Ch.10 - The Legal and Economic Environment of Financial Institutions

Question 1

Enhances public confidence
Gives open access to markets
Establishes industry practices
Create opportunity for innovation
Imposes barriers to entry
Protect clients from institution failure
Help the government manage monetary policy
What are all of these services?

Answer 1

Accomplishments of the financial services industry and customer protection regulation

Question 2

The ________ provides deposit insurance that is backed by the US government.

Answer 2

Federal Deposit Insurance Corporation (FDIC)

Question 3

The NCUSIF provides deposit insurance for __________________ that are backed by the US government.

Answer 3

credit union accounts

National Credit Union Share Insurance Fund
NCUSIF

Question 4

The Securities Investor Protection Corporation (SIPC) protects investors from losses due the failure of a…

Answer 4

securities firm

Question 5

True or false?

The SIPC protects against investment losses that are not back by the US government.

Answer 5

True

Securities Investment Protection Corporation
SIPC

Question 6

The Pension Benefits Guaranty Corporation (PBGC) protects __________ that are not backed by the US government.

Answer 6

defined benefit plans

Question 7

The a law that gives protection from fraud when buying/selling securities by requiring the security to be supported with documentation.

AKA Truth in Securities

Answer 7

Securities Act of 1933

Question 8

This act is created the SEC and allowed them power to regulate security firms, self-regulatory organizations (SROs), and requires reporting information by publicly traded companies.

Answer 8

Securities Exchange Act of 1934

Question 9

This act formed the FDIC and separated banks according to the type of services they provide.

Answer 9

Banking Act of 1933

Glass-Steagall

Question 10

This Act repealed the last bits of Glass-Steagall (Banking Act) and created new financial holding companies to perform underwriting, selling insurance and securities, and conducting commercial and merchant banking

Answer 10

Gramm-Leach Bliley Act of 1999

Question 11

This Act applies to bonds and requires a contract agreement between the bond issuer and bondholder before the bond can be sold.

Answer 11

Trust Indenture Act of 1939

Question 12

This Act regulates the organization of companies that perform mutual fund investing, reinvesting, and trading in securities. It also requires companies to fully disclose their financial status to investors.

Answer 12

Investment Company Act of 1940

Question 13

This Act requires SEC registration for firms or sole practitioners compensated for advising about securities.

Answer 13

Investment Advisors act of 1940

Question 14

This Act imposes minimum funding standards for retirement pension plans and created the Pension Benefit Guarantee Corporation.

Answer 14

Employee Retirement Income Security Act (ERISA) of 1974

Question 15

As a direct response to Enron, the Act increased financial disclosure to prevent future fraudulent acts by corporate accounting boards. It also created the Public Company Accounting Oversight Board.

Answer 15

Sarbanes-Oxley Act of 2002

Question 16

This Act returned the power of insurance regulation back to the states, as long as states regulated insurance.

Answer 16

McCarran-Ferguson Act of 1945

Question 17

Most customer protection legislation is overseen by the…

Answer 17

Federal Trade Commission (FTC).

Question 18

The _________ provides a toll-free hotline for a victim of identity theft.

Answer 18

Federal Trade Commission (FTC)

Question 19

Federal laws generally prohibits discrimination in…

Answer 19

lending.

Question 20

Federal laws generally require disclosure to borrowers and…

Answer 20

lenders.

Question 21

This Act allows public assistance income to be included as their “normal” income
Prohibits discrimination based on race, sex, marital status, religion, age, or national origin
And any denial of credit must be explained.

Answer 21

Equal Credit Opportunity Act

Question 22

This Act allow people to receive a credit report, remove incorrect information from the report, know who requested the report, file a dispute, and add explanations to the report.

Answer 22

Fair Credit Reporting Act

Question 23

This Act requires creditors to provide clear disclosure of key terms regarding amount financed: APR, payment schedule, penalties, and other fees of a lending agreement.

Answer 23

Truth-in-Lending Act

Question 24

This Act allows customers to receive an annual free copy of their credit report from any customer-reporting agency.

Answer 24

Fair and Accurate Credit Transactions Act of 2003

Question 25

This Act establishes dispute procedures for credit card billing errors, where debtors are responsible for $50 at the most.

Answer 25

Fair Credit Billing Act

Question 26

This Act limits customer liability for an unauthorized use of a debit card.

Answer 26

Electronic Fund Transfer Act

Question 27

This Act prohibits harassment, threats, false statements, wage garnishment, or property seizure by debt collectors and creditors.

Answer 27

Fair Debt Collection Practices Act

Question 28

This Act made identity theft a crime.

Answer 28

Identify Theft and Assumption Deterrence Act

Question 29

This Act made a change away from fixed-price brokerage commissions.

Answer 29

May Day 1975

Question 30

This Act was as a response to the financial crisis of 2008. It regulates OTC swaps, increased regulatory enforcement and raised SIPC coverage to $250k. It also created the Consumer Financial Protection Bureau.

Answer 30

Dodd-Frank Act

Question 31

This Acts insures there is always a liquid market for consumers to spend in ways that will stimulate the economy.

Answer 31

Consumer Protection Act

Question 32

What act established the limit for assets under management and drove the development of IA-1633 (Requires investment advisers/financial planners to register with SEC)

Answer 32

The Investment Advisers Supervision Coordination Act of 1996

Question 33

What act requires the Federal Reserve Board approval for the establishment of Bank Holdings Companies

Answer 33

Bank Holding Company Act of 1956

Question 34

What act established “NOW” accounts and established the Depository Institutions Deregulation Committee granting powers to Thrift institutions

Answer 34

Depository Institutions Deregulation and Monetary Control Act of 1980

Question 35

Permits adequately capitalized and managed banks to acquire banks in any state

Answer 35

Reigle-Nelson Interstate Banking and Branching Efficiency Act of 1994

Question 36

Eased regulation seen as impediments to raise capital for small businesses and startups. Removed prohibition of general solicitation and advertising, and allowed crowdfunding and online portals to raise capital from non-accredited investors.

Answer 36

Jumpstart Our Business Startup Act (JOBS)

Question 37

Delineated the requirements for SEC and State regulations of investment advisers and established the national de minimis standard for State regulation.

Answer 37

National Securities Market Improvement Act of 1996

Question 38

Intended to restore public confidence in the savings and loan industry. Abolished Federal Savings and Loan Insurance Corporation, giving the responsibility to FDIC.

Answer 38

Federal Institutions Reform, Recovery, and Enforcement Act of 1989
(FIRREA)