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Flashcards in IT Liquidity Management Deck (38):
1

Numbers printed at bottom of a check

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

2

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

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

3

IT risk elements (SR 98-9)

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

4

Effective MIS does what 4 things to risk?

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

5

The quality of MIS depends on

effective internal control environment

6

Examiners review MIS to ensure that it is

Timely, accurate, complete, consistent, and relevant

7

SR 00-4 Outsoursing of Information and Transaction

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

8

Assessing IT Risk

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

9

Purpose of MIS

decision support

10

Core Deposits

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

11

Net short-term Noncore Funding Dependence

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

12

Three M's critical in determining liquidity risk

Mix, Marketability, Maturity

13

Net Non-core funding dependence

(noncore liabilities - ST investments) / LT assets

14

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

Decreasing Liquidity

15

Commerical Paper

Short-term, unsecured promissory notes

16

Repurchase Agreements

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

17

Liquidity Risk Management

BOPMI

18

Who's ultimately responsible for liquidity risk management?

The Board

19

A bank's core funding sources include

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

20

3 types of credit offered by the Discount Window

1. seasonal 2. adjustment 3. extended

21

The FRB can extend credit through the discount window to…

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

22

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

the discount window

23

Liab Non-Core

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

24

Other liabilities

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).

25

3 type liquidity

1. liability 2. asset 3. income

26

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

Asset Restructure.

27

Earnings / Liquidity Trade off

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

28

Risks associated with deposits

liquidity risk and market risks

29

Elements of Risk Management

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

30

Responsibilities of the BOD

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.

31

SR 95-51 risks

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

32

When examining bank mgmt, 1st assess:

all other CAMELS ratings (CAELS)

33

A person is considered part of management

who participate in or have authority in policy making decisions

34

Risk based supervision focuses os 4 elements of Risk Mgmt

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

35

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

The management rating

36

Directors must fulfull responsibilies of?

Duty of Care and Duty of Loyalty (common law)

37

Directors bound by several areas of law?

Common law, statutory and regulatory law, and criminal law

38

12 USC 71a

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