Editor's note: Former U.S. House Speaker Dennis Hastert faces sentencing today at 11 a.m. ET after previously pleading guilty to two counts of banking violations. Prosecutors say Hastert, now 74 and ill after suffering a stroke in November, sexually abused five students when he was a high school teacher and wrestling coach decades ago in Yorkville, Ill. He is accused of using illegally structured bank withdrawals to pay out "hush money" for his misconduct. Hastert cannot be charged for sexual abuse because the federal and state statutes of limitations have passed, but one of his accusers, identified only as "Individual D," is expected to testify at today's hearing. The Chicago Tribune notes that this testimony could prove crucial in determining whether Hastert gets prison time. We'll be following the proceedings and will bring you updates. - Rebecca
A bank is a financial institution that creates credit by lending money to a borrower, thereby creating a corresponding deposit on the bank's balance sheet. Lending activities can be performed either directly or indirectly through capital markets. Due to their importance in the financial system and influence on national economies, banks are highly regulated in most countries. Most nations have institutionalized a system known as fractional reserve banking under which banks hold liquid assets equal to only a portion of their current liabilities. In addition to other regulations intended to ensure liquidity, banks are generally subject to minimum capital requirements based on an international set of capital standards, known as the Basel Accords.
Banking in its modern sense evolved in the 14th century in the rich cities of Renaissance Italy but in many ways was a continuation of ideas and concepts of credit and lending that had their roots in the ancient world. In the history of banking, a number of banking dynasties — notably, the Medicis, the Fuggers, the Welsers, the Berenbergs and the Rothschilds — have played a central role over many centuries. The oldest existing retail bank is Banca Monte dei Paschi di Siena, while the oldest existing merchant bank is Berenberg Bank.