quiz 11 Flashcards
(30 cards)
During the 1960s, 1970s, and early 1980s, traditional bank profitability declined because of ________.
Financial innovation that increased competition from new financial institutions
The Depository Institutions Deregulation and Monetary Control Act of 1980 ________.
Increased deposit insurance from $40,000 to $100,000
The Federal Home Loan Bank Board and the FSLIC, both of which failed in their regulatory tasks, were abolished by the ________.
Financial Institutions Reform, Recovery and Enforcement Act of 1989
All of the following are common to banking crises in different countries EXCEPT ________.
A dual banking system
The National Bank Act of 1863, and subsequent amendments to it, ________.
Established the Office of the Comptroller of the Currency
Which regulatory body charters national banks? ________
The Comptroller of the Currency
Today the United States has a dual banking system in which banks supervised by the ________ and by the ________ operate side by side.
Federal government; states
The Federal Reserve Act of 1913 required all ________ banks to become members of the Federal Reserve System, while ________ banks could choose to become members.
National; state
Probably the most significant factor explaining the drastic drop in the number of bank failures since the Great Depression has been ________.
The creation of the FDIC
With the creation of the Federal Deposit Insurance Corporation, ________.
Member banks of the Federal Reserve System were required to purchase FDIC insurance for their depositors, while non-member commercial banks could choose to buy deposit insurance
Which bank regulatory agency has the sole regulatory authority over bank holding companies? ________
The Federal Reserve System
The most significant change in the economic environment that changed the demand for financial products in recent years has been ________.
The dramatic increase in the volatility of interest rates
Adjustable rate mortgages ________.
Benefit homeowners when interest rates are falling
Both ________ and ________ were financial innovations that occurred because of interest rate volatility.
Adjustable-rate mortgages; financial derivatives
The most important source of the changes in supply conditions that stimulate financial innovation has been ________.
Improvement in information technology
The development of money market mutual funds contributed to the growth of ________.
The commercial paper market
The process of transforming otherwise illiquid financial assets into marketable capital market instruments is known as ________.
Securitization
The driving force behind the securitization of mortgages and automobile loans has been ________.
The improvement in information technology
Because of securitization, a new class of residential mortgages offered to borrowers with less-than-stellar credit records developed. These mortgages are known as ________.
Subprime mortgages
The process in which people seeking higher yielding securities take their funds out of the banking system, thus restricting the amount of funds banks can lend, is called ________.
Disintermediation
Sweep accounts ________.
Have made reserve requirements nonbinding for many banks
Financial innovation has caused banks to suffer a simultaneous decline of ________.
Cost and income advantages
The legislation that effectively prohibited banks from branching across state lines and forced all national banks to conform to the branching regulations in the state in which they reside is the ________.
McFadden Act
The ability to use one resource to provide different products and services is known as ________.
Economies of scope
