Ch. 2

9. National and state charters are available for all of the following except: a. credit unions. b. commercial banks. c. savings associations. d. Federal Reserve banks. e. National and state charters are available for all of the above.

d. (Federal Reserve banks.)

13. Savings and loans have historically specialized in: a. commercial loans. b. auto loans. c. mutual loan. d. real estate loans. e. demand deposit accounts.

d. (real estate loans.)

23. Which of the following is not a fundamental function of the Federal Reserve?

d. Ensure bank profitability.

26. Which of the following is the most flexible of the Fed's tools for implementing monetary policy?

d. Open market operations

43. The _________ established to Public Company Oversight Board to regulate public accounting firms that audit publicly-traded companies.

d. Sarbanes-Oxley Act

39. FASB 115 requires historical costs to be used for:

d. held-to-maturity securities.

4. Which of the following is not represented in the CAMELS ratings. a. Cash adequacy b. Asset quality c. Management quality d. Liquidity e. Sensitivity to market risk.

a. (Cash adequacy)

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

a. (FDIC.)

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

a. (Guarantee minimal profitability of the banking system.)

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

a. (cease and desist order.)

15. 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. a. unitary thrift holding company b. commercial bank c. mortgage company d. savings bank e. credit union

a. (unitary thrift holding company)

35. The _________ authorized money market deposit accounts.

a. Depository Institutions Act (Garn-St. Germain)

38. The _________ mandated that the FDIC take prompt corrective action in dealing with bank failures.

a. Depository Institutions Act (Garn-St. Germain)

31. Which type of financial institution has seen the largest drop in their share of U.S. financial assets?

a. Depository institutions

47. Which of the following statements is/are correct?

a. Higher capital requirements often result in a higher cost of capital for banks. c. Higher capital requirements encourage small banks to consolidate into larger banks.

19. Which of the following officially designates a bank as insolvent?

a. Office of the Comptroller of the Currency

40. The _________ allows adequately capitalized bank holding companies to acquire banks in any state.

a. Riegle-Neal Interstate Banking and Branching Efficiency Act

28. 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?

a. Term Auction Facility

46. 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.

a. Treasury Emergency Authority Provisions

16. Which of the following institutions' customers have a "common bond"?

a. credit union

48. The Helping Families Save Their Homes Act of 2009 included provisions:

a. intended to prevent mortgage foreclosures. b. to enhance the availability of mortgage credit. c. to protect renters living in foreclosed homes.

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

b. (Federal Reserve)

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

b. (accepted demand deposits and made business loans.)

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

b. (protect depositors.)

24. The Federal Reserve has Reserve Banks and branches in ___ districts across the country.

b. 12

25. Which of the following is not one of the Fed's monetary policy tools?

b. Changes in the fed funds rate

36. The _________ expanded the FDIC's authority for open bank assistance.

b. Competitive Equality Banking Act

21. The Federal Deposit Insurance Reform Act of 2005 created which of the following?

b. Deposit Insurance Fund

49. The Consumer Financial Protection Bureau was created as part of the:

b. Dodd-Frank Act

20. Which of the following is the receiver of a failed depository institution?

b. Federal Deposit Insurance Corporation

41. The _________ requires disclosure of a bank's privacy policy.

b. Gramm-Leach-Bliley Act

42. The _________ repealed the Glass-Steagall Act.

b. Gramm-Leach-Bliley Act

29. Which of the following loans Treasury securities to primary dealers in exchange for other securities held by the dealers?

b. Term Securities Lending Facility

34. Which of the following was a goal of the Depository Institutions Deregulation and Monetary Control Act of 1980?

b. To allow banks to pay market rates on deposits.

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

c. (Office of Thrift Supervision.)

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

c. (memorandum of understanding.)

12. Commercial banks mostly specialize in: a. mortgages. b. mutual loans. c. short-term business credit. d. savings accounts. e. share draft accounts.

c. (short-term business credit.)

37. The _________ created the Office of Thrift Supervision.

c. Financial Institutions Reform, Recovery and Enforcement Act

30. 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?

c. Primary Dealer Credit Facility

45. The _________ created a fund originally designed to allow the U.S. Treasury to purchase distressed assets from financial institutions.

c. Troubled Asset Relief Program

33. Federal Reserve Reg. ____ requires disclosure of as to why a costumer was denied credit.

c. Z

22. Bank regulations:

c. serve as guidelines for sound operating policies.

17. Originally, the FDIC insured deposits up to:

e. $5,000

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

e. (65%)

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

e. (State banking department.)

27. Currently, the Fed sets the discount rate __________ the target fed funds rate.

e. 1% - 1.5% above

18. Which of the following is not a component of the Farm Credit System?

e. Agricultural Lending Office

32. Federal Reserve Reg. ____ makes it illegal for any lender to discriminate on the basis of national origin.

e. B

44. _________ allowed any institution to "truncate" the paper check at any point in the check clearing process.

e. Check 21 Act

50. The lack of incentive to guard against risk where one is protected from it is known as:

e. moral hazard