Pick the two answers to the following is the Federal Reserve obligated (required) to act as a lender of last resort for a bank that is in trouble due to poor management? of failing due to bad management or business practices, why might the Federal Reserve choose to aid such a bank if it faced a liquidity crisis? a. Yes/the Federal Reserve is required by law to aid all banks b. Yes/ the Federal Reserve is charged with making sure that banks earn a normal profit c Northe Federal Reserve is not required to act, but it usually will because it wants all banks to earn a normal profit d Northe Federal Reserve is not required to act, but it often will because of the threat that the bad bank poses to the banking system e Northe Federal Reserve is not required to act, but banks are major political campaign contributors If a bank was in danger

Pick the two answers to the following is the Federal Reserve obligated (required) to act as a lender of last resort for a bank that is in trouble due to poor management? of failing due to bad management or business practices, why might the Federal Reserve choose to aid such a bank if it faced a liquidity crisis? a. Yes/the Federal Reserve is required by law to aid all banks b. Yes/ the Federal Reserve is charged with making sure that banks earn a normal profit c Northe Federal Reserve is not required to act, but it usually will because it wants all banks to earn a normal profit d Northe Federal Reserve is not required to act, but it often will because of the threat that the bad bank poses to the banking system e Northe Federal Reserve is not required to act, but banks are major political campaign contributors If a bank was in danger

Business/Professional Ethics Directors/Executives/Acct

8th Edition

ISBN:9781337485913

Author:BROOKS

Publisher:BROOKS

Chapter8: Subprime Lending Fiasco-ethics Issues

Section: Chapter Questions

Problem 7.3EC

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. What are some ways banks can state theircharges, and how should the cost of bankdebt be analyzed? In the early 1970s, Congressdebated the need for new legislation, and itended up passing a “Truth in Lending” law. Onepart of the law was the requirement that banksdisclose their APR. How is the APR calculated?Do you think the Truth in Lending law was reallynecessary?
The quantity of deposit and nondeposit funds in a bank depends on all of the following EXCEPT:a. the Fed's monetary policy actionsb. the bank's financial strengthc. economic conditionsd. none of the above Choose one correct answer please.
Which of the following actions could be used to resolve the too-big-to-fail problem? A. Force large banks to merge B. Repeal the Dodd-Frank regulations C. Encourage branch banking D. Require large banks to hold higher reserves
Bank regulation cannot eliminate risk and does not prevent bank failure. It cannot guarantee that bank management will make good decisions especially in high-risk lending and investment. However, bank regulation can enhance safety and stability of the banking industry. Therefore bank regulation is justified. Do you agree or disagree? Please explain your answer.
What are some of the ways that banks can borrow short-term funds when they need "liquidity"?(Select all that apply; three of the answers below are correct.) Reference: Chapters 11 & 12 They can borrow directly from the Securities & Exchange Commission through the "regulatory" market. They can borrow from the Department of Treasury through the "Treasury" window. They can borrow another bank's reserves through the "fed funds" market. The can engage in a "sale & repurchase agreement" (or "repo") by selling some of their securities to another financial insitution and promising to buy them back the next day. They can borrow directly from the Federal Reserve through the "discount window".
Based on the functions of the banking system, give reasons why governments bail out banks during an economic crisis?
Which of the following is an accurate description of a dual banking system? Government protection from losses may occur if a bank becomes insolvent or fails. There exists a system in which bank charters are granted by both the government and private licensing organizations. The government grants charters to banks. Government permission is needed to establish and operate a depository institution. Which of the following most accurately explains why the bank chartering system of the United States is known as the reason for a dual banking system? Society cannot allow just anyone to open a bank because banks have a lot of proprietary information. The government grants charters to banks. There exists a system in which bank charters are granted by both the government and private licensing organizations. Banks do not disclose to whom they have made loans and for how much.
Discuss the advantages and disadvantages of regulatory forbearance in banking. How useful has it been in mitigating COVID-19 stress on banks? Give some examples
(0) What is true regarding the commercial banks that are a part of the Federal Reserve System? (Select one of the options) They have the same rights with respect to district feds as any shareholders do They receive payments in the form of dividends from the district Feds Their deposits are insured by the government They can influence the monetary policy inside the district where they operate
As part of the safeguards against imprudent banking, the General Banking Law imposes limits or restrictions on loans and credit accommodations which may be extended by banks. Which of the following are not considered limits and restrictions on loans and credit accommodation? a. NO commercial bank shall make any loan or discount on the security of shares of its own capital stock. b. DOSRI Rules – promulgated by BSP, upon authority of Section 5 of the General Banking Law. c. Anti-Money Laundering Law d. SBL Rules – those promulgated by the Bangko Sentral ng Pilipinas upon authority of Section 35 of the General Banking Law of 2000.
4. Investment bank controversies Which of the following is true regarding the "revolving door" between the investment banking industry and the organizations tasked with regulating and overseeing investment banks? Check all that apply. The "revolving door" only goes one way. That is, former investment bankers often go on to work for government organizations, but government employees do not go on to work for investment banks. The "revolving door" only goes one way. That is, government employees often go on to work for investment banks, but former investment bankers do not go on to work for government organizations. The "revolving door" was largely a problem in the 1960's and does not pose any issues in today's financial industry. The "revolving door" can potentially create conflicts of interest among current and former employees of the investment banking industry.
Which of these statements about banks is true: i) Banks cannot convert all deposits in the Reserves Accounts into loans. ii) Banks can convert all deposits in the Reserves Accounts into loans. iii) Banks can create money iv) Banks can issue money. v) Commercial Banks decide on the reserves ratio O i and iii O ii and iii ii and iv i and v