Chapter 2

Question 1

dual banking system

Answer 1

both federal and state authorities have regulatory power

Question 2

state banking commission

Answer 2

prime regulators at the state level in America

Question 3

Comptroller of the Currency OCC

Answer 3

Assess the need for new banks, charters new national banks if necessary, and regularly examines them
Approves adding new branches or mergers

Question 4

Federal Reserve System the FED

Answer 4

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

Question 5

Glass-Steagall Act

Answer 5

Separated commercial and investment banking after many banks were failing.

Question 6

Federal Deposit Insurance Corporation (FDIC)

Answer 6

created to guarantee the public’s deposits up to a stipulated maximum amount in order to enhance public confidence in the banking system

Question 7

Federal Deposit Insurance Corporation Improvement Act

Answer 7

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

Question 8

Riegle-Neal Interstate Banking and Branching Efficiency Act

Answer 8

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

Question 9

Gramm Leach Blilely Act

Answer 9

permitted well managed and well capitalized banking companies with satisfactory Community Reinvestment Act ratings to affiliate with insurance and securities firms under common ownership

Question 10

USA Patriot Act

Answer 10

Made selected financial institutions report suspicious activity of their customers

Question 11

Sarbanes Oxley Accounting Standards Act of 2002

Answer 11

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

Question 12

National Credit Union Administration

Answer 12

Federal credit unions are analyzed by them.

Question 13

Office of Thrift Supervision

Answer 13

federally chartered savings associations fall under jurisdiction

Question 14

Securities Exchange Commission

Answer 14

Oversees the values of money as it exchanges hands

Question 15

State insurance commissions

Answer 15

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

Question 16

Dodd-Frank Financial Reform Law

Answer 16

greater separation between commercial banks and riskier private investors

Question 17

monetary policy

Answer 17

involves making sure the supply and cost of money from the financial system contribute to the nation’s economic goals

Question 18

European central bank ECB

Answer 18

relatively free and independent of governmental control as it pursues its main goal of avoiding inflation

Question 19

Bank of Japan / People’s Bank of China

Answer 19

have strict rules by government

Question 20

Federal Open Market Committee

Answer 20

makes up 5 of the 12 federal reserve banks board

Question 21

open market operations

Answer 21

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

Question 22

federal reserve bank

Answer 22

chartered in each district to supervise and serve member banks - 12 districts

Question 23

member banks

Answer 23

member institutions must purchase stock in the district reserve and submit comprehensive examinations by the Fed staff