Exam 1

Question 1

What is the banks power?

Answer 1

1. Create money in the form of deposits and loans
2. Credit flow- must be monitored bc otherwise banks could be denying certain ppl loans based on where they live, gender, age, race, etc
3. Involvement w Federal, state and local gov- gov relies on banks to assist in conducting econ policy, collecting taxes, and dispensing gov pmts

Question 2

List some of the principal reasons for gov regulation of financial firms

Answer 2

to protect the safety of the publics savings
control the money supply
to ensure equal opport in the publics access to credit
to promote public confidence in the fin system
to avoid concentration of fin power in the hands of few individuals or institutions

Question 3

What is the banking systems principal regulatory system

Answer 3

FED

Question 4

What does the OCC do (pg 32)

Answer 4

Comptroller of the Currency
-assess the need for and charters new national banks
-examines national banks
-approve all applications for new banches and any mergers
federal agency that oversees the execution of laws relating to national banks. Specifically, it charters, regulates, and supervises national banks and federal branches and agencies of foreign banks in the U.S.

Question 5

Why did we create the FED?

Answer 5

because there were many financial panics in the late 19th and 20th century

Question 6

Function of FED

Answer 6

• provide temporary loans to depository inst facing fin emergencies
• help stabilize the fin markets and economy
• boost public confidence
• Control money and credit conditions to promote economic policy
• Monetary policy

Question 7

What does check 21 say?

Answer 7

it allows the checking acct service provider to replace a paper check written by a cust w a sustitute check, containing images of the original check

Question 8

What act grants the US gov the right to begin chartering and supervising national banks to expand the nations supply of money and credit and to compete w banks chartered by the states

Answer 8

national bank act (1863)

Question 9

What act created an institution to improve the pmt mechanism, supervise banks, and regulate the supply of money and credit in the US?

Answer 9

the federal reserve act (1913)

Question 10

What act created the FDIC and seperated commercial and investment banks into two diff industries

Answer 10

glass-seagull act

Question 11

What act prevents banks from redlining certain neighborhoods, refusing to serve those areas

Answer 11

community reinvestment act

Question 12

What act lifted deposit interest-rate ceilings and reserve requirements on all depository institutions offering checkable or nonpersonal time deposits under the terms of this act; interest bearing checking accounts are legalized nationwide for hh and nonprofits

Answer 12

depository inst deregulation and mon control act

Question 13

What act is enacted to resolved failures of hundreds of dep institurions, and it set up the savings association insurance fund (SUIF). It also launched the office of thrift supervision inside the treasury to regulate nonband depository institutions

Answer 13

Fin inst reform recovery and enforcement act (FIRREA)

caused taxpayers to pay 500 billion more to rescue FDIC and resolved scores of bank and thrift failures

Question 14

What act permits interstate full service banking thru acquisitions, mergers, and branching across state lines

Answer 14

riegle-neal banking and branching efficiency act

Question 15

what act ushered in an emergency sale of “bad assets” to free up global credit markeets and reduce chances of a prolonged recession, while temp increasing FDIC dep insurance coverage for all deposits and allowing the US treasury to add capital to banks to enhance lending

Answer 15

2008- emergency econ stabilization act