Guide to Analysing Companies

FCM
See futures commission merchant.
F
FCM
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FDI
See foreign direct investment.
FDIC
See federal deposit insurance corporation.
Fed funds rate
The rate at which US banks lend their surplus reserves to
each other overnight. The reserves are generally non-interest-
bearing deposits held with the federal reserve. Banks lend
them in order to meet their required capital ratio, or the
level of their capital and reserves compared with their
assets (loans). A target for the Fed funds rate is set by the
Federal Open Market Committee, the body that sets the Fed’s
monetary policy. As the main benchmark for short-term
interest rates in the United States, the Fed funds rate is taken as
a sensitive indicator of the way in which US interest rates in
general are moving.
Federal Deposit Insurance Corporation
A deposit protection fund, established in the United States in
1933 in the depths of the Great Depression. The Federal Deposit
Insurance Corporation (fdic) insures deposits up to a limit of
$10,000 per deposit at banks that take out insurance with it.
The fdic believes in identifying new risks to the financial
system as well as dealing with existing ones. A similar body
does a similar job for the country’s savings and loans associa-
tions. It used to be called the Federal Savings and Loan Insur-
ance Corporation, then the Resolution Trust Corporation and
now goes by the name of the Savings Association Insurance
Fund.
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Federal Reserve 
Commonly known as the Fed, the central bank of the
United States and thus the guardian of the value of the dollar.
The Fed is both the regulator of banks in the United States and
the controller of the money supply. The Federal Reserve System
works through 12 regional federal reserve banks spread across
the country. Each is owned by banks in its area, and each has
nine directors serving a three-year term of office. At the pinna-
cle of the system is the Federal Reserve Board, consisting of
seven governors based in Washington, dc. The US president
appoints each governor for a 14-year term, a long time for
people who are rarely young when they start the job. The Fed
has the usual central-bank responsibilities for monetary
policy and foreign exchange. It is also the supervisor of
bank holding companies in the United States. In practice, the
Fed keeps an eye on all US banks, for which it is lender of
last resort. Since the dollar holds sway in many countries
and territories outside the United States, the Fed is also the de
facto custodian of the value of the currencies of many other
countries and territories.