Read the following scenario and write a 1 page summary based on the prompts that follow.
Suppose that the T-account for First National Bank is as follows:
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Assets
|
Liabilities
|
|
Reserves
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$100,000
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Deposits
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$500,000
|
|
Loans
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$400,000
|
|
|
For this assignment, you must assume that all other banks hold only the required amount of reserves.
• How much in excess reserves does First National hold?
• How does Bob balance the requirements put on him from the regulators, his boss (the Board of Directors), his customers and the shareholders of the bank? Be sure to consider all aspects of his situation.
• Provide alternatives that Bob can consider.
• Provide your conclusion on the case study.