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Intro to FP > Regulation of Financial Institutions > Flashcards

Regulation of Financial Institutions Flashcards

1
Q

Deposit-type Financial Institutions

A

provide traditional checking and savings accts

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2
Q

Non-deposit type Financial Institutions

A

financial institutions other than banks

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3
Q

Federally Chartered Banks are regulated by which 3 institutions

A

-Federal Reserve
-FDIC
-Office of Comptroller of Currency OCC

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4
Q

Who would restrict the amount of interest a state bank could charge?

A

State regulators

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5
Q

State Banks are regulated by

A

Federal Reserve, FDIC, state banking authorities

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6
Q

Banks that operate under a national charter are exempt from

A

Many state banking laws and regulations such as usury laws
Fair lending laws apply to national banks

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7
Q

OCC handles what banks

A

-charters and regulates NATIONAL banks & branches of FOREIGN banks

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8
Q

OCC monitors

A

-bank capital levels
-liquidity and asset quality
-sensitivity to market risk/interest rate risk
-compliance

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9
Q

Services Commercial Banks Offer

A

-checking and savings accts
-credit cards
-safety deposit boxes
-financial consulting
-all types of lending services

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10
Q

Whats another name for a Savings and Loan institution

A

Thrift

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11
Q

Savings and Loans or Thrifts

A

-borrow money from depositors
-lend it out primarily as mortgages

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12
Q

Corporate Savings and Loan depositors receive what

A

interest rather than dividends, just like a commercial bank

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13
Q

Mutual Savings and Loan depositors receive what

A

dividends rather than interest

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14
Q

Savings and Loans regulated by what 4 agencies and what else

A

FDIC, OCC, CFPB, Federal Home Bank Board
state agencies if they are state chartered

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15
Q

What is an advantage of a Savings and Loan savings account

A

it may earn up to a quarter point more interest than a commercial savings account

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16
Q

Savings Banks are owned by whom

A

depositors - basically making them a mutual savings bank

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17
Q

Primary Purpose of Savings Bank

A

provide mortgages

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18
Q

What do Savings & Loans have in common with Savings Banks?

A

Primarily issue mortgages

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19
Q

What agency oversees Savings & Loans and Savings Banks?

A

The Financial Stability Oversight Committee

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20
Q

Community banks have less than how much assets?

A

1 Billion

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21
Q

Who owns a credit union?

A

Depositors

22
Q

Credit Unions operate how (what type of biz)

A

Not for profit with membership requirement

23
Q

Who insures accounts at credit unions?

A

National Credit Union Administration insures accounts up to 250k

24
Q

How do credit unions raise capital?

A

Retaining earnings

25
Q

FDIC can force change in mgmt or policy if what happens?

A

if the banks risk-based capital ratio falls under 6%

26
Q

When can the FDIC take over a bank?

A

If the bank becomes critically undercapitalized 2% or below

27
Q

FDIC insures what 2 types of banks

A

commercial banks and S&Ls

28
Q

Say a couple owns a CD in a joint account worth $550k - what portions are insured

A

Since its a joint account their shares are divided up equally as 275k
They EACH have insurance of 250k.
They EACH have 25k that is uninsured

29
Q

SIPC insures what and how much

A

replaces missing stocks and other securities up to 500k including 250k in cash if a member brokerage or bank brokerage fails

30
Q

Other names for savings account

A

time deposit or passbook account

31
Q

Money Market Acct

A

market rate interest sensitive acct that invests in money market instruments like commercial paper, T Bills, repurchase agreements etc.

32
Q

Certificate of Deposit

A

debt instrument issued by a bank that pays a fixed rate of interest keeps funds on deposit for a set period of time

33
Q

Full Service Broker

A

-take buy and sell orders
-extend margin
-hold securities for safekeeping
-collect cash dividends
-offer research and planning advice

34
Q

Discount Broker

A

-take orders from clients
-little or no investment advice
-extend margin
-hold securities
-accumulate cash and dividends
-Schwab

35
Q

Deep Discount Broker

A

-electronic broker that takes orders online

36
Q

Governing federal insurance law

A

Mccarran-Ferguson act

37
Q

What did the Mccarran Ferguson act do?

A

turns over regulation of insurance industry to the states

38
Q

2 laws that effect the continuation of health coverage

A

COBRA
HIPPA

39
Q

Office created under dodd frank re:insurance

A

Federal insurance office

40
Q

What doesnt the federal insurance office monitor

A

-health insurance
-some long term care -insurance
-crop insurance

41
Q

What does federal insurance office monitor

A

-all aspects of ins industry
-underserved communities
-recs to FSOC about risky insurers
-admin terrorism insurance program
-international ins matters
-determine if state ins measures are preempted by covered agreement
-consulting with states

42
Q

Who can sponsor a retirement plan?

A

An employer, union or individual

43
Q

Function of pension and retirement plans

A

combine a % of your pre retirement earnings with SS and private savings

44
Q

Institutions that administer retirement plans

A

-part of a mutual fund co
-insurance co or asset management co subsidiary

45
Q

2 types of sponsored plans

A

defined benefit
defined contribution

46
Q

Defined contribution plan

A

-each employee has acct that the employer and usually employee makes contributions
-employee DEFINES how much is put into plan

47
Q

Who defines the contributions on a def cont plan

A

the employee

48
Q

A pension is what type of plan

A

defined benefit

49
Q

Defined benefit plan

A

pension benefit is determined by a formula takes into account years of service, and in most cases wages or salary

50
Q

3 types of defined benefit formulas

A

flat amount
flat percentage
unit credit

51
Q

Who absorbs the investment risk on a defined benefit plan

A

The sponsor or an insurance company

52
Q

What is required for defined benefit that is not for defined contrib.

A

Annual actuarial assessment

Intro to FP (14 decks)

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