Exam 25: Banking System and Electronic Financial Transactions

According to the Electronic Funds Transfer Act and Regulation E adopted by the Federal Reserve Board, a bank can send unsolicited electronic funds transfer system (EFTS) debit cards to a consumer only if the cards are not valid for use.

A cashier's check is a two-party check.

If there are major failures of several large banks or many small banks, and the Federal Deposit Insurance Corporation (FDIC) insurance fund is insufficient to cover all of the depositors' losses, which of the following bodies is responsible for paying the depositors money owed by the FDIC?

George, John, Paul, Ringo, and Brian are five friends from Iowa. George owes John $100, John owes Paul $200, Paul owes Ringo $300, and Ringo owes Brian $400. John and Paul find a check belonging to George. John names himself as the payee on the check, fills in $200 as the amount, and forges George's signature on it. He indorses the check to Paul and asks him to consider his debt repaid, while keeping the knowledge of the forgery to himself. Paul, in turn, indorses the check to Ringo and pays Ringo the remaining $100 in cash. Predictably, Ringo indorses the check to Brian, who presents the check to George's bank and receives payment. Who among the following can the bank recover the money from, once the forgery is detected?

The Dodd-Frank Wall Street Reform and Consumer Protection Act grants powers to the Federal Reserve to monitor and regulate institutions it supervises, including bank holding companies, savings bank holding companies, and affiliates of holding companies.

If a drawer and a payee or holder have accounts at different banks, the payer bank and depository bank are not the same bank. In this case, the check is called a(n) ________.

Which of the following regulatory agencies was set up under the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act?

In the case of presentment across the counter, the payer bank has six banking days to dishonor the check.

Describe the principal-agent relationship with respect to checks.

Banks in the collection process that are not the depository or payer bank are called ________ banks.

Which of the following is one of the provisions of the Electronic Funds Transfer Act and Regulation E of the Federal Reserve Board?

Which of the following is a provision of Article 4 of the Uniform Commercial Code?

A check that has been outstanding for more than ________ is considered stale.

Except for the collecting bank, each bank in the collection process, including the payer bank, must take proper action on an "on them" check prior to its midnight deadline.

The Federal Deposit Insurance Corporation was created under the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

A check that has been modified without authorization and thus modifies the legal obligation of a party is known as a(n) ________.

A(n) ________ is an order by the drawer to the drawee bank to pay a specified sum of money from the drawer's checking account to the named payee (or holder).

Briefly explain certified checks.

If the drawer and the payee of a check have accounts at the same bank, the check is called an "on them" item when it is presented for payment by the payee.

The drawer of a check is the customer who maintains the checking account and writes (draws) checks against the account.