Upgrade to remove ads
Econ 353 Chapter 11
Practice Exam 3
Terms in this set (50)
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 Second Bank of the United States was denied a new charter by
President Andrew Jackson
Prior to 1863, all commercial banks in the United States
were chartered by the banking commission of the state in which they operated.
The Federal Reserve Act of 1913 required that
national banks join the Federal Reserve System
With the creation of the Federal Deposit Insurance Corporation, member banks of the Federal Reserve System ________ to purchase FDIC insurance for their depositors, while non-member commercial banks ________ to buy deposit insurance
were required; could choose
The U.S. banking system is considered to be a dual system because
it is regulated by both state and federal governments.
State banking authorities have sole jurisdiction over state banks
without FDIC insurance.
In the 1950s the interest rate on three-month Treasury bills fluctuated between 1 percent and 3.5 percent; in the 1980s it fluctuated between ________ percent and ________ percent.
Automated teller machines
cost less than human tellers, so banks may encourage their use by charging less for using ATMs.
Adjustable rate mortgages
benefit homeowners when interest rates are falling
Disintermediation resulted from
interest rate ceilings combined with inflation-driven increases in interest rates.
In this type of arrangement, any balances above a certain amount in a corporation's checking account at the end of the business day are "removed" and invested in overnight securities that pay the corporation interest. This innovation is referred to as a
Rising interest-rate risk
increased the demand for financial innovation
Because of securitization, a new class of residential mortgages offered to borrowers with less-than-stellar credit records developed. These mortgages are known as
The large number of banks in the United States is an indication of
lack of competition within the banking industry
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
Financial innovations that grew out of the bank branching restrictions were
bank holding companies and automated teller machines
A financial innovation that developed as a result of banks avoidance of bank branching restrictions was
bank holding companies
The presence of so many commercial banks in the United States is most likely the result of
prior regulations that restricted the ability of these financial institutions to open branches.
Lack of competition in the United States banking industry can be attributed to
nineteenth-century populist sentiment.
The McFadden Act of 1927
effectively prohibited banks from branching across state lines
One of the concerns of increased bank consolidation is the reduction in community banks which could result in
less lending to small businesses.
Bank holding companies that rival money center banks in size, but are not located in money center cities are
The ability to use one resource to provide different products and services is
economies of scope
Critics of nationwide banking fear
an elimination of community banks
Although it has a population about half that of the United States, Japan has
fewer than 100 commercial banks
The legislation that overturned the prohibition on interstate banking is
the Riegle-Neal Act
The primary reason for the recent reduction in the number of banks is
Bank consolidation will likely result in
The legislation overturning the Glass-Steagall Act is
the Gramm-Leach-Bliley Act
A major difference between the United States and Japanese banking systems is that
Japanese banks are allowed to hold substantial equity stakes in commercial firms, whereas American banks cannot.
In a ________ banking system, commercial banks engage in securities underwriting, but legal subsidiaries conduct the different activities. Also, banking and insurance are not typically undertaken together in this system.
As a result of the global financial crisis several of the large, free-standing investment banking firms chose to become bank holding companies. This means that they will now be regulated by
the Federal Reserve.
Under the Gramm-Leach-Bliley Act the oversight of the securities activities of bank holding companies belongs to
Under the Gramm-Leach-Bliley Act states retain regulatory authority over
In a ________ banking system, commercial banks provide a full range of banking, securities, and insurance services, all within a single legal entity
The FHLBS gives loans to S&Ls and thus performs a function similar to the ________ for commercial banks.
The Federal Reserve makes discount loans to banks, and similarly, the FHLBS makes loans to savings and loan institutions. The Fed loans are expected to be repaid ________ while the FHLBS loans are ________.
quickly; for longer periods of time
Thrift institutions include
mutual savings banks
An essential characteristic of credit unions is that
they are organized for individuals with a common bond
Like the dual banking system for commercial banks, thrifts can have either ________ or ________ charters.
________ are the only depository institutions that are tax-exempt.
Mutual savings banks are primarily regulated by
the states in which they are located
Foreign banks may engage in banking activities in the United States by opening all of the following EXCEPT
a McFadden Corporation
In 2017, ________ of the ten largest banks in the world were not U.S. banks.
U.S. banks have most of their branches in
Latin America, the Far East, the Caribbean, and London.
_______ of a foreign bank operates in the U.S. but cannot accept deposits from domestic residents.
An agency office
The spectacular growth in international banking can be explained by
the rapid growth in international trade
Since the passage of the International Banking Act of 1978 the competitive advantage enjoyed by foreign banks in the U.S. has been
OTHER SETS BY THIS CREATOR
Econ 353 Chapter 14
Econ 353 Chapter 12
Facts and Theories Econ 353
Econ 353 Practice Exam 2 (Chapter 8)
OTHER QUIZLET SETS
Honors Anatomy and Physiology Ear-APPLICATION
MCAT P/S Drug Dependence
JOUR 101 Rucker Final Exam