sale will only produce capital losses, the asset is described as toxic and it is already too late, the depositors’ funds held are at risk.
Regulations and oversight to protect individual depositors’ accounts and keep a high level of confidence in the entire financial system has been shown to be inadequate and has failed worldwide.
Rationale
T.A.J & Associates Company Limited uses this occasion to comment on topics that have been covered, both academically and by the mainstream media, to add its opinion and point out investment opportunity, not to invoke any social action.
