Exam 16: Thrift Institutions and Finance Companies

The Federal Savings and Loan Insurance Corporation insures deposits of savings institutions.

Credit unions were originally organized with the idea that members could pool their funds together and make low-cost loans to themselves as a group.

The DIDMC Act allowed national charters for thrifts.

The Office of Thrift Supervision is the principal federal regulator of S&Ls.

Thrifts face significant interest rate risk because their primary loans are mortgages and their primary sources of funds are deposits.

Usury laws are regulations that limit the amount of times a finance company can lend to the same individual in a given time period to limit the amount of interest charged to any one customer.

How do CUNA and corporate central credit unions help small individual credit unions?Can small banks and thrifts apply similar methods?

Credit unions have shortened the duration of their loan portfolios by making mortgage loans.

"Mutual" institutions are owned by their depositors.

Finance companies are less regulated than thrift institutions and banks.

A mutual thrift institution is one that is owned by its depositors.

Financial institutions must have at least 65% of their assets in mortgage related areas in order to maintain their favorable tax and regulatory status.

Federal Home Loan Banks are among the regulators of savings institutions.

Explain how unexpected increases in interest rates hurt savings institutions. How would they alter their maturity GAP if they expected interest rates to rise?

Aggregate finance company assets declined by almost 10 percent from 2009 to June 2015.

The major expenses of a finance company are salaries and loan losses.

The major risk that caused widespread failures in Savings and Loans in the 1980s was interest rate risk.

The issue of defining the common bond among members of credit unions has been debated in the courts and Congress. Why is this issue important to competing bankers? To credit unions? Does it have any relationship to the risks faced by credit unions?

Why did General Electric divest much of its portfolio of financial services after the financial crisis?

Most savings institutions are not involved in securitization.