269. The largest asset class on credit unions’ balance sheet as of year-end 2009 was
270. By late 2009, the number of commercial banks in the U.S. was approximately
271. The primary regulators of savings institutions are
272. By late 2009, the number of branches of existing commercial banks in the U.S. approximated _______,
which was a (an) _________ from 1985.
273. The largest asset class on FDIC-insured savings institutions’ balance sheet as of year-end 2009 was
274. The largest liability on FDIC-insured savings institutions’ balance sheet as of year-end 2009 was
275. The future viability of the savings association industry in traditional mortgage lending has been questioned
because of
276. Traditionally, the percentage of depository institutions’ assets funded by some form of liability is
approximately
277. National-chartered commercial banks are most likely to be regulated by
278. State-chartered commercial banks may be regulated by
279. The strong performance of commercial banks during the decade before 2007 was due to
280. Money center banks are considered to be any bank which
281. A large number of the savings institution failures during the in the 1980s was a result of
282. One of the primary reasons that investment banks were allowed to convert to bank holding companies
during the recent financial crisis was recognition that
283. Regulatory forbearance refers to a policy of
284. 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
285. A primary advantage for a depository institution of belonging to the Federal Reserve System is
286. Customer deposits are classified on a DI’s balance sheet as
287. Holdings of U.S. Treasury securities are classified on a DI‘s balance sheet as
288. Customer loans are classified on a DI’s balance sheet as
289. This broad class of loans constitutes the highest percentage of total assets for all U.S. commercial banks as
of the end of 2009.
290. Which of the following dominates the loan portfolios of banks with assets less than one billion dollars?
292. Which of the following observations concerning trust departments is true?
293. Which of the following identifies the primary function of the Office of the Comptroller of the Currency?
294. Which of the following currently manages the insurance funds for both commercial banks and savings
institutions?
295. What was the primary objective of the Bank Holding Company Act of 1956?
296. These organizations were originated to avoid the legal definition of a bank.
297. The qualified thrift lender test is designed to ensure that
298. Which of the following is the most important source of funds for savings institutions?
299. The primary regulators of savings institutions are
300. The largest asset class on credit unions’ balance sheet as of year-end 2009 was
301. The largest liability on credit unions’ balance sheet as of year-end 2009 was
302. Credit Unions were generally less affected than other depository institutions by the recent financial crisis
because
303. The most numerous of the institutions that define the depository institutions segment of the FI industry in
the US is (are)
304. Which of the following observations concerning credit unions is NOT true?
305. Compared to banks and savings institutions, credit unions are able to pay a higher rate on the deposits of
members because
306. Which of the following is NOT an off balance sheet activity for U.S. banks?
307. Correspondent banking may involve
308. What is the defining characteristic of the dual banking system?
309. Choose among the following major banking laws
1. This legislation introduced money market
The Competitive Equality
2. This legislation streamlined bank holding
company supervision, with the Federal
Reserve as the umbrella holding company
The Federal Deposit
3. This legislation sought to limit the growth
The Garn-St Germain
Depository Institutions Act of
4. This legislation separated commercial and
The Riegle-Neal Interstate
Banking and Branching
5. Eliminated restrictions on banks, insurance
companies, and securities firms from entering
The McFadden Act of
6. This legislation replaced FSLIC with
Financial Services
7. This legislation phased out Regulation Q
The Glass-Steagall Act of
The Depository Institutions
Deregulation and Monetary
9. This legislation limited the use of “too big
The Riegle-Neal Interstate
Banking and Branching
10. This legislation limited interstate
Financial Services
11. This legislation introduced prompt
corrective action requiring mandatory
intervention by regulators when a bank’s
The Financial Institutions
12. This law allows bank holding companies to
convert out-of-state subsidiary banks into
The Financial Institutions
The Federal Deposit
Insurance Corporation
14. This legislation introduced risk based
The Federal Deposit
Insurance Corporation
Improvement Act (FDICIA) of
15. This legislation limited thrift investments
Financial Services
Saunders – Chapter 02 #103
310. In recent years, the number of commercial banks in the U.S. has been increasing.
311. Most of the change in the number of commercial banks since 1990 has been due to bank failures.
312. Commercial banks have had limited power to underwrite corporate securities since 1987.
313. Large money center banks finance most of their activities by using retail consumer deposits as the primary
source of funds.
314. Currently, federal standards do not allow investment banks to covert to a bank holding company structure.
315. Prior to the financial crisis of 2008, the return on equity for small community banks had been larger than
for large money center banks.
316. Commercial banks with under $1 billion in assets have become a larger segment of the industry in recent
years.
317. Money center banks rely more heavily on wholesale and borrowed funds as sources of liability funding
than do community banks.
318. Large banks tend to make business decisions based on personal knowledge of customers creditworthiness
and business conditions in the local communities.
319. All banks with assets greater than $10 billion are considered money center banks.
320. Since 1990, commercial banks decreased the proportion of business loans and increased the proportion of
mortgages in their portfolios.
321. The growth of the commercial paper market has led to a decline in the demand for business loans from
commercial banks.
322. The securitization of mortgages involves the pooling of mortgage loans for sale in the financial markets.
323. By converting to a bank holding company, an investment bank gains access to Federal Reserve lending
facilities.
324. Large money center banks are often primary dealers in the U.S. Treasury markets.
325. Because of the large amount of equity on a typical commercial bank balance sheet, credit risk is not a
significant risk to bank managers.
326. Lehman Brothers failed during the recent financial crisis despite having access to the low cost sources of
funds offered by the Federal Reserve.
327. A major difference between banks and other nonfinancial firms is the low amount of leverage in
commercial banks.
328. Money market mutual funds have attracted large amounts of retail savings and retail time deposits from
commercial banks in recent years.
329. Retail nontransaction savings and time deposits comprise the largest portion of deposits for commercial
banks.
330. Negotiable certificates of deposits are differentiated from fixed time deposits by their negotiability and
active trading in the secondary markets.
331. The maturity structure of the assets of commercial banks tends to be shorter than the maturity structure of
liabilities.
332. The growth in off-balance-sheet activities during the decade of the 1990s was due, in large part, to the use
of derivative contracts.
333. The movement of an off-balance-sheet asset or liability is dependent on the occurrence of a contingent
event.
334. The use of off-balance-sheet activities allows banks to practice regulatory tax-avoidance.
335. The use of off-balance-sheet activities and instruments will always reduce the risk to a bank.
336. Although growing, the notional value of bank OBS activities remained less than the value of
on-balance-sheet activities at the end of 2009.