Chapter 2
The Impact of Government Policy and Regulation on the Financial-Services Industry
Fill in the Blank Questions
1. The _____________________ was created as part of the Glass Steagall Act. In the beginning it
insured deposits up to $2,500. Answer: FDIC
2. The________________________ is the law that states that a bank must get approved from their
regulatory body in order to combine with another bank. Answer: Bank Merger Act
3. One tool that the Federal Reserve uses to control the money supply is _________________ . The Federal Reserve will buy and sell T-bills when they are using this tool of monetary policy. Answer: open market operations
4. The__________________________ was created in 1913 in response to a series of economic
depressions and failures. Its principal role is to serve as the lender of last resort and to stabilize the financial markets.
Answer: Federal Reserve
5. The __________________________ prevented banks from crossing state lines and made national
banks subject to the branching laws of their state. This act was later repealed by the Riegle Neal Interstate Banking law.
Answer: McFadden-Pepper Act
6. Because the FDIC levies fixed insurance premiums regardless of risk, this leads to a problem called
the ____________________ among banks. The fixed premiums encourage all banks to accept greater risk.
Answer: moral hazard
7. In 1980, __________________________ was passed and lifted government ceilings on deposit
interest rates in favor of free market interest rates. Answer: DIDMCA
15
8. One tool that the Federal Reserve uses to control the money supply is _________________. The
Federal Reserve will change the interest rate they charge for short term loans when they are using this tool of monetary policy.
Answer: changing the discount rate
9. The first major federal banking law in the U.S. was the __________________________. This law
was passed during the Civil War and set up a system for chartering national banks and created the OCC.
Answer: National Banking Act
10. The_________________________ was passed during the Great Depression. It separated
investment and commercial banks and created the FDIC. Answer: Glass-Steagall Act
11. The__________________________ brought bank holding companies under the jurisdiction of the
Federal Reserve.
Answer: Bank Holding Company Act
12. The__________________________ allows bank holding companies to acquire banks anywhere in
the United States. However, no one bank can control more than 30 percent of the deposits in any one state or more than 10 percent of the deposits across the country. Answer: Riegle-Neal Interstate Banking Act
13. The allows banks to affiliate with insurance companies and securities firms either through a holding company or as a subsidiary.
Answer: Gramm-Leach-Bliley Act (Financial Services Modernization Act)
14. Customers of financial-service companies may _____________________ of having their private
information shared with a third party such as a telemarketer. However, in order to do this they must tell the financial-services company in writing that they do not want their personal information shared with outside parties. Answer: opt out
15. The federal bank regulatory agency which examines the most banks is the ______________.
Answer: FDIC
16. The _________________ requires financial service companies to report suspicious activity in
customer accounts to the Treasury Department. Answer: U.S. Patriot Act
16 Test Bank, Chapter 2
17. The central bank of the new European Union is known as the _______________________.
Answer: European Central Bank or ECB
18. The _____________________ Act prohibits banks and other publicly owned firms from
publishing false or misleading financial performance information. Answer: Sarbanes-Oxley
19. One of the main roles of the Federal Reserve today is . They have three tools that they use today to carry out this role; open market operations, the discount rate and legal reserve requirements.
Answer: monetary policy
20. The is the center of authority and decision making within the Federal Reserve. It consists of seven members appointed by the president for terms not exceeding 14 years. Answer: Board of Governors
21. The main regulators of insurance companies are . Answer: state insurance commissions
22. Federal Credit Unions are regulated and examined by . Answer: the National Credit Union Administration.
23. The makes it easier for victims of identity theft to file fraud alerts and allows the public to apply for a free credit report once a year. Answer: Fair and Accurate Credit Transactions Act (FACT Act)
24. The makes it faster and less costly for banks to clear checks. It allows for banks to electronically send check images instead of shipping paper checks across the country.
Answer: Check 21 Act
25. The was created by the National Banking Act and is part of the Treasury Department. It is the primary regulator of National Banks. Answer: Office of the Comptroller of the Currency (OCC)
26. The _________________________ proposes various regulations applying to the financial markets
to combat the recent credit crisis. This “bail-out” bill granted the US Treasury the means to purchase troubled loans, allowed the FDIC to temporarily increase deposit insurance, and permitted the government to inject additional capital into the banking system. Answer: The Emergency Economic Stabilization Act of 2008
True/False Questions
17
T
F 27. Federal Reserve Act authorized the creation of the Federal Deposit Insurance Corporation. Answer: False
T
F 28. In the United States, fixed fees charged for deposit insurance, regardless of how risky a
bank is, led to a problem known as moral hazard.
Answer: True
T
F 28. Government-sponsored deposit insurance typically encourages individual depositors to
monitor their banks' behavior in accepting risk.
Answer: False
T
F 29. The Federal Reserve changes reserve requirements frequently because the affect of these
changes is so small.
Answer: False
T
F 30. The Bank Merger Act and its amendments requires that Bank Holding Companies be under
the jurisdiction of the Federal Reserve.
Answer: False
T
F 31. National banks cannot merge without the prior approval of the Comptroller of the
Currency.
Answer: True
T
F 32. The Truth in Lending (or Consumer Credit Protection) Act was passed by the U.S.
Congress to outlaw discrimination in providing bank services to the public.
Answer: False
T
F 33. The federal law that states individuals and families cannot be denied a loan merely because
of their age, sex, race, national origin or religious affiliation is known as the Competitive Equality in Banking Act.
Answer: False
T
F 34. Under the terms of the 1994 Riegle-Neal Interstate Banking law bank holding companies
can acquire a bank anywhere inside the United States, subject to Federal Reserve Board approval.
Answer: True
T
F 35. The 1994 federal interstate banking bill does not limit the percentage of statewide or nationwide deposits that an interstate banking firm is allowed to control.
18 Test Bank, Chapter 2
Answer: False
T
F 36. The term \
United States and selected other countries where both the federal or central government and local governments regulate banks.
Answer: False
T
F 37. The moral hazard problem of banks is caused by the fixed insurance premiums paid by
banks and causes banks to accept greater risk.
Answer: True
T
F 38. When the Federal Reserve buys T-bills through its open market operations, it causes the
growth of bank deposits and loans to decrease.
Answer: False
T
F 39. When the Federal Reserve increases the discount rate it generally causes other interest rates
to decrease.
Answer: False
T
F 40. The National Bank Act (1863) created the Federal Reserve which acts as the lender of last
resort.
Answer: False
T
F 41. FIRREA (1989) allowed bank holding companies to acquire nonblank depository
institutions and, if desired, convert them into branch offices.
Answer: True
T
F 42. The Sarbanes-Oxley Act allows banks, insurance companies, and securities firms to form
Financial Holding Companies (FHCs).
Answer: False
T
F 43. The Gramm-Leach-Bliley Act of 1999 essentially repeals the Glass-Steagall Act passed in
the 1930s.
Answer: True
T
F 44. Passed in 1977, the Equal Credit Opportunity Act prohibits banks from discriminating
against customers merely on the basis of the neighborhood in which they live.
Answer: False
T
F 45. The tool used by the Federal Reserve System to influence the economy and behavior of
19
(完整版)商业银行管理彼得S.罗斯英文原书第8版英语试题库Chap002
