1. In recent years, the number of commercial banks in the U.S. has been increasing.
2. Most of the change in the number of commercial banks since 1990 has been due to bank failures.
3. Commercial banks have had limited power to underwrite corporate securities since 1987.
4. Large money center banks finance most of their activities by using retail consumer deposits as the primary
source of funds.
5. Currently, federal standards do not allow investment banks to covert to a bank holding company structure.
6. Prior to the financial crisis of 2008, the return on equity for small community banks had been larger than for
large money center banks.
7. Commercial banks with under $1 billion in assets have become a larger segment of the industry in recent
years.
8. Money center banks rely more heavily on wholesale and borrowed funds as sources of liability funding than
do community banks.
9. Large banks tend to make business decisions based on personal knowledge of customers creditworthiness and
business conditions in the local communities.
10. All banks with assets greater than $10 billion are considered money center banks.
11. Since 1990, commercial banks decreased the proportion of business loans and increased the proportion of
mortgages in their portfolios.
12. The growth of the commercial paper market has led to a decline in the demand for business loans from
commercial banks.
13. The securitization of mortgages involves the pooling of mortgage loans for sale in the financial markets.
14. By converting to a bank holding company, an investment bank gains access to Federal Reserve lending
facilities.
15. Large money center banks are often primary dealers in the U.S. Treasury markets.
16. Because of the large amount of equity on a typical commercial bank balance sheet, credit risk is not a
significant risk to bank managers.
17. Lehman Brothers failed during the recent financial crisis despite having access to the low cost sources of
funds offered by the Federal Reserve.
18. A major difference between banks and other nonfinancial firms is the low amount of leverage in commercial
banks.
19. Money market mutual funds have attracted large amounts of retail savings and retail time deposits from
commercial banks in recent years.
20. Retail nontransaction savings and time deposits comprise the largest portion of deposits for commercial
banks.
21. Negotiable certificates of deposits are differentiated from fixed time deposits by their negotiability and
active trading in the secondary markets.
22. The maturity structure of the assets of commercial banks tends to be shorter than the maturity structure of
liabilities.
23. The growth in off-balance-sheet activities during the decade of the 1990s was due, in large part, to the use
of derivative contracts.
24. The movement of an off-balance-sheet asset or liability is dependent on the occurrence of a contingent
event.
25. The use of off-balance-sheet activities allows banks to practice regulatory tax-avoidance.
26. The use of off-balance-sheet activities and instruments will always reduce the risk to a bank.
27. Although growing, the notional value of bank OBS activities remained less than the value of
on-balance-sheet activities at the end of 2009.
28. Commercial banks in the U.S. often are subject to several of the four regulatory agencies.
29. The dual banking system in the U.S. refers to the operation and establishment of large regional as well as
small community banks.
30. As of December 2009, the number of nationally chartered banks was greater than the number of state
chartered banks.
31. All commercial banks must be members of the Federal Reserve System.
32. Small banks make proportionately larger amounts of real estate loans than large banks.
33. The Federal Reserve System has regulatory supervision over all holding company banks whether they
include national- or state-chartered banks.
34. The primary objective of the 1927 McFadden Act was to restrict interstate bank branching.
35. The primary objective of the 1933 Glass-Steagall Act was to prevent commercial banks from competing
directly with commercial insurance companies.
36. The DIDMCA of 1980 and the DIA of 1982 were the initial acts to begin the deregulation of the
commercial banking industry.
37. The Riegle-Neal Act of 1994 removed many of the restriction on interstate banking that were originally
imposed by the 1933 Glass Steagall Act.
38. The Financial Services Modernization Act of 1999 allows commercial banking activities and securities
underwriting to operate simultaneously under the same ownership structure.
39. Savings banks and savings associations are savings institutions; with savings banks serving as the primary
providers of residential mortgage loans, and savings associations concentrating on commercial loans and
corporate bonds as well as mortgage assets.
40. In general, the banking industry performed at higher levels of profitability in the decade of the 1990s than
the decade of the 1980s.
41. Commercial banks that have invested in Internet banking services and products have outperformed
significantly those banks that have chosen to avoid these markets.
42. Regulator forbearance is a policy of allowing economically insolvent FIs to continue in operation.
43. The primary reason for the decline of the S&L industry was the passage of legislation that gave commercial
lending powers to the S&L industry.
44. Savings associations and savings banks both are insured by insurance funds that are managed by the FDIC.
45. The savings association industry continues to be the primary lender of residential mortgages.
46. As a percent of total assets, savings institutions hold lower amounts of cash and U.S. Treasury securities
than commercial banks.
47. The number of savings associations has been declining since 1990.
48. Savings associations and savings banks are chartered and regulated by the Federal Reserve Bank.
49. Savings institutions enjoyed record profitability during the late 1990s and early 2000s.
50. The common bond principle of credit unions emphasizes the depository and lending needs of credit union
members.
51. The credit union industry avoided much of the financial distress of the 1980s because of the short maturity
and relatively lower credit risk of their assets.
52. The primary objective of the Reigle-Neal Act was to ease branching across state lines by banks.
54. A significant disadvantage for credit unions in competing with commercial banks is the severe restriction in
the variety of products and services that they can offer.
55. A significant advantage for credit unions in competing with commercial banks is the tax-exempt status that
has been granted to credit unions.
56. According to the American Bankers Association, the tax-exempt status of credit unions is the equivalent of
a $1 billion per-year subsidy to the industry.
57. Compared to the average commercial bank, credit unions tend to have higher overhead expenses per dollar
of assets.
58. All credit unions are nationally chartered and regulated by the National Credit Union Administration.
59. Which of the following FIs does not currently provide a payment function for their customers?
60. A consumer lending function is performed by each of the following FIs EXCEPT
61. Which of the following FIs does not provide a business lending function?
62. As of 2009, commercial banks with over $10 billion in assets constituted approximately ____ percent of the
industry assets and numbered approximately _____.
63. The largest asset class on U.S. commercial banks’ balance sheet as of year-end 2009 was
64. The largest liability on U.S. commercial banks’ balance sheet as of year-end 2009 was
65. By late 2009, the number of commercial banks in the U.S. was approximately
66. By late 2009, the number of branches of existing commercial banks in the U.S. approximated _______,
which was a (an) _________ from 1985.
67. Commercial banks in the U.S. often are subject to several of the four regulatory agencies.
68. The largest asset class on FDIC-insured savings institutions’ balance sheet as of year-end 2009 was
69. The dual banking system in the U.S. refers to the operation and establishment of large regional as well as
small community banks.
70. The largest liability on FDIC-insured savings institutions’ balance sheet as of year-end 2009 was
71. As of December 2009, the number of nationally chartered banks was greater than the number of state
chartered banks.
72. The future viability of the savings association industry in traditional mortgage lending has been questioned
because of
73. All commercial banks must be members of the Federal Reserve System.
74. Traditionally, the percentage of depository institutions’ assets funded by some form of liability is
approximately
75. Small banks make proportionately larger amounts of real estate loans than large banks.
76. National-chartered commercial banks are most likely to be regulated by
77. The Federal Reserve System has regulatory supervision over all holding company banks whether they
include national- or state-chartered banks.
78. State-chartered commercial banks may be regulated by
79. The primary objective of the 1927 McFadden Act was to restrict interstate bank branching.
80. The strong performance of commercial banks during the decade before 2007 was due to
81. The primary objective of the 1933 Glass-Steagall Act was to prevent commercial banks from competing
directly with commercial insurance companies.
82. Money center banks are considered to be any bank which
83. The DIDMCA of 1980 and the DIA of 1982 were the initial acts to begin the deregulation of the
commercial banking industry.
84. A large number of the savings institution failures during the in the 1980s was a result of
85. The Riegle-Neal Act of 1994 removed many of the restriction on interstate banking that were originally
imposed by the 1933 Glass Steagall Act.
86. One of the primary reasons that investment banks were allowed to convert to bank holding companies
during the recent financial crisis was recognition that
87. The Financial Services Modernization Act of 1999 allows commercial banking activities and securities
underwriting to operate simultaneously under the same ownership structure.
88. Regulatory forbearance refers to a policy of
89. Savings banks and savings associations are savings institutions; with savings banks serving as the primary
providers of residential mortgage loans, and savings associations concentrating on commercial loans and
corporate bonds as well as mortgage assets.
90. The FIRREA Act of 1989 introduced the qualified thrift lender test (QLT), which set the percentage of
assets required for qualification to be no less than
91. In general, the banking industry performed at higher levels of profitability in the decade of the 1990s than
the decade of the 1980s.
92. A primary advantage for a depository institution of belonging to the Federal Reserve System is
93. Commercial banks that have invested in Internet banking services and products have outperformed
significantly those banks that have chosen to avoid these markets.
94. Customer deposits are classified on a DI’s balance sheet as
95. Regulator forbearance is a policy of allowing economically insolvent FIs to continue in operation.
96. Holdings of U.S. Treasury securities are classified on a DI’s balance sheet as
97. The primary reason for the decline of the S&L industry was the passage of legislation that gave commercial
lending powers to the S&L industry.
98. Customer loans are classified on a DI‘s balance sheet as
99. Savings associations and savings banks both are insured by insurance funds that are managed by the FDIC.
100. This broad class of loans constitutes the highest percentage of total assets for all U.S. commercial banks as
of the end of 2009.
101. The savings association industry continues to be the primary lender of residential mortgages.
102. Which of the following dominates the loan portfolios of banks with assets less than one billion dollars?
103. As a percent of total assets, savings institutions hold lower amounts of cash and U.S. Treasury securities
than commercial banks.
104. Which of the following is true of off-balance-sheet activities?
105. The number of savings associations has been declining since 1990.
106. Which of the following observations concerning trust departments is true?
107. Savings associations and savings banks are chartered and regulated by the Federal Reserve Bank.
108. Which of the following identifies the primary function of the Office of the Comptroller of the Currency?
109. Savings institutions enjoyed record profitability during the late 1990s and early 2000s.