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Service Industries, Banking and Financial Services

pension managers, loan associations, mortgage banks, savings institutions, Wachovia

In 1995 the U.S. financial market had a total of 628,500 institutions, which employed 7.0 million people. These institutions included investment, commercial, and savings banks; credit unions; mortgage banks; insurance companies; mutual funds; real estate agencies; and various holdings and trusts.

Banks play a central role in any economy since they act as intermediaries in the flow of money. They collect deposits and distribute them as loans, allowing depositors to save for future consumption and allowing borrowers to invest. In 1998 the United States had 10,481 insured banks and savings institutions with a total of 84,123 banking offices. Because of mergers and closures, the number of banks steadily declined in the 1980s and 1990s while the number of bank offices increased. Combined assets of insured banks and savings institutions totaled $5.44 trillion in 1998.

Banking in the 1990s was a highly competitive business, as banks offered a variety of services to attract customers and sought to stem the flow of investors to brokerage houses and insurance firms. Large banks in the United States, in terms of assets, include Citibank and J.P. Morgan Chase & Co., headquartered in New York City; Bank of America and Wachovia/First Union, headquartered in Charlotte, North Carolina; and Wells Fargo, headquartered in San Francisco, California.

In 1998 the United States had 1,687 savings and loan associations (SLAs), with combined assets of $1.1 trillion. SLAs are similar to banks, in that they accept deposits from customers, but SLAs focus primarily on the housing and building industries by making loans to home buyers. The industry was substantially restructured in the late 1980s and early 1990s after some prominent SLAs became insolvent largely because of falling real estate prices in some parts of the country.

In addition, a host of other professions offer financial services to individuals and corporations. Insurance companies provide insurance as well as a variety of other services, including deposit accounts, pension management, mutual funds, and other investments. Stockbrokers, investment experts, pension managers, and personal financial consultants advise consumers on investing money. In addition, corporate finance managers, accountants, and tax consultants make recommendations on financial planning to businesses and individuals.

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