Midterm 2 Review

Midterm 2 Review - BANKING IN A CHANGING WORLD Chapter 4:...

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BANKING IN A CHANGING WORLD Chapter 4: Depository Institutions: activities and characteristics Advances: funds that savings and loan associations borrow from the Federal Home Loan Banks. Bank holding company: a firm that owns one or more banks, usually by holding all or most of the equity shares of those banks. Bank insurance fund (BIF): created in 1989 and administered by the federal deposit insurance corporation, this fund insures deposits of banks. Banking act of 1933: this law created the federal deposit insurance corporation (FDIC) and establishes rules on commercial banks’ activities in the investment banking area, popularly referred to as the Glass-Steagall Act. Basle committee on banking regulation and supervisory practices: an international committee consisting of the central banks and supervisory authorities of the large industrial and financial economies of the world. Capital adequacy standards: rules regarding the capital requirements of depository institutions. Capital requirements: governmental rules about the percentage of a depository institution’s funding that must be in the form of equity, or owner-supplied capital. Central liquidity facility (CLF): managed by the National Credit Union Administration, the CLF provides short-term loans to member credit unions with liquidity needs. Charter: the authorization, by either a federal regulatory agency for national banks or a state agency for state banks, for a financial institution to engage in banking activities. Comptroller of the currency: A US government agency with responsibility for chartering national banks and monitoring some of their key activities. Core capital: tier 1 capital requirements for a commercial bank consisting basically of common stockholders’ equity, certain types of preferred stock, and minority interest in consolidated subsidiaries. Corporate credit union: an entity that provides a variety of investment services only to natural person credit unions. Credit risk (or default risk): the risk that the issuer or borrower will default on its obligations. Credit risk-based capital requirements: capital requirements for a depository institution that are based on the credit risk of its assets. Credit union: an organization for people with some common bond, which accepts their savings as deposits and lends them money for purchases, mostly of consumer goods. Demand deposit: a checking account that pays no interest and funds can be withdrawn upon demand. Deposit computation period: the period over which a bank must calculate its actual reserves in order to determine if it has met the required reserve ratio. Depository institutions deregulation and monetary control act of 1980 (DIDMCA): passed by congress in 1980, this act phased out the ceilings on interest rates on time deposits and certificates of deposits.
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Midterm 2 Review - BANKING IN A CHANGING WORLD Chapter 4:...

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