Banking Services Careers
Usually, no one shareholder (or company) can own more than _____% of a banking institution.
24.9
The National Credit Union Administration (NCUA) insures deposits up to a maximum of:
$250000
The Federal Reserve has set the reserve ratio at 10%. Your local bank has deposits of $150 million and reserves of $20 million. How much in excess reserves is the bank holding?
$5 million
What bill denomination stays in circulation the longest?
$50
The amount of profit the Federal Reserve Bank turned over to the United States Treasury in 2012 was approximately:
$80 billion
A local bank in your area was recently audited. It turns out that the bank is not properly covering its deposits with the recommended reserve requirements and is not using bank credit sufficiently. Which office below is best suited to take action against the bank in question?
Board of Governors
What are the similarities between the roles of the Federal Reserve and the FDIC?
Both the federal reserve and the FDIC have regulatory power over the banking industries
Most adult US citizens are evaluated based on a credit score system that tracks an individual's spending, saving, and payment habits. Which of the following was implemented in the banking industry and is the best equivalent to the personal credit score system?
CAMELS
People are slowing down their spending and holding onto their money, causing a sluggish economy. What is one way to stimulate the economy?
Decrease the reserve requirements at banks
_____ are the statistics and numerical facts about a group of people.
Demographics
A person's net worth is calculated by subtracting all your assets from all your liabilities.
False
The Federal Reserve monitors the US banking industry to protect corporations only.
False
The US Treasury is responsible for implementing banking laws passed by Congress.
False
What does FDIC stand for?
Federal Deposit Insurance Corporation
Name three college degrees that would prove useful for a banking job at a credit union. List three jobs that are available in the banking industry. List three ways job openings are communicated to potential applicants.
Three degrees would be financial analysis, accounting, and business administration. Banking industry jobs would be a teller, a personal banker, and an operations clerk. Finally, openings are communicated through job fairs, interviews, and through email
The housing market has come to a standstill and the government wants to encourage first-time home buyers to make housing purchases. What action can the Fed take that will most likely result in more first-time home purchases?
decrease interest rates
share
each aspect of an account for a member-owner is referred to as a share, reflecting the ownership that each member has in the credit union; for example, a savings account might be called "share 3", and a check is called a "share draft" because it is being debited against the member's share of the credit union's assets
If a consumer was in the process of purchasing an automobile and the automobile loan information regarding rate and full expense of the loan were omitted, which consumer protection law would offer the car buyer the best protection in this scenario?
either ECOA or TILA
An interest rate is the percentage the Fed charges its member banks.
false
Credit unions wield more fiscal power than top banks.
false
Each state operates in the same manner and follows the same set of laws and regulations.
false
Federal-chartered banks always had the ability to lend more money compared to the smaller state-chartered institutions.
false
If the Fed engages in open market operations and buys Treasury bonds from member banks, consumers are less likely to borrow money for automobile and home loans.
false
In early banking days, banks kept bonds and currency in reserve.
false
Only a small percentage of state-chartered credit unions are federally insured under the National Credit Union Administration (NCUA).
false
The Fed only oversees the domestic activities of banks belonging to the Federal Reserve System.
false
A "thrift" is another name for a commercial bank.
fasle
To lower interest rates, the Fed should _____.
increase the money supply
In 1950, the cost to go to a movie was 25 cents. In 2014, the cost to go to a movie is $15. This can be attributed to _____.
inflation
a credit union that shares their services with other credit unions for a fee; for example, a credit union can give permission to another credit union to use their branches for members to make deposits and cash checks
issuer
Commercial banks
lends money to the consumer
US Department of Treasury
manages the country's money supply
A depositor at a credit union is called a _____.
maybe employee
What is one way a bank has the jurisdiction of its charter automatically determined?
maybe if the bank is privately insured
In a set of statistics, the _____ is the middle number.
median
Some people hold on to dollars as a store of value while others use it as a _____, to purchase something that is wanted or needed.
medium of exchange
The methods and rules the Federal Reserve uses to ensure the safety of your money is called _____.
monetary policy
What would most likely happen if the Federal Reserve raises interest rates from 5% to 10%? (Select all that apply.)
more consumers will borrow money, the sale of building supplies will decrease
Offering wealth management advising and IRA and trust fund management to a rich, aging community is an example of identifying a _____?
niche
Back Nine Savings Bank, which sponsors golf tournaments and offers a designated sum of money for PGA members who score a hole-in-one and have a specific account at the bank, is an example of a bank that was opened based on which of the following:
niche market
Andriana Rodriguez is applying for a loan. As she is filling out the paperwork, she comes across a question about her age, which Andriana does not fill in. Which consumer protection law best supports Andriana's decision to leave this field blank?
not TILA so maybe ECOA
Investments that are typically held or owned for a duration of time in order to receive the best return on the investment are known as _____.
not savings deposits
When investigating the start up of a bank, there are several factors that must be considered. If a person wanted to open a bank that had less costs and less regulations, what institution would be the best option to open?
not state-charted bank with fed oversight
When credit unions share their services with other credit unions for a fee, they are called _____.
not stockholderor member-owner
Regulators who visit and oversee banks and update CAMELS ratings are employees of _____.
not the FDIC
Regional Federal Reserve Branches
prints and mints money
Federal reserve
puts new money into circulation
Each aspect of an account for a member-owner in a credit union is referred to as a _____, which reflects the ownership each member has in the credit union.
share
A check at a credit union is called a _____.
share draft
Executives that become partners in a bank and who own a part of the bank's business are called _____.
shareholders
reserve
something of value saved for use when needed; in early banking, banks kept gold and silver in reserve. Today. they can keep bonds and currency in reserve
Who has a bigger advantage to implement new banking practices and why?
state-charted banks because of their law making ability
In today's banking industry, if a bank were to experience a bank run and close its doors, a depositor can still recover their deposits. This is in part due to which piece of legislation?
the banking act of 1933
solvency
the condition of being able to pay off all your debts
What organization brings together state banking organizations?
the conference of state bank supervisors
When determining the best location to open a bank, executives review various demographics for several locations to choose the best option. What is the most likely correlation between the average consumer's household net worth and a bank's success in a specific region?
the higher the net worth the more likely the bank will be successful
Who grants federal charters?
the office of the comptroller of currency
What is CAMELS?
the rating system for banks
What is the meaning of oversight?
the supervision of banking members by Federal Reserve Bank regulators
An individual may not deposit and withdraw at a Federal Reserve Bank or its branches.
true
Banks use your deposits to make loans to other individuals.
true
Some state banks belong to the Federal Reserve Bank.
true
The dual banking system is unique to the United States.
true
inflation
when the cost of most goods and services rise over time; this has the effect of a dollar being able to buy less over time, so its value deflates as prices inflate
The Free Banking Era, where anyone was free to start their own bank, which resulted in financial chaos and political unrest, is also known as _____.
wildcat banking
What percentage of state-chartered banks are federally insured?
95
Early in the development of our banking system, many banks failed. List five factors that caused banks to fail.
1. Bad loans 2. Funding issues 3. Rogue employees 4. Non-bank activities 5. Risky management decisions
How many Regional Federal Reserve Banks exist?
12
What does "lender of last resort" mean?
FRB serves as the ultimate lender to eligible institutions experiencing financial difficulty and considered high risk in terms of near collapse
Janie just inherited a large sum of money from her grandmother in the amount of $10,000. Janie was thinking of buying a new car but would require additional money to cover the full cost of the automobile. Currently, interest rates are high. What would be the best option for Janie to do? (Select all that apply.)
Deposit the money into a bank account, wait until the Fed lowers the discount rate to take out a car loan
You are a researcher working with the Treasury Department and the Philadelphia Historical Society on a brochure that will introduce tourists visiting the First Bank of the United States, the nation's first federally chartered bank, which still stands at 120 South Third Street in Philadelphia. In approximately 225 words, your brochure should explain why the bank was chartered, what services it provided, how long it was chartered, what competition the bank faced and what happened after the bank's charter expired.
In 1791, The First Bank of the United States was founded by Alexander Hamilton. It was the first federally charted bank , and still stands today. The goals Hamilton had for this bank were rather simple - to establish financial order, establish credit, and resolve debts from the Revolutionary War. Hamilton also requested that the bank was to be a private company, having a 20 year charter, and would only allow the Secretary of the Treasury to remove government deposits and inspect the record books. The founding fathers originally thought that this proposal was unconstitutional when it was first brought to them. They did not want people other than congress to regulate money. The House and the Senate both made their objections, and after much debate and revision, they made a final proposal. President George Washington signed the bill in February of 1791, thus creating the First Bank of the United States. This carter expired in 1811, and in 1816 the bank was succeeded by the Second Bank of the United States. After it expired, other banks began opening up and they had similar goals. Many of these banks are still open today, and continue to help people in both saving money and helping financially.
If the demand for money is low and the amount of money in the money supply is decreasing, which of the following is correct?
Interest rates are high
Johanna received a large sum of money and wants to open up a bank account to deposit her money. She is comparing several banks in her neighborhood to determine the bank that would be the best one for her. Which consumer protection law sets the guidelines that will help Johanna make an informed decision when comparing banks?
Not ECOA, so maybe TISA
The Office of the Comptroller of the Currency accepts and reviews applications for bank charters for all of the following, except:
Not credit card banks or trust banks
Why was the Federal Deposit Insurance Corporation (FDIC) created? (Select all that apply.)
Set up the US as "lender of last resort", instill confidence in the banking community, prevent a run on banks
What are the advantages of having a dual banking system? (Select all that apply.)
State banks are allowed to act as testing facilities for innovation and change, it promotes competition and helps combat unfair and deceptive practices
What is one aspect that may deter a person from opening a new bank?
The area is saturated with banks
State several differences between state-chartered banks and federally chartered banks. Include reasons why a bank would choose one charter over the other.
The first difference would be where federal banks have maximum interest rate regulations where different states may have high or no limits on interest rates. The next difference is that state authorities have a greater level of familiarity with their local credit unions. Federally charted banks are not operated by the federal government. The National Credit Union Association supervises and insures both federal and state banks. I think a bank would rather choose to be a state charted bank because they have their own set of rules based on the state's laws.
Why do many businesses incorporate in Delaware?
The laws are favorable toward businesses
Each state has its own set of state laws, which vary by state to state.
True
Who prints and mints money in the United States?
US Department of Treasury
An interest rate is _____.
What it costs to borrow money from a lender
If the stock market were to crash and investors became increasingly nervous about the future of the economy's financial stability, this could result in _____.
a bank run
acquirer
a credit union that buys services from other issuing credit unions; for example, a smaller credit union may pay for its members to have permission to use branches or ATM machines from a larger credit union
member-owner
a deposit at a credit union; members own the credit union, since it is formed under a cooperative structure
bank charter
a legal document granting the right to operate a bank in a specified geographic area; includes required regulations, specifies supervising agencies, and specifies types of banking that can be done by this institution
dual banking system
a system unique to the United States that allows banks to either be chartered under state or under federal law
monetary
about national money, as in "monetary system" or "monetary exchange"
When a smaller credit union pays for its members to have permission to use branches or ATM machines from a larger credit union, they are called:
acquirer
Which of the following is a leading cause of credit unions' need to diversify and expand?
aging population
What is important to a consumer when choosing a bank? (Select all that apply.)
all except if the bank if federal or state charted
What are some checks a credit union performs when hiring a new employee? (Select all that apply.)
all except running a report on how many credit cards a person has
Currency
an object or group of objects widely agreed upon to be used as a form of exchange; examples of currency include coins and dollar bills within a national system; US currency is based on the US dollar, while in Italy the recognized currency is the Euro
Due to the financial crisis of 2007-2008, many new laws were passed that added more layers of oversight and regulation to the banking industry. Smaller community banks have become concerned with the newly imposed regulations by the federal regulators on their bank. What is the best action the bank could take to alleviate this situation?
apply for a charter conversion from a federally-charted bank to a credit union
A legal document granting the right to operate a bank in a specified geographic area is called a _____.
bank charter
The FDIC was established by the:
banking act of 1933
If a settler agreed to plow a neighbor's field so he could take home some of the neighbor's crop, this is an example of _____.
bartering
What does the "C" stand for in CAMELS?
capital adequacy
Mel was meeting with his accountant to discuss his finances. The accountant asked Mel to create a spreadsheet of all his liquid assets that are available in case of an emergency. Mel included the bills and coins in his pocket and the current market value of his home. Which of the following should Mel have included on his spreadsheet? (Select all that apply.)
coins and bills, checking account balance
Most of the early US credit unions had membership based on:
common employment
Which is NOT an example of a traditional bank that is run like a business to make a profit?
credit union
What is the leading factor that distinguishes a credit union from a federally chartered bank?
credit unions are better able to focus on customizing products and services
Which statement about credit unions is NOT true?
credit unions members are called stockholders
An object or group of objects widely agreed upon to be used as a form of exchange is called _____.
currency