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71 Cards in this Set
- Front
- Back
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Bank Liabilities Transaction Deposits |
A. Demand Deposits B. Interest bearing checking account |
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Bank Liabilities Non-Transaction Deposits |
A. Savings account B. Small certificate of Deposit (< $100k) C. Money Market deposit account (MMDA) D. Negotiable CD (> $100k) |
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Bank Liabilities Non-Deposit borrowing |
A. Borrowing from the FED (discount rate) B. Borrow from other banks (fed fund rate) C. Borrow from Holding Companies (Commercial Paper) |
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Bank Liabilities Other Liabilities |
A. Notes bond issued by bank B. Bills payable |
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Assets Cash Assets |
1. Vault cash 2. Reserve account 3. Deposits in other banks (small banks deposit in large banks) a. Investment counsel b. Collection of checks c. assistance with securities of foreign currencies. 4. Cash items an process of collection |
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Assets Loans |
1. Real estate - Mortgage - short term to building contractors - secularization 2. Business loans 3. Consumer loans 4. other loans - loan to other financial inst - Loan to stock buyers - farmers - loan of fed fund |
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Assets Securities |
1. U.S gov't securities 2. municipal Bonds |
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Assets other assets |
Physical capitol buildings etc. |
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National banking Act (1863) |
Allowed for the federal chartering of "national banks". Granted the states power to limit branching. |
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McFadden Act (1927) |
Prohibited national banks from operating outside the borders of their "home state" and to comply with state banks regulations |
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Bank Holding Company Act (1956) |
Closed the loophole of bank holding companies in one state purchasing a controlling interest in a bank operating in another state. Previously a bank holding company operating in one state could buy an out-of-state bank and operate it as a subsidiary. |
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Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 |
Eliminated most branching restrictions. Allowed states the option of opting out of interstate branching. |
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Glass- Steagall Act (1933) |
1. Ownership of commercial and investment banks were separated. 2. Commercial banks were prohibited from underwriting securities. 3. Banks separated from other types of corp. 4. Banks were permitted to hold as assets only certain types of approved debt.(U.S gov't sec, municipal bond) |
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Glass- Steagall Act Continued |
5. Provisions for deposit insurance (later formalized FDIC Act) 6. Prohibited paying interest on demand deposits 7. Provided for interest ceiling on savings accounts (#6 & 7 are Regulation Q) 8. Establish margin requirements on stock purchase |
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Gramm - Leach - Bliley Act (1999) |
1. allowed securities firms (invest bank) and insurance companies to purchase banks 2. Allowed banks to underwrite insurance, securities and to engage in real estate activities 3. State regulated insurance activity. SEC regulates security activities. 4. Office of the controller of the currency has regulatory power over security underwriting subsidiaries of banks. 5. Federal Reserve still regulates bank holding companies. |
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Bank Holding Company |
is a corporation that owns a controlling interest in one or several banks but is itself not a bank. |
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First Bank of U.S. (1791- 1811) |
A. 20 year charter Alexander Hamilton B. |
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Bank of Canada (1934) |
A. Conducted Monetary policy B. Not Independent of the Gov't C. Finance minister can issue directive to Bank they must follow |
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Bank of England (1694 ?) |
A. Gov't has statutory authority over Bank of England. B. Not very independent of gov't C. Has the power to change interest rate but Gov't can override. |
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Bank of Japan (1882) |
Policy board |
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New Bank of Japan (1998) |
A. object of monetary policy is price stability. B. More independent than old bank. - only have non voting representatives on policy board. C. Finance minister has right to fire bank officials, also controls budget not related to monetary policy. |
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Treaty of Rome |
Benelux, France, w. Germany, Italy (common market) customs union. 1. Free trade within he common market. 2. Common tariffs outside of the common Market. |
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Maastricht Treaty |
1. Formed the EU 2. Set fourth the conditions for the creation of a single central bank and currency.( euro) 3. Similar inflation rates and macro econ for this common monetary policy to work. 4. |
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European Central Bank |
*Most independent central bank in world* 1. Mission is price stability |
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The financial Crisis of 2008 was started by problems with what financial instrument ? |
Mortgage backed securities |
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The FED chair ? |
Janet Yellien |
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The Federal government encouraged home lending to less than credit worthy individuals through? |
Community Reinvestment Act |
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When the Federal Reserve tried to stimulate the economy in response to the Financial Crisis of 2008, banks? |
Kept the money as excess reserves at the Federal Reserves. |
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Which of the following private organizations had to be propped-up by the Government? |
Fannie Mae Freddie Mac |
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Which of the following Banks Failed during the Financial Crisis of 2008? |
Washington Mutual |
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Which well known brokerage house declared bankruptcy during the financial crisis of 2008? |
Lehman Brothers |
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What is a Federal Reserve Note? |
"paper money" issued by the Fed |
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If banks hold a large amount of capitol, the cost is? |
Decreased return on equity |
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Which of the following Federal Reserve liabilities has risen GREATLY since 2008 ? (is unusually high compared to historical norms) |
Reserve Accounts |
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Risk of Insolvency |
As capitol increases there is more money to write off bad loans |
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Return on equity |
As capitol increases there are more owners and hence less return on equity. |
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Bank Balance sheet Bank Assets |
1. real estate loans 2. reserve deposits at the Fed 3. Vault cash 4. Government Securities owned by bank 5. Bank building and other property |
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Bank Balance sheet Liabilities |
1. Demand deposits 2. Interest bearing Checking Accounts 3. borrowing from other banks |
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Bank balance sheet Capitol |
1. Stockholder's Equity 2. Retained Earnings( Bank surplus) |
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First credit card? |
1952 |
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Between 1970 and 2009, which of the following has grown rapidly in terms of share of assets? |
Money market mutual funds |
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Troubled Assets Relief Program (TARP) |
Loans from the treasury to "critical" firms like Goldman socks, citibank, Bank of America, Chase, Gm, and Chrysler. |
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Wall street reform & Consumer protection Act |
ends office of thrift supervision process to sell non bank financial institution assets. - Federal regulation of mortgage backed SEc -federal in consumer financial protection note |
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Quantitative Easing |
Goal: was to increase bank reserves, not to lower interest rate. |
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Operation twist |
The fed would sell short term bonds and would buy long term bonds. |
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When a commercial bank writes off a bad loan, it subtracts the amount from "loans" on the left side of the "T" account and from the " " account on the right side of the "T". |
Capitol |
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Which of the following are reasons why branching restrictions were repealed in 1994? |
-Allows the U.S. banks to compete with big foreign banks. - Allows U.S. banks to obtain greater economies of scale. |
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Interstate bank branching through bank holding companies was ended by ? |
The bank Holding Company act. |
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Ownership of commercial and investment banks were separated under ? |
Glass Steagall Act |
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The Federal Reserve receives most of its income from ? |
Interest on government securities |
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Who owns the stock of the Federal Reserve ? |
Private banks because "member banks" are banks who have bought stock in the Fed |
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What is the name of the committee that enacts monetary policy ? |
Federal Open Market Committee (FOMC) |
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Which of the following did the Federal Reserve directly replace in 1913? |
National Banking System |
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How many members does the board of Directors have for a given Federal Reserve Bank ? |
nine |
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Which of the following cities is not the home of a Federal Reserve Bank? |
Washington DC |
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Which of the following is the BIGGEST Asset of the Federal Reserve ? |
U.S. Government securities |
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The Excess Reserve ratio (e) is the amount of excess reserves divided by ? |
Demand deposits e = e/D |
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If the Federal Reserve increases the money supply and banks refuse to lend this money, which of the following ratios will definitely go up? |
Excess reserve ratio (e) |
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When the Federal Reserve is increasing the money supply via open market operations exactly what are they doing ? |
Already issued government securities |
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Who was the Second Bank of the U.S. president who is considered the "father of discretionary monetary policy ? |
Nicolas Biddle |
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For many years, currency outstanding was the largest liability on the Federal Reserve's balance sheet. Since the financial Crisis of 2008, what has replaced currency as the Fed's biggest liability ? |
Bank Reserves |
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Problems with the capitol market instrument was at the heart of the Financial Crisis of 2008? |
Mortgage Backed securities |
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What are the largest four banks in the United States? |
Chase, Citi, Bank of America, and Wells Fargo |
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For the most part, banks have done what with the reserves created by the Federal Reserves as a response to the Financial Crisis of 2008? |
Saved them |
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What Major commercial bank failed as a result of the Financial Crisis of 2008? |
wamu Washington Mutual Bank |
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well know investment bank that also failed as a result of the Financial Crisis of 2008? |
Lehman Brothers |
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The government agency that actually issues government debt? |
Treasury |
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The president of the Federal Reserve Bank of New York always enjoys voting privileges on the ? |
FOMC Fed open market committee |
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Full time Fed's board of governors ? |
14 years |
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Surprisingly, the FED Reserve gives most of its profits to ? |
Congress |
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dss |
