FNBK Exam

Deposit insurance was increased to __________ per depositor in 2008. $100,000 $150,000 $250,000 $300,000 $500,000

$250,000

Originally, the FDIC insured deposits up to: $100,000 $50,000 $25,000 $10,000 $5,000

$5,000

Currently, the Fed sets the discount rate __________ the target fed funds rate. 1% - 1.5% below 2% - 2.5% below 3% - 3.5% above 2% - 2.5% above 1% - 1.5% above

1% - 1.5% above

At the end of 2013, there were approximately ______ independent banks and thrifts in operation in the United States. 300 1,800 4,200 4,500 6,300

1,800

S-corps must have no more than ___ shareholders. 10 50 100 500 1,000

100

The Federal Reserve has Reserve Banks and branches in ___ districts across the country. 10 12 14 16 18

12

Controlling interest in a bank is defined as ownership or indirect control of ____ of the voting shares in the bank. 15% 20% 25% 30% 51%

25%

Savings institutions must maintain what percent of their assets in housing-related assets to be considered a "Qualified Thrift Lender"? 100% 15% 70% 85% 65%

65%

A financial holding company cannot own which of the following? A bank. A bank holding company. A thrift. A thrift holding company. A financial holding company may own all of the above.

A financial holding company may own all of the above.

Which of the following is not a component of the Farm Credit System? Farm Credit Banks Agricultural Credit Associations Federal Land Credit Associations Farm Credit Administration Agricultural Lending Office

Agricultural Lending Office

The Helping Families Save Their Homes Act of 2009 included provisions: intended to prevent mortgage foreclosures. to enhance the availability of mortgage credit. to protect renters living in foreclosed homes. All of the above are correct. Only a. and b. are correct.

All of the above are correct

Federal Reserve Reg. ____ makes it illegal for any lender to discriminate on the basis of national origin. AA BB Z C B

B

Which act limited the activities a company could engage in if it owned a bank? Federal Reserve Act Bank Holding Company Act McFadden Act Glass-Steagall Act Competitive Equality Banking Act

Bank Holding Company Act

Federal Reserve Reg. ____ requires disclosure of as to why a costumer was denied credit. AA BB Z C B

C

Which of the following is not represented in the CAMELS ratings. Cash adequacy Asset quality Management quality Liquidity Sensitivity to market risk.

Cash adequacy

Which of the following is not one of the Fed's monetary policy tools? Open market operations Changes in the fed funds rate Changes in the discount rate Changes in the required reserve ratio All of the above are monetary policy tools of the Fed

Changes in the fed fund rate

_________ allowed any institution to "truncate" the paper check at any point in the check clearing process. Riegle-Neal Interstate Banking and Branching Efficiency Act Fair and Accurate Credit Transactions Act Troubled Asset Relief Program Sarbanes-Oxley Act Check 21 Act

Check 21 Act

The _________ expanded the FDIC's authority for open bank assistance. Depository Institutions Act (Garn-St. Germain) Competitive Equality Banking Act Financial Institutions Reform, Recovery and Enforcement Act Federal Deposit Insurance Corporation Improvement Act Depository Institutions Deregulation and Monetary Control Act

Competitive Equality Banking Act

The Federal Deposit Insurance Reform Act of 2005 created which of the following? Bank Insurance Fund Deposit Insurance Fund Savings Association Insurance Fund National Credit Union Shares Insurance Fund Federal Savings and Loan Insurance Fund

Deposit Insurance Fund

The _________ authorized money market deposit accounts. Depository Institutions Act (Garn-St. Germain) Competitive Equality Banking Act Financial Institutions Reform, Recovery and Enforcement Act Federal Deposit Insurance Corporation Improvement Act Depository Institutions Deregulation and Monetary Control Act

Depository Institutions Act (Garn-St. Germain)

The _________ mandated that the FDIC take prompt corrective action in dealing with bank failures. Depository Institutions Act (Garn-St. Germain) Competitive Equality Banking Act Financial Institutions Reform, Recovery and Enforcement Act Federal Deposit Insurance Corporation Improvement Act Depository Institutions Deregulation and Monetary Control Act

Depository Institutions Act (Garn-St. Germain)

Which type of financial institution has seen the largest drop in their share of U.S. financial assets? Depository institutions Mutual funds Insurance companies Pension plans Finance companies

Depository institutions

In 2010, Congress passed the ______________ which addressed a wide range of problems associated with the financial crisis, including Too Big to Fail banks. Sarbanes-Oxley Act Troubled Asset Relief Program Glass-Steagall Act Gramm-Leach-Bliley Act Dodd-Frank Act

Dodd-Frank Act

The Consumer Financial Protection Bureau was created as part of the: Hope for Homeowners Act Dodd-Frank Act Fair and Accurate Credit Transactions Act Gramm-Leach-Bliley Act Sarbanes-Oxley Act

Dodd-Frank Act

Which of the following is not a fundamental function of the Federal Reserve? Conduct the nation's monetary policy. Provide an effective payments system. Regulate banking operations. Ensure bank profitability. All of the above are fundamental functions of the Federal Reserve.

Ensure bank profitability

The primary federal regulator of state banks that are not members of the Fed is the: FDIC. Office of the Comptroller of the Currency. Office of Thrift Supervision. State's banking department. National Credit Union Administration.

FDIC

Credit union membership is based upon a strict common bond that defines the members.

False

Most banks have the ability to easily raise new capital by issuing new equity.

False

True/False- During the past 20 years, the number of distinct U.S. banking organizations has increased.

False

True/False- Financial holding company and bank holding company are different names for the same type of entity.

False

True/False- In 2008, the U.S. Treasury committed over $50 trillion dollars in financial support for financial institutions.

False

True/False- Securitization refers to the process of splitting a single loan into several smaller loans.

False

True/False- Smaller banks tended to have more subprime mortgage defaults than larger banks.

False

True/False- To help keep people in their homes, the SEC promoted loan modifications for troubled home-loan borrowers.

False

True/False- Transaction banking emphasizes the personal relationship between the banker and customer.

False

Which of the following is the receiver of a failed depository institution? Federal Reserve Federal Deposit Insurance Corporation Office of the Comptroller of the Currency Office of Thrift Supervision Federal Savings and Loan Insurance Corporation

Federal Deposit Insurance Corporation

The primary federal regulator of state banks that are members of the Fed is the: Resolution Trust Corporation Federal Reserve Office of the Comptroller of the Currency State Banking Authorities. Federal Deposit Insurance Corporation.

Federal Reserve

National and state charters are available for all of the following except: credit unions. commercial banks. savings associations. Federal Reserve banks. National and state charters are available for all of the above.

Federal Reserve banks.

The _________ created the Office of Thrift Supervision. Depository Institutions Act (Garn-St. Germain) Competitive Equality Banking Act Financial Institutions Reform, Recovery and Enforcement Act Federal Deposit Insurance Corporation Improvement Act Depository Institutions Deregulation and Monetary Control Act

Financial Institutions Reform, Recovery and Enforcement Act

Which act separated commercial banking, investment banking and insurance into three separate industries? Glass-Steagall Act Bank Holding Company Act McFadden Act Federal Reserve Act Competitive Equality Banking Act

Glass-Steagall Act

__________ have a large international presence. Global banks Nationwide banks Super regional banks Regional banks Specialty Banks

Global banks

At the end of 2008, which of the following investment banks remained independent? Bear Stearns Goldman Sachs Lehman Brothers Merrill Lynch a. and b.

Goldman Sachs

The _________ gave regulatory responsibility over financial holding companies to the Federal Reserve. Riegle-Neal Interstate Banking and Branching Efficiency Act Gramm-Leach-Bliley Act Financial Institutions Reform, Recovery and Enforcement Act Federal Deposit Insurance Corporation Improvement Act Depository Institutions Deregulation and Monetary Control Act

Gramm-Leach-Bliley Act

The _________ repealed the Glass-Steagall Act. Riegle-Neal Interstate Banking and Branching Efficiency Act Gramm-Leach-Bliley Act Financial Institutions Reform, Recovery and Enforcement Act Federal Deposit Insurance Corporation Improvement Act Depository Institutions Deregulation and Monetary Control Act

Gramm-Leach-Bliley Act

The _________ requires disclosure of a bank's privacy policy. Riegle-Neal Interstate Banking and Branching Efficiency Act Gramm-Leach-Bliley Act Financial Institutions Reform, Recovery and Enforcement Act Federal Deposit Insurance Corporation Improvement Act Depository Institutions Deregulation and Monetary Control Act

Gramm-Leach-Bliley Act

The _______________ repealed the restriction on banks affiliating with securities firms under the Glass-Steagall Act. Sarbanes-Oxley Act Bank Holding Company Act Competitive Equality Banking Act Gramm-Leach-Bliley Act Financial Institutions Reform, Recovery and Enforcement Act

Gramm-Leach-Bliley Act

Which of the following is not a purpose of bank regulation? Guarantee minimal profitability of the banking system. Provide monetary stability. Ensure safety and soundness of banks. Provide a competitive financial system. Protect consumers from abuses by banks.

Guarantee minimal profitability of the banking system.

Deposits at credit unions are insured by the: National Credit Union Association. Federal Credit Union Administration. Federal Reserve. Federal Deposit Insurance Corporation. Credit Union Insurance Corporation.

National Credit Union Association

A new charter to start a federal savings association is obtained from the: Office of the Comptroller of the Currency. National Credit Union Administration. Office of Thrift Supervision. State banking department. Federal Reserve

Office of Thrift Supervision.

Which of the following officially designates a bank as insolvent? Office of the Comptroller of the Currency Federal Reserve Office of Thrift Supervision Office of National Charters Resolution Trust Corporation

Office of the Comptroller of the Currency

Which of the following statements is/are correct? Higher capital requirements often result in a higher cost of capital for banks. Small banks have greater access to the equity markets than large banks. Higher capital requirements encourage small banks to consolidate into larger banks. All of the above are correct. Only a. and c. are correct.

Only a. and c. are correct

Which of the following is the most flexible of the Fed's tools for implementing monetary policy? Changes in the fed funds rate Changes in the required reserve ratio Changes in the discount rate Open market operations Private placements

Open market operations

Which of the following is an overnight collateralized loan facility that provides loans for up to 120 days to primary dealers in exchange for a broad range of collateral? Term Auction Facility Term Securities Lending Facility Primary Dealer Credit Facility Troubled Asset Relief Program Housing and Economic Recovery Facility

Primary Dealer Credit Facility

Which of the following is not a channel for delivering banking services? Mobile banking. Online banking. Automated Teller Machines. Branch banking. Retail banking.

Retail banking

The _________ allows adequately capitalized bank holding companies to acquire banks in any state. Riegle-Neal Interstate Banking and Branching Efficiency Act Competitive Equality Banking Act Financial Institutions Reform, Recovery and Enforcement Act Federal Deposit Insurance Corporation Improvement Act Depository Institutions Deregulation and Monetary Control Act

Riegle-Neal Interstate Banking and Branching Efficiency Act

___-corps have favorable tax treatment because a qualifying firm does not pay corporate income taxes. C Q S V Z

S

The _________ established to Public Company Oversight Board to regulate public accounting firms that audit publicly-traded companies. Riegle-Neal Interstate Banking and Branching Efficiency Act Competitive Equality Banking Act Financial Institutions Reform, Recovery and Enforcement Act Sarbanes-Oxley Act Depository Institutions Deregulation and Monetary Control Act

Sarbanes-Oxley Act

_____________ refers to the process of pooling a group of assts with similar features and issuing securities that are collateralized by the assets. Originate-to-Resell Securitization Mortgage Collateralization Deposit Origination Loan-to-Distribute

Securitization

A new charter to start a state bank must be obtained from the: Federal Reserve. Federal Deposit Insurance Corporation. Office of the Comptroller of the Currency. Office of Thrift Supervision. State banking department.

State banking department.

Which of the following allows depository institutions to borrow for a fixed term against a variety of collateral that is normally accepted for discount window loans? Term Auction Facility Term Securities Lending Facility Primary Dealer Credit Facility Troubled Asset Relief Program Housing and Economic Recovery Facility

Term Auction Facility

Which of the following loans Treasury securities to primary dealers in exchange for other securities held by the dealers? Term Auction Facility Term Securities Lending Facility Primary Dealer Credit Facility Troubled Asset Relief Program Housing and Economic Recovery Facility

Term Securities Lending Facility

Which of the following is false regarding community banks? They typically have extensive operations in specific regions of the country. They typically operate in a limited geographic area. They often focus on lending to small businesses. The bulk of their funding comes from deposits. They tend to grow at a modest rate.

They typically have extensive operations in specific regions of the country.

Which of the following was a goal of the Depository Institutions Deregulation and Monetary Control Act of 1980? To reduce the range of banking services offered. To allow banks to pay market rates on deposits. To allow banks to make long-term mortgage loans. To allow banks to offer Money Market Deposit Accounts. To reduce the number of leveraged buyouts.

To allow banks to pay market rates on deposits

What is the primary motivation today of forming a financial holding company? To increase speculation. To branch across state lines. To engage in activities not permitted in a bank holding company. To branch within a particular states boundaries. To reduce the risk of bank failures.

To engage in activities not permitted in a bank holding company

The _________ authorized the Treasury to purchase debt securities issued by the Fannie Mae, Freddie Mac, and the Federal Home Loan Banks and to purchase common stock. Treasury Emergency Authority Provisions Foreclosure Prevention Act Troubled Asset Relief Program Primary Dealer Credit Facility Check 21 Act

Treasury Emergency Authority Provisions

The _________ created a fund originally designed to allow the U.S. Treasury to purchase distressed assets from financial institutions. Capital Purchase Program Foreclosure Prevention Act Troubled Asset Relief Program Primary Dealer Credit Facility Check 21 Act

Troubled Asset Relief Program

A dual banking system means that both the federal government and individual states charter banks and credit unions.

True

A function of investment banking is to facilitate corporate mergers and acquisitions.

True

True/False- An independent bank operates a single organization that accepts deposits and makes loans.

True

True/False- Community banks tend to operate in a limited geographic region.

True

True/False- It is more difficult for multibank holding companies to realize economies of scale if they allow subsidiary banks to retain key decision-making authority.

True

True/False- Mortgage defaults were greatest in geographic markets that had experienced the greatest run-up in real estate prices.

True

True/False- Super-regional banks typically have limited global operations.

True

True/False- The Federal Reserve may prevent the formation of a financial holding company if one of its insured depository institution subsidiaries is not well capitalized.

True

True/False- Thrifts are supervised by the Office of Thrift Supervision.

True

True/False- Universal banks were originally centered in Western Europe.

True

Which of the following mortgage types were offered to "subprime" borrowers? Interest Only Option Adjustable-Rate Principal Only All of the above a. and b. only

a. and b. only

Historically, a commercial bank was defined as a firm that: accepted NOW accounts and made consumer loans. accepted demand deposits and made business loans. accepted government deposits and made public loans. accepted demand deposits and made consumer loans. is regulated by the Federal Reserve.

accepted demand deposits and made business loans.

In 2008, the U.S. Treasury financial supported financial institutions by: purchasing troubled assets. buying preferred stock in some financial institutions. issuing guarantees on money market funds. increasing the deposit insurance limit. all of the above.

all of the above.

A legal document that orders a firm to stop an unfair practice under full penalty of law is a: cease and desist order. capital request. memorandum of understanding. quality assurance directive. national bank order.

cease and desist order.

The U.S. government took all of the following actions to address the credit crisis in 2008 except: putting Fannie Mae into conservatorship. passed the Troubled Asset Relief Program (TARP). created the Keep Banks Solvent (KBS) agency. authorized large non-financial firms to sell bonds that were FDIC-insured. temporarily increased FDIC domestic deposit coverage to $250,000.

created the Keep Banks Solvent (KBS) agency.

The parent bank holding company assists bank subsidiaries with all of the following except: asset and liability management. strategic planning. loan review. deposit insurance. business development.

deposit insurance

Banks created Section 20 affiliates to: engage in investment banking activities. make international loans. purchase savings and loans. invest in junk bonds. compete with general-purpose finance companies.

engage in investment banking activities

FASB 115 requires historical costs to be used for: trading account securities. available-for-sale securities. retained earnings. held-to-maturity securities. net income.

held-to-maturity securities

The primary appeal of online banking is: prevention of identity theft. high-volume traffic. lack of face-to-face interaction. its convenience. the ability to make small dollar purchases.

its convenience

A formal regulatory document that prescribes corrective action for a problem institution is called a: cease and desist order. capital request. memorandum of understanding. quality assurance directive. national bank order.

memorandum of understanding.

The lack of incentive to guard against risk where one is protected from it is known as: risk aversion too big to fail protection guarantee incentive failure moral hazard

moral hazard

Bank holding companies and financial holding companies generally do not pay income tax because: they are always chartered as non-profit corporations. most of their income is subsidiary paid dividends, of which 80% is tax-exempt. the subsidiaries always operate at a net loss. bank holding companies must carry deposit insurance. bank holding companies are not subject to Internal Revenue Service regulations.

most of their income is subsidiary paid dividends, of which 80% is tax-exempt

A __________ controls at least two commercial banks. one-bank holding company state holding company national holding company multibank holding company financial holding company

multibank holding company

An "independent" bank is: an "independent" subsidiary of a multi-bank holding company. another name for a one-bank holding company. a bank that is exempt from paying federal income taxes. a bank that is specifically created to underwrite corporate debt issues. not controlled by a multi-bank holding company or any other outside interest.

not controlled by a multi-bank holding company or any other outside interest.

Many insurance companies have formed __________ to operate banks as part of their financial services efforts. one-bank holding companies multibank holding companies retail subsidiaries finance companies financial holding companies

one-bank holding companies

A primary purpose of maintaining the safety and soundness of banks is to: encourage loan growth. protect depositors. ensure liquidity for the stock market. prevent discrimination. minimize bank losses.

protect depositors.

Savings and loans have historically specialized in: commercial loans. auto loans. mutual loan. real estate loans. demand deposit accounts.

real estate loans

The Federal Reserve may prevent the formation of a financial holding company if one of its insured depository institution subsidiaries: received an unsatisfactory in its most recent Community Reinvestment Act exam. has branches across state lines. is part of a bank holding company. makes subprime loans. is well capitalized.

received an unsatisfactory in its most recent Community Reinvestment Act exam

Bank regulations: can prevent bank failures. can eliminate economic risk for banks. serve as guidelines for sound operating policies. guarantee bankers will make sound management decisions. guarantee bankers act in an ethical manner.

serve as guidelines for sound operating policies

Commercial banks mostly specialize in: mortgages. mutual loans. short-term business credit. savings accounts. share draft accounts.

short-term business credit

Which of the following institutions' customers have a "common bond"? credit union commercial bank mortgage company savings bank thrift

thrift

Today, the primary motivation behind forming a bank holding company is: to reduce competition. the ability to circumvent restrictions on branching. to broaden the scope of products the bank can offer. to increase deposit concentration. All of the above are motivating factors today for forming a bank holding company.

to broaden the scope of products the bank can offer

Many insurance companies have organized as a _____________ in order to own a depository institution and bypass prohibitions in the Glass-Steagall Act and the Bank Holding Company Act. unitary thrift holding company commercial bank mortgage company savings bank credit union

unitary thrift holding company