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21 Cards in this Set

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  • Back
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Riegle-Neal Interstate Banking and Branching Efficiency Act
Federal law passed in 1994 that permits bank holding companies to acquire banks nationwide and authorized interstate branching and mergers beginning June 1, 1997.
Gramm-Leach-Bliley (Financial Services Modernization) Act
A federal law approved in 1999 permitting common ownership of banks, securities firms, and insurers through financial holding companies or subsidiaries if well capitalized and well managed and granted regulatory approval.
A system that assigns a numerical rating to a depository institution based on examiner judgment regarding its:
Capital adequacy
Asset condition
Management quality
Earnings record
Liquidity position
Sensitivity to market risk
The bringing together of firms from different industries to create conglomerate firms offering multiple services.
Acquisitions of firms in the same industry as the acquiring firm.
Economies of Scale
Cost savings achieved when a firm expands in size and becomes more efficient in using productive resources to produce goods and services.
Economies of Scope
Employing the same management, staff, and facilities to offer multiple products or services, thereby helping to reduce the per-unit cost of production and delivery of goods or services.
Glass-Steagall Act
Law passed in 1933 that legally mandated the separation of commercial and investment banking, imposed interest rate ceilings on bank deposits, authorized the creation of the Federal Deposit Insurance Corporation (FDIC), and granted federally chartered banks the power to branch throughout a state, provided that state grants similar powers to its own statechartered banks.
Securities and Exchange Commission
A federal oversight board created by the Securities and Exchange Act of 1934 that requires public companies to file financial reports and disclose relevant information about their financial condition to the public and to prevent the issuance of fraudulent or deceptive information in the offering of new securities to the public.
Depository Institutions Deregulation and Monetary Control Act
Law passed in 1980 requiring that federal interest rate ceilings on deposits sold to the public be phased out so that deposit interest rates could more closely reflect prevailing market conditions
FDIC Improvement Act
A law passed in 1991 to recapitalize the Federal Deposit Insurance Corporation (FDIC) and exercise closer regulation over troubled depository institutions.
Check 21 Act
Allows the conversion of paper checks into electronically transferable payment items
Roll of Banking
The primary purpose of the ever-changing financial system is to encourage individuals and institutions to save and to transfer those savings to those individuals and institutions planning to invest in new projects, causing the economy to grow, new jobs to be created, and living standards to rise.
It also provides a variety of supporting services essential to modern living. These include payment services, risk protection, liquidity services, and credit services.
Forces impacting industry, not only banks, but other institutions
(1) Service Proliferation (widening service menus)
(2) Rising Competition
(3) Government Deregulation
(4) An Increasingly Interest-Sensitive Mix of Funds
(5) Technological Change and Automation
(6) Consolidation and Geographic Expansion
(7) Convergence
(8) Globalization
Managing bank — bank rating based on
The feel of the bank
Importance of regulations to industry, why we need it?
Financial-service institutions are among the most heavily regulated of all industries due, in part, to their key roles in attracting and protecting the public’s savings, providing credit to a wide range of borrowers, and creating money to serve as the principal medium of exchange in a modern economy.
Various structure in banking industry
Unit Banks: Banks that offer the full range of their services from one office, though a small number of services (such as taking deposits or cashing checks) may be offered from limited-service facilities, such as drive-up windows and ATMs.

Branch Banking: An arrangement in which a bank offers a full range of services from multiple locations, including a head office and one or more branch offices.

Internet Banking: The offering of information and selected services through the Internet by banks and other financial-service firms.

Bank Holding Company: A corporation chartered for the purpose of holding the stock (equity shares) of one or more banks.
Why bank wants to get larger
Larger institutions generally play a wider range of roles and offer more services.
Implications for a new bank manager
Today — implications for new bank manager? What areas? (ATM, virtual, what implications? Issues that are important — staffing, expense control, asset quality, sales orientation)
Where banks are headed in future?
Banks will continue to grow, but not as fast
Ideals about future banking industry
Whatever service facilities move to dominance in the future, these delivery vehicles are likely to be scrutinized more closely for performance and efficiency and configured for marketing multiple services more effectively.