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improvement loans, educational loans, trust services, and credit card privileges. In 1986, the Depository Institutions Deregulation and Monetary Control Act removed all savings account interest rate ceilings and minimum balance requirements at savings institutions and at commercial banks.
The investments that MSBs deposit money into are called “mutual funds” and take the form of a wide variety of stocks, bonds, and other “money market instruments” such as U.S. Treasury bills and other federal securities, commercial paper, and bank certificates of deposit. These mutual funds provide working-class investors with the opportunity to have professional money managers oversee their funds and to invest in opportunities offered by leading corporations, federal and state governments, and other entities that individuals would not have access to on their own.
Mutual Funds
Mutual funds are regulated by federal laws that include the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Company Act of 1940. Most states also have laws that regulate the organization of companies offering mutual funds and the funds themselves.
• Open-end Funds: Most mutual funds are classed this way. This means that the depositor can withdraw from the fund immediately upon request. This results in the number of shares in the fund fluctuating as withdrawals are made. The withdrawal value of an open-end fund is based on the market value of the securities in the fund at the time of withdrawal.
• Closed-end Funds: These funds generally have a fixed number of shares available, which are traded on the over-the-counter mar- ket or on stock exchanges. Shares are purchased and sold at the market price plus a commission. Depending on the state of the market, they may sell above or below the value of their assets.
Mutual Savings Banks (MSBs)