\text{31} & \text{Paid employees salaries (\$2,500), advertising expense (\$1,300), and utilities expense (\$1,700). Consumer-protection regulations donot involve what? A promise to lend to a corporation in the next 12 months may be weighted at 100. It creates an "orderly liquidation" option (alternative to bankruptcy or bailout), and a "living will" requirement. The latter is generally portfolio management; investment advisors don't need to be BDs, but place orders w/ BDs on behalf of clients. Since 2000, trading in futures has been allowed to go OTC (off exchange). Credit unions are only ever chartered for affinity groups; separate insurer. What is one thing the government must do to enforce consumer-protection regulations? }\\ An entity that trades securities for client accounts (broker) or its own (dealer). This problem is addressed by Title II of the DFA, the "orderly liquidation" provision. \text{George} & \text{$23,000$} & \text{8} & \text{Annually}\\ \end{matrix} $$Similar to the rules that apply to BHCs and depository institutions. Regulates alongside the SEC. To ensure competition and protect consumers. What does the enforcement of antitrust laws do? What does increasing consumer confidence do? risks for PE and hedge funds in buying banks. 1 is good and 5 is bad for each individual part. Similar to private placement agency activities, except that the BD buys the securities from the issuer itself. Borrowing money from a bank c. Performing a service on account for a customer d. Purchasing supplies on account, Frankinfurter Limited decided that it wanted to improve earnings. Under Title VII of the DFA, the CFTC has been given authority to create rules governing swaps markets. Reserve fund used by the FDIC to close failing banks. "conversions" of Goldman Sachs and Morgan Stanley. In addition, SLHCs are now regulated by the FRB, like BHCs. Why are bank regulators more concerned about a large bank failure than a small bank failure? Briefly describe the Glass-Steagall Act. }\\ Financial holding companies (FHCs) are a category of GHCs created by the GLBA. Established uniform reserve requirements for all depository institutions, Depository Institutions Act of 1982 (Garn-St. Germain), 1. }\\ To do this, it understated its expenses by omitting unpaid expenses from the accrued liabilities account at year end. Producers pass along the costs of compliance. Sort the statements below into the correct order in which the federal budget is prepared. Collecting cash from a customer on an account receivable b. Explain how the Sarbanes-Oxley (SOX) Act improved the transparency of banks. }\\ Which of these has been a trend in the 20th century? Title II of the DFA is addressed to the "too big to fail" problem. Citibank, N.A. They can only invest in bonds that are considered "investment-grade" quality. Virtually all BDs are members of FINRA. The Basel (CH) Committee on Banking Supervision has created G-20 capitalization requirements so as to prevent a race to the bottom, contain systemic risk. All investment banks are broker-dealers (BDs); "investment bank" is applied to large BDs which also engage in other activities -- underwriting, dealing and M&A advising -- in addition to buying-selling securities for customer accounts. This is because the activity of an investment bank (BD) is "financial in nature," and can hence be pursued by an FHC. Office of Thrift Supervision. Firms that accepted deposits could not underwrite stocks and corporate bonds. Hasty movements of money into and out of a country's economic system, A. particular activities "closely related to banking". During GFC: (1) was opened to BDs; and (2) allowed loans of up to 90 days.$$ Which of these isnot necessary for the enforcement of consumer-protection regulations? It increases the tax rate as income rises. A derivative transaction in which parties exchange assets or obligations -- e.g., trade a fixed interest rate for a floating rate -- with one party paying a fee to the other (often in exchange for greater certainty). Each bank gets a CRA rating. Censorship is a government-imposed limit on which of the following? FCMs must register with, and are regulated by, the CFTC; they also have an SRO, the National Futures Association (NFA). Can a BHC own a broker-dealer, investment advisor, credit card firm or mortgage lender? 9 percent charged on all purchases of non-necessities. If banks need to maximize growth to fully achieve economies of scale, they would need to grow nationwide. Title VII of the DFA requires all swaps transactions to be cleared by a DCO, with two exceptions (1) no DCO will clear it because it has unusual, customized ("bespoke") terms; or (2) the swap qualifies for an "end-user" exemption -- i.e., one with a non-financial entity seeking to hedge commercial risk. Banks are not generally allowed to invest on their own account in debt securities, but an exception is made for investment-grade debt. Derivative activities were ruled permissible for a bank under 24(7), setting forth the powers of national banks. }\\ Federal statute that sets out the powers of a national bank. Interstate banking restrictions could prevent them from fully achieving economies of scale. What speeds up the flow of investment and wages in the circular flow of the free-market system? Si quieres estar al da y conocer todas las noticias y promociones de Bodegas Torremaciel. \text{145 Hiking Equipment} & \text{520 Salaries Expense}\\ This was never prevented by G-S, since brokering is. \text{9} & \text{Paid \$7,000 cash and signed a \$28,000 note payable to purchase land for an office site. Under FRB Regulation O, banks are limited in their ability to extend loans to officers, directors and principal shareholders. The four people below have the following investments. This has been folded into the OCC. Why does the free-market system require government regulation? It says that banks can engage in activities that are "the business of banking or incidental to banking," which includes lending, deposit-taking, investment advice, etc. Which of the following is true about tariffs? \text{2} & \text{Issued Check 515 to Town News for a$\$75$ ad. FCMs must register with, and are regulated by, the CFTC. Exceptions: (1) de minimis (less than 5% of the class of voting securities); (2) "debt previously contracted" (DPC), usually shares held during work-out of a bankrupt borrower (can only be held for a limited time); and (3) shares in companies engaged in activities "closely related to banking.".

}\\ IBs are exempted from the BHCA, meaning the parents of IBS are not required to observe non-banking prohibitions. regulation of highly leveraged transactions, a result of concern about the popularity of highly leveraged loans, bank regulators monitor the amt of HTLs, loans in which liabilities are greater then 75% of assets, monitor a banks exposure to loans to foreign countries, banks are restricted to a max loan amt of 15% of their capital to any single borrower (up to 25% if the loan is adequately collateralized), - banks are regulated to ensure they attempt to accommodate the credit needs of the communities in which they operate, requires banks to meet credit needs of qualified borrowers in the community, even those with low or moderate incomes, Regulation of Bank Investment in Securities, -banks arent allowed to use borrowed or deposited funds to purchase common stock. Can only happen with: (1) rec from 2/3 of FRB, seconded by 2/3 of FDIC *or* 2/3 of SEC. Allowed depository institutions to offer money market deposit accounts (MMDAs), Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), 1. A BHC and subsidiaries are barred from holding any voting shares in, or more than 33% of the equity of, any company that is not a US bank. DFA commissioned a study on whether this would reduce bad behavior; if a fiduciary duty were imposed, a BD might be barred from (1) representing an issuer in underwriting securities; while (2) simultaneously advising other clients on the same securities. c. \$13,800.

Can be adjusted by the FSOC. The G-20 has considered creating a category of "G-SIFIs.". Consequently, the risk of other banks is perceived to be higher than before.

This is called a(n): 12. Desimone signed a note payable to the bank in the name of the business.

A BHC and subsidiaries may hold shares due to a "debt previously contracted" (DPC), e.g., as a result of a borrower's bankruptcy. These prudential standards are higher than those governing other BHCs, and relate to capitalization and liquidity. The anti-tying provision of the BHCA. Which merit good does the U.S. government provide through a payroll tax? How can recent government spending be best described? Title I of the DFA creates a Financial Stability Oversight Committee, charged with overseeing the financial industry and identifying / preventing systemic risks. Title VII of the DFA imposes two key requirements on swaps market: (1) certain actors (SDs and MSPs) must register with the CFTC; and (2) swap transactions must be cleared by a derivatives clearing org (DCO).

D. 20%. Since lending or underwriting division of a large financial institution may have material non-public information re: clients, "Chinese walls" must be erected within a firm to keep that info from traders / investment advisors. Which items have a zero tolerance between the Loan Estimate and the Closing Disclosure. Creates the system of national banks to be chartered by the Comptroller of the Currency and establishes a uniform currency. (II.5 applied to trading book.) The government might enact a price ceiling in order to accomplish what? In general, BHCs and subsidiaries are limited in their ability to own companies not US banks. A thrift (S&L) holding company.

We are leaving to the Expo in CHINA, so it's time to pack the bags to bring a little bit of La Rioja and our house on the other side of the world. \begin{matrix}

Banks are required to pay a premium on deposits, to maintain a minimum level of capital, and are restricted to a maximum loan amount to any single borrower. A particular foreign bank branch is not required to meet capitalization requirements on its own; rather, the capitalization of the bank as a whole is measured. It just doesnt make sense to penalize my profits when there hasnt been any loss in value from using the assets. Taxes differ from tariffs because taxes are what? ", three non-banking activities allowed to FHCs (but not other BHCs). This enables a single person or team to provide banking and BD services to a particular client. Set up to promote international trade and investment, these had limited deposit-taking and lending powers, but have always had the ability to branch interstate (which is relatively new to banks). }\\ 1. B. less than 10%. Strengthened regulations to insured institutions, Reigle-Neal Interstate Banking and Branching Efficiency Act of 1994, Eliminated most restrictions on interstate bank managers and allowed commercial banks to open nationwide branches, Financial Services Modernization Act of 1999 (Gramm-Leach-Bliley Act), 1. A true BHC can be a US company or a foreign bank (but not the branch or agency of a foreign bank -- those can only be "deemed" BHCs). \text{General Ledger} & \text{ }\\ \hline \text{150 Rafting Equipment} & \text{525 Utilities Expense}\\ \text{110 Accts. They cannot use borrowed or deposited funds to purchase common stock. Pay.Peak Equipment Inc.}\\ Authorizes FSOC; relates to, inter alia, SIFIs. Tariffs differ from taxes because tariffs are what? $$, Which of the following transactions will increase an asset and increase stockholders equity? A collection of issues related to the Bank Secrecy Act post-9/11, but not actually part of the PATRIOT Act -- inc. sanctions imposed by the Office of Foreign Assets Control (OFAC) at Treasury, and its "Special Designated Nationals" (i.e., suspected terrorist) list. However, this has an enormous "closely related to banking" exception, which allows for ownership of firms that make loans, broker securities, provide investment advice, etc. A fusion of tradition, modernity and surroundings. Regulators are concerned about this risk. }\\ What are the two primary reasons for Bank Failures? (This is one way in which the FRB regulates money supply.). So these thrifts / industrial banks began taking demand deposits. Inventory and purchases data for June follow: A PE or hedge fund that acquires a bank must be careful not to obtain more than 24.9% of voting shares in the bank, or it will be subject to the BHCA. Explain the accounting concept of depreciation and include a brief example in your explanation showing that over the life of the asset the change in value approach to depreciation and the allocation of cost approach will result in the same total effect on income. (This, some say, is what led to 30:1 leverage ratios at Bear and Lehman Bros.), Banks were long exempt from the definition of "broker" and could thus broker securities without registering as a BD. Pay.Premier Processors}\\ FSOC has the power to set SIFI standards. Proposed rule would apply this 50 billion minimum to non-US banks based on worldwide -- and not just US -- assets. Which management assertion has been violated. At the end of each quarter, Patti deposits 1,200 into an account that pays 10% interest compounded quarterly. The president writes a preliminary budget proposal. \end{matrix} \text{9} & \text{Sale} & \text{(1,400)}\\ prepare the President's budget and suggest fiscal policies. Rule 23A of the FRA limits a bank's ability to engage in "covered" transactions with its affiliates (e.g., to extend credit or purchase assets the affiliate holds or the affiliate's own securities). Not on this test. Typically small "community" banks; these are insured and regulated by the FDIC (rather than the FRS Board of Governors). The SRO for broker-dealers, which was created by an NASD-NYSE merger. One negative effect of the SOX Act is that publicly-traded banks have incurred expenses of more than 1 million per year to comply with the costs of satisfying the SOX provisions. A BHC and subsidiaries may purchase less than 5% of the voting securities in a firm that is not a US bank. A very small category; some states, like Maine, allow banks to operate without FDIC insurance so long as they have no retail business. These banks are significantly leveraged, and if assets decline in value and incur losses, capital can erode to the point of insolvency, System that includes both a Federal and a State regulatory system. Let's apply the economics of taxation to romantic relationships. The location of a national bank's principal office determines which state laws apply to its operations around the country. \text{15} & \text{Received a check for \ 4,800 from Feldman, Jones 8 Ritter in payment of their account, Receipt 252. b.15,400. For how long will a temporary license issued by the commissioner following a transfer application by a salesperson last. Under DFA Title VII, required to register with CFTC. The Dodd-Frank Act, a 2010 law creating a set of new financial industry regulations. Establishes the finance stability oversight council (FSOC) to reduce risks to the financial system. What is the basic conflict on regulatory requirements? }\\ E. more than 20%. What is the structure of a bank that fails due to Insufficient liquidity? The capital requirements were imposed among numerous countries so that banks from any of these countries would be subject to the same rules and would not have an unfair advantage. Gramm-Leach-Bliley Act (1999), which repealed, four major areas of FRB regulation of BHCs. This law has a number of different components. Although Title VII of the DFA requires all swaps to be cleared by a DCO, this is not true of swaps in which one party is an "end user" -- i.e., one with a non-financial entity seeking to hedge commercial risk. I thought that the purpose of the balance sheet was to reflect the value of my business and that the purpose of the income statement was to report the net change in value or wealth of a company. The only securities that a bank is allowed to deal in or underwrite -- viz., those issued by the US government. Tier II ratio = Tier II capital / total risk-weighted assets. Once exempt from rules like those governing BHCs, FDIC has extracted commitments quite like non-banking, source of strength rules.$$ What does it mean to have an inelastic demand for your boyfriend or girlfriend? Provide examples of off-balance activities. (1) Dealing (buying securities for one's own account for resale); (2) underwriting (buying securities from the issuer for resale); and (3) proprietary trading (investment of the BD's own funds in the market). How much in total liabilities does it owe? Environmental-protection laws are good for the economy because they do what?