Chapter 2 Flashcards
dual banking system
both federal and state authorities have regulatory power
state banking commission
prime regulators at the state level in America
Comptroller of the Currency OCC
Assess the need for new banks, charters new national banks if necessary, and regularly examines them
Approves adding new branches or mergers
Federal Reserve System the FED
Serve as the lender of last resort - providing temporary loans to depository institutions that face financial emergencies. Help stabilize financial markets and the economy in order to preserve public confidence
** Control money and credit conditions to promote economic stability
Glass-Steagall Act
Separated commercial and investment banking after many banks were failing.
Federal Deposit Insurance Corporation (FDIC)
created to guarantee the public’s deposits up to a stipulated maximum amount in order to enhance public confidence in the banking system
Federal Deposit Insurance Corporation Improvement Act
permitted the FDIC to borrow money from the Treasury to remain solvent, using risk-based insurance premiums, and defined the actions to be taken, when depository institutions fall short of meeting their capital requirements
Riegle-Neal Interstate Banking and Branching Efficiency Act
Capitalized and managed holding companies can acquire banks anywhere in the US
Interstate holding companies many consolidate their affiliated banks acquired across state lines into full service branch offices
No single banking company can control more than 10% of nationwide deposits or more than 30% of deposits in a single state
Gramm Leach Blilely Act
permitted well managed and well capitalized banking companies with satisfactory Community Reinvestment Act ratings to affiliate with insurance and securities firms under common ownership
USA Patriot Act
Made selected financial institutions report suspicious activity of their customers
Sarbanes Oxley Accounting Standards Act of 2002
Made stricter controls over statement writing on behalf of companies and banks for audits. Made publishing false or misleading information a serious crime. Higher internal control of information publishing for financial statements
National Credit Union Administration
Federal credit unions are analyzed by them.
Office of Thrift Supervision
federally chartered savings associations fall under jurisdiction
Securities Exchange Commission
Oversees the values of money as it exchanges hands
State insurance commissions
prescribe the types of content of insurance policies sold to the public, set the max premium rates the public must pay, license insurance agents, scrutinize insurer investments for the protection of policyholders, charter new companies, and liquidate failing ones
Dodd-Frank Financial Reform Law
greater separation between commercial banks and riskier private investors
monetary policy
involves making sure the supply and cost of money from the financial system contribute to the nation’s economic goals
European central bank ECB
relatively free and independent of governmental control as it pursues its main goal of avoiding inflation
Bank of Japan / People’s Bank of China
have strict rules by government
Federal Open Market Committee
makes up 5 of the 12 federal reserve banks board
open market operations
the buying and selling of securities by the Fed banks this body actually looks at the whole range of Fed policies and actions to influence the economy and financial system
federal reserve bank
chartered in each district to supervise and serve member banks - 12 districts
member banks
member institutions must purchase stock in the district reserve and submit comprehensive examinations by the Fed staff
