Exam 26: Savings Associations and Credit Unions

The political economy of the S&L crisis shows that the principal-agent problem occurs in politics.In this instance,the agent-regulators did not act to protect the principal-taxpayers because

Since the early 1990s,the number of savings and loan associations has ________ and the average size (in assets)has ________.

Savings and loan associations

Regulatory forbearance reduces moral hazard because an operating but insolvent S&L will take fewer risks than healthy S&Ls that can take risks and still remain solvent.

The second major liability of savings and loans is borrowings.

Examples of the huge risks that "zombie S&Ls" undertook include

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

Mutual savings banks are the only financial institutions that are tax-exempt.

Which of the following are reasons that explain why regulators pursued a policy of regulatory forbearance toward thrifts in the early 1980s?

(I)S&Ls' net worth ratio is about the same as that of commercial banks. (II)Goodwill accounts for a majority of S&Ls' capital.

Most credit unions today have federal charters.

Credit unions are characterized by

The bailout of the savings and loan industry was much delayed and,therefore,much more costly to taxpayers because

The capital of financial institutions is often measured by the ________ ratio.

Discuss the background of mutual savings banks and how this lead to the creation of S&Ls.

Which of the following statements concerning the mutual form of ownership of savings banks are true?

Mutual savings banks

FIRREA imposed new restrictions on thrift activities that,in essence,re-regulated the S&L industry to the asset choices it had before 1982.

The major provisions of the Financial Institutions Reform,Recovery,and Enforcement Act of 1989 included

"Bureaucratic gambling" refers to