Question 1

The major provisions of the Competitive Equality in Banking Act of 1987 included

Accepted Answer

A) expanding the responsibilities of the FDIC, which is now the sole administrator of the federal deposit insurance system. 
B) establishing the Resolution Trust Corporation to manage and resolve insolvent thrifts placed in conservatorship or receivership. 
C) directing the Federal Home Loan Bank Board to continue to pursue regulatory forbearance. 
D) all of the above. 
E) only A and B of the above. 
A) expanding the responsibilities of the FDIC, which is now the sole administrator of the federal deposit insurance system. 
B) establishing the Resolution Trust Corporation to manage and resolve insolvent thrifts placed in conservatorship or receivership. 
C) directing the Federal Home Loan Bank Board to continue to pursue regulatory forbearance. 
D) all of the above. 
E) only A and B of the above.

Question 2

"Zombie S&Ls"

Accepted Answer

A) paid above market interest rates to attract deposits to fuel their lending boom. 
B) offered loans at below market interest rates to expand their lending. 
C) drove down the profitability of solvent S&Ls, threatening to turn them into "zombies" too. 
D) did all of the above. 
E) did only A and B of the above. 
A) paid above market interest rates to attract deposits to fuel their lending boom. 
B) offered loans at below market interest rates to expand their lending. 
C) drove down the profitability of solvent S&Ls, threatening to turn them into "zombies" too. 
D) did all of the above. 
E) did only A and B of the above.

Question 3

Credit unions' main type of loans is ________.

Accepted Answer

A) mortgages 
B) automobile 
C) credit cards 
D) nonresidential real estate 
A) mortgages 
B) automobile 
C) credit cards 
D) nonresidential real estate

Question 4

The Competitive Equality in Banking Act of 1987

Accepted Answer

A) provided insufficient funds to the FSLIC to close down insolvent S&Ls. 
B) actually directed S&L regulators to continue to pursue regulatory forbearance, further delaying the closing of insolvent S&Ls. 
C) created a new agency, the Resolution Trust Corporation, to manage insolvent thrifts. 
D) did all of the above. 
E) did only A and B of the above. 
A) provided insufficient funds to the FSLIC to close down insolvent S&Ls. 
B) actually directed S&L regulators to continue to pursue regulatory forbearance, further delaying the closing of insolvent S&Ls. 
C) created a new agency, the Resolution Trust Corporation, to manage insolvent thrifts. 
D) did all of the above. 
E) did only A and B of the above.

Question 5

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

Accepted Answer

A) abolishing the Federal Home Loan Bank Board and the FSLIC. 
B) transferring the regulatory role of the Federal Home Loan Bank Board to the Office of Thrift Supervision, a bureau within the U.S. Treasury Department. 
C) expanding the responsibilities of the FDIC, which is now the sole administrator of the federal deposit insurance system. 
D) all of the above. 
E) only A and B of the above. 
A) abolishing the Federal Home Loan Bank Board and the FSLIC. 
B) transferring the regulatory role of the Federal Home Loan Bank Board to the Office of Thrift Supervision, a bureau within the U.S. Treasury Department. 
C) expanding the responsibilities of the FDIC, which is now the sole administrator of the federal deposit insurance system. 
D) all of the above. 
E) only A and B of the above.

Question 6

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

Accepted Answer

A) building shopping centers in the desert. 
B) buying manufacturing plants to convert manure to methane. 
C) purchasing billions of dollars of junk bonds. 
D) all of the above. 
E) only A and B of the above. 
A) building shopping centers in the desert. 
B) buying manufacturing plants to convert manure to methane. 
C) purchasing billions of dollars of junk bonds. 
D) all of the above. 
E) only A and B of the above.

Question 7

In the 1980s, thrift institutions, which had been almost entirely restricted to making loans for home mortgages only, were allowed by regulators to

Accepted Answer

A) finance acquisitions in commercial real estate. 
B) extend consumer loans. 
C) purchase junk bonds. 
D) do all of the above. 
E) do only A and B of the above. 
A) finance acquisitions in commercial real estate. 
B) extend consumer loans. 
C) purchase junk bonds. 
D) do all of the above. 
E) do only A and B of the above.

Question 8

In the early stages of the banking crisis in the 1980s, financial institutions were especially hurt by

Accepted Answer

A) the sharp increases in interest rates from late 1979 until 1981. 
B) the severe recession in 1981-82. 
C) the sharp decline in the price level from mid-1980 to early 1983. 
D) all of the above. 
E) only A and B of the above. 
A) the sharp increases in interest rates from late 1979 until 1981. 
B) the severe recession in 1981-82. 
C) the sharp decline in the price level from mid-1980 to early 1983. 
D) all of the above. 
E) only A and B of the above.

Question 9

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

Accepted Answer

A) why politicians hampered the efforts of thrift regulators, cutting regulatory appropriations and encouraging regulatory forbearance. 
B) why thrift regulators were reluctant to admit that any problem even existed in the thrift industry. 
C) why thrift regulators willingly acceded to pressures placed upon them by members of Congress. 
D) all of the above. 
E) only A and B of the above. 
A) why politicians hampered the efforts of thrift regulators, cutting regulatory appropriations and encouraging regulatory forbearance. 
B) why thrift regulators were reluctant to admit that any problem even existed in the thrift industry. 
C) why thrift regulators willingly acceded to pressures placed upon them by members of Congress. 
D) all of the above. 
E) only A and B of the above.

Question 10

Which of the following statements about mutual savings banks are true?

Accepted Answer

A) There are currently under 200 mutual savings banks in the United States. 
B) Most mutual savings banks are federally chartered. 
C) Both A and B of the above are true. 
D) None of the above are true. 
A) There are currently under 200 mutual savings banks in the United States. 
B) Most mutual savings banks are federally chartered. 
C) Both A and B of the above are true. 
D) None of the above are true.

Question 11

Credit unions are owned by stockholders.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) abolishing the Federal Home Loan Bank Board and the FSLIC. 
B) transferring the regulatory role of the Federal Home Loan Bank Board to the Office of Thrift Supervision, a bureau within the U.S. Treasury Department. 
C) establishing the Resolution Trust Corporation to manage and resolve insolvent thrifts placed in conservatorship or receivership. 
D) all of the above. 
E) only A and B of the above. 
A) abolishing the Federal Home Loan Bank Board and the FSLIC. 
B) transferring the regulatory role of the Federal Home Loan Bank Board to the Office of Thrift Supervision, a bureau within the U.S. Treasury Department. 
C) establishing the Resolution Trust Corporation to manage and resolve insolvent thrifts placed in conservatorship or receivership. 
D) all of the above. 
E) only A and B of the above.

Question 13

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

Accepted Answer

A) regulators initially attempted to downplay the seriousness of problems within the thrift industry. 
B) politicians who received generous campaign contributions from the savings and loan industry hoped that the problems in the industry would ease over time. 
C) Congress did not wait long enough for many of the problems in the thrift industry to correct themselves. 
D) of all of the above. 
E) of only A and B of the above. 
A) regulators initially attempted to downplay the seriousness of problems within the thrift industry. 
B) politicians who received generous campaign contributions from the savings and loan industry hoped that the problems in the industry would ease over time. 
C) Congress did not wait long enough for many of the problems in the thrift industry to correct themselves. 
D) of all of the above. 
E) of only A and B of the above.

Question 14

In the 1980s, regulators engaged in bureaucratic gambling when they allowed insolvent S&Ls to continue operating.

Accepted Answer

A) True 
 B)False

Question 15

The common bond membership requirement makes it difficult for ________ to diversify their loans.

Accepted Answer

A) savings and loan associations 
B) credit unions 
C) banks 
D) mutual savings banks 
A) savings and loan associations 
B) credit unions 
C) banks 
D) mutual savings banks

Question 16

The congressionally imposed cap on the interest rate that S&Ls could pay on savings accounts became a serious problem for them in the 1970s when inflation rose.

Accepted Answer

A) True 
 B)False

Question 17

Savings and loans associations

Accepted Answer

A) initially were allowed to attract funds by offering savings accounts that paid a slightly higher interest rate than that offered by commercial banks. 
B) held about 85 percent of their total assets as mortgages prior to the Great Depression. 
C) did not weather the Great Depression well, as thousands of S&Ls failed in the 1930s. 
D) are all of the above. 
E) are only A and B of the above. 
A) initially were allowed to attract funds by offering savings accounts that paid a slightly higher interest rate than that offered by commercial banks. 
B) held about 85 percent of their total assets as mortgages prior to the Great Depression. 
C) did not weather the Great Depression well, as thousands of S&Ls failed in the 1930s. 
D) are all of the above. 
E) are only A and B of the above.

Question 18

Most credit unions today have federal charters.

Accepted Answer

A) True 
 B)False

Question 19

Since the early 1990s, the net income of savings and loan associations has ________.

Accepted Answer

A) risen 
B) fallen slightly 
C) fallen sharply 
D) held steady 
A) risen 
B) fallen slightly 
C) fallen sharply 
D) held steady

Question 20

Explain the advantages and disadvantages between mutual savings banks and savings and loans.

Accepted Answer

Mutual savings banks and savings and loa

Exam 25: Savings Associations and Credit Unions

The major provisions of the Competitive Equality in Banking Act of 1987 included

"Zombie S&Ls"

Credit unions' main type of loans is ________.

The Competitive Equality in Banking Act of 1987

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

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

In the 1980s, thrift institutions, which had been almost entirely restricted to making loans for home mortgages only, were allowed by regulators to

In the early stages of the banking crisis in the 1980s, financial institutions were especially hurt by

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

Which of the following statements about mutual savings banks are true?

Credit unions are owned by stockholders.

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

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

In the 1980s, regulators engaged in bureaucratic gambling when they allowed insolvent S&Ls to continue operating.

The common bond membership requirement makes it difficult for ________ to diversify their loans.

The congressionally imposed cap on the interest rate that S&Ls could pay on savings accounts became a serious problem for them in the 1970s when inflation rose.

Savings and loans associations

Most credit unions today have federal charters.

Since the early 1990s, the net income of savings and loan associations has ________.

Explain the advantages and disadvantages between mutual savings banks and savings and loans.

Why Study Financial Markets and Institutions

Overview of the Financial System

What Do Interest Rates Mean and What Is Their Role in Valuation

Why Do Interest Rates Change

How Do Risk and Term Structure Affect Interest Rates

Are Financial Markets Efficient

Why Do Financial Institutions Exist

Why Do Financial Crises Occur and Why Are They so Damaging to the Economy

Central Banks and the Federal Reserve System

Conduct of Monetary Policy: Tools, Goals, Strategy, and Tactics

The Money Markets

The Bond Market

The Stock Market

The Mortgage Markets

The Foreign Exchange Market

The International Financial System

Banking and the Management of Financial Institutions

Financial Regulation

Banking Industry: Structure and Competition

The Mutual Fund Industry

Insurance Companies and Pension Funds

Investment Banks, Security Brokers and Dealers, and Venture Capital Firms

Risk Management in Financial Institutions

Hedging With Financial Derivatives

Finance Companies

Filters