Before 1933, and particularly during the period 1929-33, bank failures were not uncommon. _1_ a bank overextended itself in creating credit or if several of its important loans could not be _2_, depositors in the bank would frequently become panicky and begin to make large withdrawals. __3__ the bank had only a small number of its deposits backed by currency, the band would soon be unable to meet withdrawals, and most depositors __4__ their money. Most frequently a bank merely needed time to improve its cash position by __5__ some of its loans and not making additional ones. In 1933, the number of bank failures __6__ a peak, forcing the federal government to intervene and __7__ the banks temporarily. To help restore the public’s confidence __8__ banks and strengthen the banking community, Congress passed legislation setting up the Federal Deposit Insurance Corporation. __9__ corporation, an agency of the federal government, now insures over 90 percent of all mutual savings and commercial bank deposits for __10__ $100,000 per deposit. The FDIC has __11__ its insurance fund by charging member institutions one-twelfth of 1 percent of their total deposits. As a result of the protection provided by the FDIC and through other kinds of supervision, bank failures have been __12__ to a few isolated instances. When deposits are federally insured, people __13__ rush to withdraw their money if they __14__ the financial condition of their bank. The delay gives the banks the necessary time to adjust their cash credit balance, and this action helps to reduce the __15__ of bankruptcy. For an example of the value of the FDIC, note that the failure in 1974 of the huge Franklin National Bank did not touch off a panic, and that depositors lost no money as Franklin was taken over by another bank.
EXERCISE:
1. A) Although B) Even if C) If D) Because 2. A) repaid B) deposited C) found D) saved 3. A) Because B) Because of C) As a result D) considering 4. A) lost B) had lost C) will lose D) would lose 5. A) calling on B) calling for C) calling off D) calling in 6. A) fell from B) reached C) climbed up D) arrived 7. A) closed B) closing C) close D) has closed 8. A) to B) in C) of D) into 9. A) For the B) This C) As a D) A 10. A) up to B) as much C) as many as D) equal 11. A) built up B) build up C) been built D) build 12. A) growing B) increased C) reduced D) disappeared 13. A) no B) any more C) no longer D) not 14. A) become concerned about B) become concerned with C) become concerned in D) concern 15. A) likely B) possibility C) possibly D) opportunity
Key: CAADD BCBBA ACCAB
PASSAGE 23
Brokers
Brokers neither physically handle products being distributed nor work on a continuing __1__ with their principals. __2__, a broker is an independent wholesaling middleman that brings buyers and sellers together and provides market information to either party. Most brokers work for sellers, __3__ a small percentage represent buyers. Brokers have no authority to set prices. They simply negotiate a sale and leave it up to the seller to accept or __4__ the buyer’s offer. They also furnish considerable market information __5__ prices, products, and general market conditions. Because of the limited services provided , brokers receive relatively small commissions-5 percent or less. __6__, brokers need to operate on a low -cost basis. Food brokers __7__ buyers and sellers of food and __8__ general-merchandise items to one another and bring them together to complete a sale. They are well __9__ about market conditions, terms of sale, sources of credit, price setting, potential __10__, and the art of negotiating. They do not actually provide credit but sometimes store and deliver goods. Brokers also do not __11__ goods and usually are not allowed to complete a transaction __12__formal approval. Like other brokers, food brokers generally represent the seller, who pays their commission. Food brokers, __13__manufactures’ agents, operate in specific geographic locations and work for a limited __14__ of food producers within these areas. Their sales force calls on chain-store buyers, store managers, and institutional purchasing agents. Brokers work __15__with advertising agencies. The average commission for food brokers is 5 per cent of sales.