Final answer:
Yes, a bank can include fixtures and chattels in the security for a mortgage. These serve as collateral and can be seized if the borrower defaults to recover the owed amount. The example provided also demonstrates the banking system's multiplier effect on the money supply.
Step-by-step explanation:
When a bank states that all fixtures and chattels are included in the security for a mortgage, it means that these items serve as collateral for the loan. If the borrower defaults on the mortgage, the bank has the right to seize the fixtures and chattels to recover the loan amount. In the example given, Singleton Bank lends $9 million to Hank's Auto Supply and issues a cashier's check in that amount. Upon depositing this check, Hank's balance at First National increases, and so do the bank's reserves. First National is then allowed to loan out the excess over the required reserves. This showcases the multiplier effect in the banking system, where deposit creation allows banks to extend more loans, ultimately impacting the money supply.
The security for a loan is central to ensuring that banks can recoup funds lent out. In terms of a mortgage for a restaurant, fixtures and chattels could be considered critical assets and part of the security agreement. Fixtures generally include items that are attached to the property, like lighting systems or built-in furniture, while chattels are movable items like free-standing equipment.