PRINCIPLES OF BANKING EVALUATION TEST
ANSWERS AND QUESTIONS SET A+
✔✔Interest ____ tax deductible; dividends ____ tax deductible. - ✔✔is, are not
✔✔Glass-Steagall Act 1933 - ✔✔separated the business of investing & trading by
banks from the business of providing services, like checking or savings accounts, to
consumers. This effectively separated investing from the rest of banking, which
regulated the industry.
✔✔Amendments to the Bank Holding Company Act - ✔✔amendments allowed the
consumer banks to begin making commercial loans. This was among the first small
moves towards deregulation.
✔✔Marquette v. First of Omaha 1978 - ✔✔Due to the Supreme Court's decision, banks
had the right to make loans in the states that they were not headquartered in. The
lenders immediately jumped into creating new loans in states that had the least
regulation, including Delaware and South Dakota.
✔✔Depository Institutions Deregulation and Monetary Control Act - ✔✔changed
banking regulation again. Deposit insurance increased to $100,000 and the limitation on
interest rates for deposit accounts was eliminated. It also provided additional authority
to thrift banks,
✔✔Thrift Banks - ✔✔institutions that focus primarily on taking deposits and providing
mortgages. They were also known as savings & loan institutions.
✔✔Garn-St. Germain Depository Institutions Act - ✔✔he Reagan administration signed
the act with approval from both the Democrats and the Republicans. This new act
allowed even more freedom to thrift banks, leaving them almost entirely deregulated. It
now provided the ability to do commercial lending, along with new accounts that could
compete in the mutual funds market.
, ✔✔Financial Institutions Reform and Recovery Act - ✔✔was also used to assist in the
creation of the Resolution Trust Corporation to assist in dealing with the failed thrift
banks.
✔✔Gramm-Leach-Bliley Act. - ✔✔hen the Glass-Steagall Act was repealed completely.
The repeal was done using the ,,,,,
✔✔subprime loan - ✔✔a type of loan offered at a higher rate to individuals who do not
qualify for prime rate loans
✔✔In what year did the bubble burst and banking deregulation show up as an issue that
led to the 2008 depression? - ✔✔2007, when new house sales decreases by 20%
✔✔What was one of the first moves to deregulate the banking industry? -
✔✔Amendments to the Bank Holding Company Act
✔✔What Supreme Court Decision allowed banks to start making loans in states they
were not headquartered in? - ✔✔Marquette v. First of Omaha
✔✔What happened to the Glass-Steagall Act? - ✔✔The act was repealed
✔✔Safeguards - ✔✔a measure taken to protect someone or something from
undesirable outcome.
✔✔Internal Controls - ✔✔Rules and regulations that are put into place to to guard
assets owned by a person or a company
✔✔Separations of duties - ✔✔to separate one big job into several small jobs, with a
different individual performing each.
✔✔Measures that are taken to prevent someone or something from an undesirable
outcome are called _____. - ✔✔safeguards
✔✔What are rules and regulations that are put into place to guard assets owned by a
person or a company? - ✔✔Internal controls
✔✔How many goals are there for having effective safeguards in place in the banking
industry? - ✔✔5
✔✔Bankruptcy - ✔✔A legal process to get out of debt when you can no longer make all
your required payments
ANSWERS AND QUESTIONS SET A+
✔✔Interest ____ tax deductible; dividends ____ tax deductible. - ✔✔is, are not
✔✔Glass-Steagall Act 1933 - ✔✔separated the business of investing & trading by
banks from the business of providing services, like checking or savings accounts, to
consumers. This effectively separated investing from the rest of banking, which
regulated the industry.
✔✔Amendments to the Bank Holding Company Act - ✔✔amendments allowed the
consumer banks to begin making commercial loans. This was among the first small
moves towards deregulation.
✔✔Marquette v. First of Omaha 1978 - ✔✔Due to the Supreme Court's decision, banks
had the right to make loans in the states that they were not headquartered in. The
lenders immediately jumped into creating new loans in states that had the least
regulation, including Delaware and South Dakota.
✔✔Depository Institutions Deregulation and Monetary Control Act - ✔✔changed
banking regulation again. Deposit insurance increased to $100,000 and the limitation on
interest rates for deposit accounts was eliminated. It also provided additional authority
to thrift banks,
✔✔Thrift Banks - ✔✔institutions that focus primarily on taking deposits and providing
mortgages. They were also known as savings & loan institutions.
✔✔Garn-St. Germain Depository Institutions Act - ✔✔he Reagan administration signed
the act with approval from both the Democrats and the Republicans. This new act
allowed even more freedom to thrift banks, leaving them almost entirely deregulated. It
now provided the ability to do commercial lending, along with new accounts that could
compete in the mutual funds market.
, ✔✔Financial Institutions Reform and Recovery Act - ✔✔was also used to assist in the
creation of the Resolution Trust Corporation to assist in dealing with the failed thrift
banks.
✔✔Gramm-Leach-Bliley Act. - ✔✔hen the Glass-Steagall Act was repealed completely.
The repeal was done using the ,,,,,
✔✔subprime loan - ✔✔a type of loan offered at a higher rate to individuals who do not
qualify for prime rate loans
✔✔In what year did the bubble burst and banking deregulation show up as an issue that
led to the 2008 depression? - ✔✔2007, when new house sales decreases by 20%
✔✔What was one of the first moves to deregulate the banking industry? -
✔✔Amendments to the Bank Holding Company Act
✔✔What Supreme Court Decision allowed banks to start making loans in states they
were not headquartered in? - ✔✔Marquette v. First of Omaha
✔✔What happened to the Glass-Steagall Act? - ✔✔The act was repealed
✔✔Safeguards - ✔✔a measure taken to protect someone or something from
undesirable outcome.
✔✔Internal Controls - ✔✔Rules and regulations that are put into place to to guard
assets owned by a person or a company
✔✔Separations of duties - ✔✔to separate one big job into several small jobs, with a
different individual performing each.
✔✔Measures that are taken to prevent someone or something from an undesirable
outcome are called _____. - ✔✔safeguards
✔✔What are rules and regulations that are put into place to guard assets owned by a
person or a company? - ✔✔Internal controls
✔✔How many goals are there for having effective safeguards in place in the banking
industry? - ✔✔5
✔✔Bankruptcy - ✔✔A legal process to get out of debt when you can no longer make all
your required payments
