Name: Instructions: For multiple choice questions, indicate i n the space provid

Question

Name: Instructions: For multiple choice questions, indicate i n the space provided whether the correct answer is A, B, C, or D. For True-False questions, indica te T for True or F for False 1. Under US banking law, n ational-chartered banks must purchase FDIC insurance but state- chartered banks do not have to, 2. In the US, banks get their operating licen federal banking regulatory agencies can charter a national bank. state-chartered banks get their operating license from the state: nationally-chartered se from the (a) FDIC (b) OCC (c) Federal Reserve (d) any of these A fundamental premise of US bank regulation is that the more capital banks are required to hold, the less risk they are likely to take in lending and investing funds Friedman National Bank has its head office in New York City. Accordingly, it is examined by (a) New York State, the FDIC and the Federal Reserve (b) New York State, the OCC, and the FDIC (c) the OCC and New York State (d) the Federal Reserve and New York State 5. If a bank establishes a "financial holding company" it can use that company to buy nsurance company, but, under rules established by the Federal Reserve, that insurance company can only sell new policies to depositors of the bank To reduce risk-taking, US bank regulators (a) require banks to hold substantial capital (b) subject banks to annual financial examinations (c) prohibit banks from investing in corporate stock (d) all of the above To ensure that all banks are operating with "safety and soundness," the bank regulatory authorities require all banks to (a) obtain deposit insurance from the FDIC (b) h capital equal to no less than their required reserves (c) subject themselves to annual financial xaminations (d) all of the above 8. Forming a "bank holding company" provided banks with important advantages in that allowed bank engage in activities prohibited to the bank itself (c) it allowed insurance companies and other shadow banks to purchase commercial banks and put them under single corporate control (d) all of the above (a) it s to avoid Federal Reserve-imposed reserve requirements (b) it allowed them to 9. Federal Reserve Banks are private institutions owned by member commercial banks; they are not government institutions 10. Within the Federal Reserve, the organizational body that is responsible for conducting market operations (i.e., the buying and selling of government securities) Board of Governors (c) Board of Directors (d) Federal Reserve Bank of New York is the (a) FOMC (b)

Explanation / Answer

1. False all banks need to have FDIC as per the Glass-Steagall ACT 1933
2. Option b. OCC, Office of the comptroller of the currency regulates the nationally chartered banks
3. True
4. Option b, as it is examined by multiple levels through state, OCC and FDIC
5. False
6. Option 4
7. Option 4
8. Option 4
9. True. It is guided by interests of share holders who are commercial banks
10. Option 1

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