Financial institutions are a principal source of loanable funds in the economy.
While commercial banks account for the single largest share of credit (loanable funds) creation in the financial system, savings and loan associations and other thrift institutions also play an important role in this credit creation process. This exercise asks you to examine the amount of credit contributed to the economy by one of the largest publicly held savings and loans.
Go to Standard & Poor’s Market Insight database at www.mhhe.com/edumarketinsight and locate the most recent annual balance sheet (look under “Excel Analytics”) for Washington Mutual (WM). Identify the total amount of credit created by this thrift in the form of primary securities (Investment Securities plus Loans/Claims/Advances) and secondary securities (Customer Deposits plus Short-term Borrowings less Federal Funds Purchased). What percentage of Washington Mutual’s total assets does this credit represent? What is the major use of the credit created by this thrift institution?
