FinancialMarketsChap4 - Financial Markets Chapter 4 Key...

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Financial Markets Chapter 4 Key Terms and Key Points Key Terms: 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 and establishes rules on commercial banks’ activities in the investment banking area, popularly referred to as the Glass-Steagall Act Basle Committee on Banking Regulations 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 U.S. 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 obligation 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, the Depository Institutions Deregulation and Monetary Control Act phased
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This note was uploaded on 01/27/2010 for the course ECON 252 taught by Professor Robertshiller during the Spring '08 term at Yale.

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FinancialMarketsChap4 - Financial Markets Chapter 4 Key...

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