CH02-Treasury Management Enviornment

Question 1

Who is the Central Bank in the US?

Answer 1

The Federal Reserve

Question 2

Does the Fed issue currency?

Answer 2

No, Dept of Treasury issues currency

Question 3

Is The Fed a commercial bank?

Answer 3

No. The Fed is a central bank.

Question 4

3 areas of Financial Regulation

Answer 4

1. Safety and soundness of the financial system
2. Market Confidence
3. Protect Consumers

Question 5

4 Primary goals of FSB

Answer 5

FSB=Financial Stability Board

1. Financial stability
2. Openness and Transparency
3. Implement International Financial Standards
4. Conduct Peer Reviews

Question 6

SEPA

Answer 6

Single Euro Payments Area - focuses on electronic payments

Question 7

Who established SEPA and why?

Answer 7

EPC = European Payments Council

For harmonized payment schemes

Question 8

4 payment schemes of SEPA

Answer 8

1. credit transfers
2. instant credit transfers
3. Core direct debits
4. B2B direct debits

Question 9

3 stages of Money Laundering

Answer 9

1. Placement
2. Layering
3. Integration

Placement=physical deposit of cash from illegal acts into an FI

Layering=financial transactions that separate the cash from it’s criminal origin

Integration=legit explanation for source of funds

Question 10

What is dual banking system in the US?

Answer 10

Bank is either Federal or State Chartered

Question 11

Dual banking federal supervision

Answer 11

FSOC oversees the regulators:
OCC
Board of Governors of The Fed
FDIC

Question 12

FSOC

Answer 12

Financial Stability Oversight Council = prevent systematic risk.
FSOC does NOT regulate institutions. It only makes recommendations.

Question 13

CFTC

Answer 13

Commodity Futures Trading Commission

• part of Dodd Frank
• required to work w/ SEC to regulate OTC derivatives

Question 14

How does Dodd-Frank close regulatory gaps?

Answer 14

provides the SEC and CFTC authority to regulate OTC derivatives
CFTC=Commodity Futures Trading Commission

Question 15

Federal Reserve Act

Answer 15

1913

-Foundation for current banking system

Question 16

What part of Glass-Steagall Act remains?

What was eliminated?

Answer 16

Deposit Insurance Remains

Eliminated banking, insurance, and securities barriers

Question 17

What repealed Glass-Steagall Act of 1933?

Answer 17

Gramm-Leach-Bliley Act 1999

Question 18

Anti-tying

Answer 18

1970

• Forbids (prohibits) tying in financial services
• Extension of credit not conditional to obtain other services

Question 19

What does the CFPB do?

Answer 19

The Consumer Financial Protection Bureau (CFPB) consolidates consumer protections against abuses by large banks and credit unions and any size mortgage-related business.
CFPB has the authority to examine and enforce regulations for banks and credit unions with assets exceeding $10 billion and all mortgage-related businesses

Question 20

How was the Consumer Financial Protection Bureau (CFPB) created?

Answer 20

The Consumer Financial Protection Bureau (CFPB) is an independent consumer protection entity within the Fed that was created in 2010 by the Dodd-Frank Act.

Question 21

A state-chartered bank who is part of the federal reserve system would be supervised by which federal governmental entity?

Answer 21

Board of Governors

Question 22

What does The Board of Governors of the Federal Reserve System do?

Answer 22

regulates state-chartered member banks and bank holding companies.

Question 23

What does the OCC oversee?

Answer 23

The Office of the Comptroller of the Currency (OCC) oversees national banks, as well as federal savings banks.

Question 24

bank supervision at the federal level is done by 3 agencies:

Answer 24

1. FDIC
2. OCC
3. Board of Governors

Question 25

Regulation Y

Answer 25

defines and regulates nonbanking activities that US banks are allowed to engage in, including anti-tying restrictions.
Per Bank Holding Company Act and Change in Bank Control Act