Chat with AIExam 14: Regulating the Financial System
You have savings accounts at two separately FDIC insured banks. At one of the banks your account has a balance of $200,000. At the other bank the account balance is $60,000. You find out the banks are going to merge. If you are concerned about the possibility of the new bank failing, you should:
(100) 
VerifiedC
Discuss the case for a "super-regulator" in the context of what you have learned about
"regulatory competition."
(60) VerifiedRegulatory competition describes the current situation in which banks can effectively choose their regulators by choosing whether to be a state or national bank and whether or not to belong to the Federal Reserve System. If one regulator allows an activity that another prohibits, a bank's managers can threaten to switch, or argue that a competitor who answers to a more permissive regulator has an unfair advantage. This has two consequences: first, regulators force each other to innovate, improving the quality of the regulations they writing. This is a positive outcome because it ensures that regulators and banks follow current best practice. But there is also a less desirable outcome in that bank managers can "shop" for the most lenient regulator. This was compounded in the 1990s when Congress removed the functional (and geographic) barriers that one separated commercial banking from other forms of financial intermediation (and which had outlawed interstate branching). It is likely that in the future regulators and supervisors will have no choice but to combine forces, either cooperating or merging, and the creation of a "super-regulator" would have the advantage of making the process more uniform and coherent.
In the ten years after the FDIC limit was increased to $100,000:
(67) VerifiedA
The financial system is inherently more unstable than most other industries due to the fact that:
(85) Which of the following is not a positive effect of the Basel Accord?
(88) You have savings accounts at two separately FDIC insured banks. At one of the banks your account has a balance of $200,000. At the other bank the account balance is $60,000. If both banks fail, you will receive:
(75) Under the purchase-and-assumption method, the FDIC usually finds it:
(76) Under the purchase-and-assumption method of dealing with a failed bank, the FDIC:
(70) Governments employ three strategies to contain the risks created by government safety nets. These include each of the following, except:
(73) One reason that financial regulations restrict the assets that banks can own is to:
(85) Deflation can cause widespread bank crises for all of the following reasons except:
(75) Why do bank runs usually have people rushing to their bank instead of waiting for the lines to taper off so they do not have to wait so long?
(86) What was the primary motivation behind the creation of the 1988 Basel Accord?
(83) When the Federal Reserve was unable to stem the bank panics of the 1930s, Congress responded by:
(81) Explain why the ratio of assets to capital increased dramatically for commercial banks from the 1920s to the present.
(80) 
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