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33 Cards in this Set
- Front
- Back
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purpose of 2nd national bank
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end deflation
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What kind of banks are allowed in free banking era
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state chartered
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what was the average bank life during free banking era
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dhort
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what does national bank act of 1863 do
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establish national banks and currency
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What happens in Panic of 1907
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loss of confidence and lower liquidity
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how can monetary policy be dealth with
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open market transaction (change money supply), discount rate, reserve requirement
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What is a ninja loan
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loans given to those with no credit/assets
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What is a credit derivative
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seperate/transfer risk
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what caused bubble
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poor ratings
relaxed mortgage lending |
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how did Lehman fall
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dhifted 50 Bill off the books, repo 105
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what was the purpose of ltcm
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speculative hedge fund that was suposed to avoid govt regulation adn was low cost
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how did LTCM operate
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used fixed income arbitrage (short longed duration fixed income debt and shortered longer duration debt (had to way over leverage)
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what was the finances of LTCM
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5B=assets, managed 100B, positions= 1T
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Why was bankruptcy costly
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LTCM (deleware chartered runs fund (cayman Islands chartered)
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What does LTCM large derivative holdings mean
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creditors have a lot they can claim
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What led to the downfall of LTCM
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information assemtry, Russian govt debt tanks, loses 4.6B
had to liquidate at worst time |
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Aftermath of LTCM
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bailout- 3.5B
Private banks step up (90% stake) Owners (once managed 1.9B-) fund has to operate with only 10% of earnings |
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Why did LTCM close down
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other market shocks
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negative of bailout in LTCM case
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moral hazard
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Why was the effects of LTCM on market hard to guage
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complex structure
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why do we need banks
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entrepreneurial and financial intermediation
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what does the michigan act do
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state charters can be obtained without permission of state legislature
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What is the dual banking system and what act established it
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national banking act and choose state or national charter
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How did Investment banks begin
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need to raise money for civil war and then industrial rev projects
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what was the initial issue with investment banks
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no regulation
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What leads to p[anic of 1907
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lack of regulation
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alternative sources of credit
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credit unions and savings/loans (mortgage lending)
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What was the Emergency Banking Act of 1913
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national holiday, part of the new deal amd only FR approved banks=allowed in US
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What is the FDIC and HSLIC and when was it started
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Federal deposit insurance company and it was started during the emergency banking act
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Wht was the Glass-Stegall act
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look up
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What did the Bretton woods conference to
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unite internation countries
establish IMF |
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What was the savings+Loan crisis
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1/5 banks fail because of 90s recession
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what caused the savings/loan crisis
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tax reform
moral hazard from 80s leniant real estate lending brokered deposits end of inflation |
