Banking Economy

Econ 340

Money and Banking

Chapter 12 Problem Set: U.S. Banks and Bank Regulations

1. What are differences between state banks and national banks? Is the Bank of America a national bank? How about Emprise Bank? How can you tell whether a bank is a state or national bank? What is the banking law that created national banks?

2. Which regulatory agency has the primary responsibility for supervising the following categories of financial institutions?

a. National banks

b. Bank holding companies

c. Non-Federal Reserve state banks

d. Federal Reserve member state banks

e. Saving & Loan associations

f. Foreign banks in the U.S.

3. What is the McFadden Act? What is the banking law that overturned the McFadden Act?

4. What is the Glass-Steagall Act? What is the law that repealed the Glass-Steagall?

5. What are superregional banks? How do they differ from money center banks?

6. What are benefits of consolidation of banking organizations? Is bank consolidation through mergers and acquisitions likely to create banks that are “too big to fail”?

7. What are differences between the German style universal banking and the British-style universal banking?

8. What are international banking facilities (IBFs)? What is the purpose of establishing IBFs?

9. What is the Regulation Q? How has it contributed to the rapid growth of money market funds in the 1970s and 1980s?

10. How does commercial paper help corporations? Is this also beneficial to commercial banks?

11. What are benefits of securitizing mortgage loans to commercial banks? Who have been major buyers of mortgage backed securities (MBS)? What happened to these investors?

12. What is disintermediation? What are the reasons for this? How does it affect banks?