FI 412 Final Exam questions with complete solutions

FI 412 Final Exam questions with complete
solutions


Federal Reserve Act (1913) - answer-created the Federal Reserve system
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McFadden Act of 1927 - answer-prohibited banks from branching across state lines and
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put national and state banks on equal footing regarding branching
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Glass Steagall - answer-created FDIC; separated banking from the securities industry;
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Prohibited interest on checkable deposits and restricted such deposits to commercial
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banks; Put interest-rate ceilings on other deposits
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Securities Act of 1933 and 1934 - answer-Required that investors receive financial
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information on securities offered for public sale, created the SEC, and prohibited
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misrepresentations and fraud in the sale of securities
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Investment Company and Advisors Act of 1940 - answer-regulated investment
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ccompanies, including mutual funds and regulated investment advisors
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Bank Holding Company Act - answer-clarified the status of bank holding companies
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(BHCs)
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Douglas Amendment - answer-gave the Federal Reserve regulatory responsibility for
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BHCs
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Depository Institutions Deregulation and Monetary Control Act (DIDMCA) of 1980 -
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answer-gave thrift institutions wider latitude in activities; Approved NOW and sweep
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accounts nationwide; phased out interest-rate ceilings on deposits; imposed uniform
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reserve requirements on depository institutions; eliminated usury ceilings on loans;
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increased deposit insurance to $100,000 per account
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Garn-St.Germain - answer-Gave the FDIC and the Federal Savings and Loan Insurance
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Corporation (FSLIC) emergency powers to merge banks and thrifts across state lines;
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Allowed depository institutions to offer money market deposit accounts (MMDAs);
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Granted thrifts wider latitude in commercial and consumer lending
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Competitive Equality in Banking Act (CEBA) of 1987 - answer-provided $10.8 billion to
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the FSLIC and made provisions for regulatory forbearance in depressed areas
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, Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) of 1989 -
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answer-provide funds to resolve S&L failures; Eliminated the FSLIC and the Federal
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Home Loan Bank Board; Created the Office of Thrift Supervision to regulate thrifts;
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Raised deposit insurance premiums; Re-imposed restrictions on S&L activities
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Federal Deposit Insurance Corporation Improvement Act (FDICIA) - answer-
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recapitalized the FDIC; limited brokered deposits and the too-big-to-fail policy; set
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cprovisions for prompt corrective actions; instructed the FDIC to establish risk-based
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cpremiums; increased examinations, capital requirements, and reporting requirements;
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cIncluded the Foreign Bank Supervision Enhancement Act (FBSEA), which strengthened
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cthe Fed's authority to supervise foreign banks
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Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 - answer-
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overturned prohibition of interstate banking and allowed branching across state lines
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Gramm-Leach-Bliley Financial Services Moderation Act of 1999 - answer-Repealed c c c c c c c c


Glass-Steagall and removed the separation of banking and securities industries
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Sarbanes Oxley Act of 2002 - answer-Created Public Company Accounting Oversight
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Board (PCAOB); prohibited certain conflicts of interest; Required certification by CEO
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and CFO of financial statements and independence of audit committee
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Federal Deposit Insurance Reform Act of 2005 - answer-merged the Bank Insurance
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Fund and the Savings Association Insurance Fund; increased deposit insurance on
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individual retirement accounts to $250,000 per account; authorized FDIC to revise its
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system of risk-based premiums
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Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 - answer-Created
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cConsumer Financial Protection Bureau to regulate mortgages and other
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financial products; Required routine derivatives to be cleared through central
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cclearinghouses and exchanges; Provided new government resolution authority to allow
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cgovernment takeovers of c c


financial holding companies; Created Financial Stability Oversight Council to regulate
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csystemically important financial institutions; Banned banks from proprietary trading and
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cowning large percentage of hedge funds
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When and why was the Glass-Steagall Act passed? - answer-passed in 1935 to
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separate banking and securities industries
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When and why was Glass-Steagall replaced? - answer-replaced in 1999 to remove the
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separation of the banking and securities industries
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FDIC Payoff Method - answer-the FDIC allows the bank to fail and pays off deposits up
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to the $250,000 insurance limit
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