Exam 11: Economic Analysis of Financial Regulation

Deposit insurance is only one type of government safety net.All of the following are types of government support for troubled financial institutions except

The Depository Institutions Deregulation and Monetary Control Act of 1980

Overseeing who operates banks and how they are operated is called

A well-capitalized financial institution has ________ to lose if it fails and thus is ________ likely to pursue risky activities.

Off-balance-sheet activities

Since depositors,like any lender,only receive fixed payments while the bank keeps any surplus profits,they face the ________ problem that banks may take on too ________ risk.

The current supervisory practice toward risk management

The Volcker Rule addresses the off-balance-sheet problem involving

Regulators attempt to reduce the riskiness of banks' asset portfolios by

One of the problems experienced by the savings and loan industry during the 1980s was

The evidence from banking crises in other countries indicates that

During the 1960s,1970s,and early 1980s,traditional bank profitability declined because of

Firms that are designated as systemically important financial institutions (SIFIs)are subject to all of the following additional Federal Reserve regulations except

In the ten year period 1981-1990,1202 commercial banks were closed,with a peak of 206 failures in 1989.This rate of failures was approximately ________ times greater than that in the period from 1934 to 1980.

The government safety net creates ________ problem because risk-loving entrepreneurs might find banking an attractive industry.

Federal deposit insurance covers deposits up to $250,000,but as part of a doctrine called "too-big-to-fail" the FDIC sometimes ends up covering all deposits to avoid disrupting the financial system.When the FDIC does this,it uses the

The primary difference between the "payoff" and the "purchase and assumption" methods of handling failed banks is

The Basel Committee ruled that regulators in other countries can ________ the operations of a foreign bank if they believe that it lacks effective oversight.

An analysis of the political economy of the savings and loan crisis helps one to understand

The directive of prompt corrective action means that