Quiz: Thrifts & Finance Companies

Question 1

Resolution Trust Corporation (RTC) is a government agency that was in charge of liquidating insolvent thrift institutions and selling off the assets of the failed institutions. It also arranged mergers and bailouts for bankruptcy by still operating thrifts

Answer 1

True

Question 2

In 1966, the thrifts lose their “special” standing among regulators as the Interstate Rate Regulation Act extended Regulation Q to include the thrifts

Answer 2

True

Question 3

What we are known today as savings banks were earlier called mutual savings banks or simply mutual savings associations

Answer 3

True

Question 4

Federal Home Loan (FHL) Bank System is a system of private-sponsored banks designed to increase the amount of low-cost funds available to financial institutions for home mortgage loans, small-business loans, agricultural loans, and rural economic development loans

Answer 4

False

Question 5

Federal Credit Union Act allowed credit unions to be organized anywhere in the country and to be incorporated under either federal or state laws

Answer 5

True

Question 6

Credit unions often pay high interest rates on loans and low interest rates on deposits than thrifts and commercial banks

Answer 6

False

Question 7

Washington Mutual was heavily involved in the prime mortgage market in which investors lost confidence in its ability to make good on its promises to pay its debts

Answer 7

False

Question 8

There were no explicit nationwide regulations on the interest rates and dividends that the thrifts could pay until 1966

Answer 8

True

Question 9

Zombie Institutions were dead from an accounting perspective but continued to lend as if they were still alive

Answer 9

True

Question 10

Today, savings banks’ deposits are insured by either the FDIC or a state-regulated deposit insurance scheme, and they provide financial services to a wide variety of customers

Answer 10

True

Question 11

Savings banks were composed of a group of people that would pool their money together for the purpose of building homes

Answer 11

False

Question 12

Credit Unions are nonprofit financial institutions that don’t have to pay any corporate income taxes on any profits they generate

Answer 12

True

Question 13

During the postwar boom, thrifts were subject to Regulation Q, which imposed an interest ceiling that capped what they could pay on deposits

Answer 13

False

Question 14

A loan that uses real estate as collateral

Answer 14

Home Mortgages

Question 15

A long-term rental that is advantageous to smaller firms that do not cash available to purchase expensive items

Answer 15

Leasing

Question 16

A loan to purchase things like furniture, washers and dryers, refrigerators, and TVs

Answer 16

Consumer Durables

Question 17

Loan offered by financial companies through automobile loans, most often through car dealers

Answer 17

Auto Loan

Question 18

A loan that pays the manufacturer of the goods and have the goods delivered to the retailer to sell

Answer 18

Floor-Plan or Inventory Financing

Question 19

Provident began operation promising to pay depositors a 4% return annually

Answer 19

False

Question 20

Deregulation and Monetary Control Act (DIDMCA) retain Regulation Q and allowed credit

Answer 20

False