Bank Holding Company Act Flashcards
Which of the following transactions does NOT require prior approval of the Federal Reserve Board?
a. The formation of a bank holding company
b. The acquisition by a bank holding company of a subsidiary
c. The acquisition of 25 percent of voting stock of a bank by another bank, in good faith, in its fiduciary capacity with no power to vote
d. The acquisition of 25 percent of voting stock of a bank by another bank in its fiduciary capacity for the benefit of the acquiring bank’s employees
c. The acquisition of 25 percent of voting stock of a bank by another bank, in good faith, in its fiduciary capacity with no power to vote
Choices (a) and (b) clearly require Federal Reserve Board approval. To avoid the necessity of Federal Reserve Board approval for choice (d), this transaction would have to be for the beneficial interest of parties other than the acquiring bank’s employees, shareholders, or subsidiaries.
For which of the following business activities must a bank holding company obtain prior approval of the Federal Reserve Board?
a. Operating an auto club service
b. Serving as a safe deposit company
c. Operating as a management consulting firm for financial institutions
d. Selling installment loan data processing
a. Operating an auto club service
Which of the following activities is NOT a permissible nonbanking activity?
a. Servicing mortgage loans
b. Providing general courier services to the businesses around the bank office
c. Providing mortgage loan data processing services to mortgage companies
d. Acting as a broker for credit life insurance
b. Providing general courier services to the businesses around the bank office
Courier services may only be provided for banking and other financial records.
Which of the following is NOT a corporate practice required of bank holding companies?
a. Each bank subsidiary must file a notice with the Federal Reserve before offering a new product.
b. Each bank subsidiary must conduct its operations in a safe and sound manner.
c. Each bank subsidiary must be insured by the FDIC.
d. Each bank subsidiary must file a notice with the Federal Reserve before purchasing any of its own securities.
a. Each bank subsidiary must file a notice with the Federal Reserve before offering a new product.
First National Bancshares, Inc., a bank holding company, filed an application with its Federal Reserve Bank on March 1 to acquire a subsidiary bank. On March 15 the Federal Reserve Board asked First National for more information. On April 1 the Federal Reserve Bank received the completed application and accepted it. On April 5 the Federal Reserve Bank notified First National of the April 1 acceptance and referred the application to the Federal Reserve Board. Under the normal rules, by what date must the Federal Reserve Board act on the application?
a. June 1
b. April 30
c. June 5
d. July 1
a. June 1
The usual time from acceptance is 60 days. However, with additional notification, the Federal Reserve Board can extend the time up to 91 days from the date the Federal Reserve Bank accepted the application.
Which of the following is NOT a factor considered by the Federal Reserve Board when it evaluates an application under Regulation Y?
a. The financial strength of the applicant
b. The management strength of the applicant
c. The current nonbanking activities of the applicant
d. The effect of the transaction on competition
c. The current nonbanking activities of the applicant
First National Bankshares, Inc., a bank holding company, held substantially all of the voting stock of an equipment manufacturing corporation as collateral for a loan to the owner. On May 15 the borrower defaulted and on September 1, after proper notice was given, the bank foreclosed its security interest on the stock and exercised its rights to vote the stock at appropriate times. On December 31 the bank transferred the stock to a subsidiary corporation, FNB, Inc., to market the stock for sale more effectively. What is the longest time period that FNB, Inc., can possibly hold the stock?
a. Up to two years from September 1
b. Up to five years from September 1
c. Up to two years from December 31
d. Up to five years from December 31
b. Up to five years from September 1
Property that is a DPC acquisition (that is, acquired in connection with a debt previously contracted) can be held for up to two years. On request the Federal Reserve Board may grant up to three additional one-year extensions of this time period. Real property or property that can be demonstrated to have the characteristics of real property may be held for longer time periods. The transfer of property to a subsidiary of the bank holding company does not extend the time period for which it can be held.
