IT Liquidity Management

Question 1

Numbers printed at bottom of a check

Answer 1

MICR #. Routing #, Federal Reserve District #, Account #, Check #

Question 2

Components of the Uniform Rating Systems for Info Tech (URSIT)

Answer 2

Audit; Management; Development & Acquisition; Support & Delivery *Composite Rating

Question 3

IT risk elements (SR 98-9)

Answer 3

1. Mgmt process 2. architecture 3. integrity 4. security 5. availability

Question 4

Effective MIS does what 4 things to risk?

Answer 4

1. identify 2. measure 3. monitor 4. control

Question 5

The quality of MIS depends on

Answer 5

effective internal control environment

Question 6

Examiners review MIS to ensure that it is

Answer 6

Timely, accurate, complete, consistent, and relevant

Question 7

SR 00-4 Outsoursing of Information and Transaction

Answer 7

bank is responsible for managing its software vendor and service provider relationships as if the processing was done in-house.

Question 8

Assessing IT Risk

Answer 8

quantity of risk, quality of Risk Management over IT, adjusted risk, direction

Question 9

Purpose of MIS

Answer 9

decision support

Question 10

Core Deposits

Answer 10

DDA, NOW, Money Market MMDA, Savings Accts, CD’s

Question 11

Net short-term Noncore Funding Dependence

Answer 11

Short-term noncore funding - short-term investments / long-term assets

Question 12

Three M’s critical in determining liquidity risk

Answer 12

Mix, Marketability, Maturity

Question 13

Net Non-core funding dependence

Answer 13

(noncore liabilities - ST investments) / LT assets

Question 14

GAAP Requires a public company to desplay is assets in order of?

Answer 14

Decreasing Liquidity

Question 15

Commerical Paper

Answer 15

Short-term, unsecured promissory notes

Question 16

Repurchase Agreements

Answer 16

Short-term loan secured w/securities. Overnight or term arrangement

Question 17

Liquidity Risk Management

Answer 17

BOPMI

Question 18

Who’s ultimately responsible for liquidity risk management?

Answer 18

The Board

Question 19

A bank’s core funding sources include

Answer 19

DDA, NOW, Money Market MMDA, Savings Accts, CD’s

Question 20

3 types of credit offered by the Discount Window

Answer 20

1. seasonal 2. adjustment 3. extended

Question 21

The FRB can extend credit through the discount window to…

Answer 21

meet bank’s liquidity needs (ie when there is an increase in loan demand)

Question 22

What can financial institutions use to avoid deficiencies in reserve accts?

Answer 22

the discount window

Question 23

Liab Non-Core

Answer 23

CD >+ $250M, Wholesale funding, Federal funds purchased

Question 24

Other liabilities

Answer 24

FRB Funds Purchased; Customer Repurchase Agreements; Sweep Accts; Subordinated debt (more commonly used to provide capital but can be used as a funding source as a last alternative).

Question 25

3 type liquidity

Answer 25

1. liability 2. asset 3. income

Question 26

What does management have to do to make the balance sheet more liquid?

Answer 26

Asset Restructure.

Question 27

Earnings / Liquidity Trade off

Answer 27

banks with higher loans to assets ratios tend to have lower liquidity

Question 28

Risks associated with deposits

Answer 28

liquidity risk and market risks

Question 29

Elements of Risk Management

Answer 29

1) active board and senior management oversight. 2) adequate policies, procedures, and limits. 3) adequate risk-measurement, risk-monitoring, and anagement information systems. 4) comprehensive internal controls

Question 30

Responsibilities of the BOD

Answer 30

1. reviewing info in sufficient detail to allow them to understand and assess the risks 2. review/approve exceptions to established standards 3. review/approve investment strategy 4. periodically review policies that govern selection of securities dealers.

Question 31

SR 95-51 risks

Answer 31

Credit; Market; Liquidity; Operational; Reputational; Legal (risk levels: low, moderate, high; risk trends: decreasing, stable, increasing)

Question 32

When examining bank mgmt, 1st assess:

Answer 32

all other CAMELS ratings (CAELS)

Question 33

A person is considered part of management

Answer 33

who participate in or have authority in policy making decisions

Question 34

Risk based supervision focuses os 4 elements of Risk Mgmt

Answer 34

1. identify 2. measure 3. monitor 4. control

Question 35

The risk management rating is factored into which commercial bank rating component?

Answer 35

The management rating

Question 36

Directors must fulfull responsibilies of?

Answer 36

Duty of Care and Duty of Loyalty (common law)

Question 37

Directors bound by several areas of law?

Answer 37

Common law, statutory and regulatory law, and criminal law

Question 38

12 USC 71a

Answer 38

National bank and state member banks must have at least 5 directors, but no more than 25