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Exam 14: Other Lending Institutions: Savings Institutions, Credit Unions, and Finance Companies

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Question 31

True/False

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Savings institution deposits and bank deposits are backed by two different insurance funds.

A) True
B) False

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Question 32

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The QTL test requires that thrifts

A) limit the amount of mortgage-related assets on the balance sheet to improve diversification.
B) invest in a minimum percentage of government-backed securities to protect their mortgage loans.
C) lend no more than 80 percent of the value of a home to a borrower to ensure mortgage safety.
D) keep 35 percent of their assets in safe liquid investments to ensure adequate deposit liquidity.
E) invest at least 65 percent of their assets in mortgages or mortgage-related assets.

F) C) and D)
G) D) and E)

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Question 33

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Which one of the following utilizes the least amount of deposits as a source of funds?

Which one of the following institutions is the least regulated?

Credit unions are not taxed and,as a result,well-run credit unions are often able to charge lower loan rates and pay slightly higher deposit rates than banks.

Traditionally,most credit union members had a common employer,but increasingly the required commonality is a common location of either residence or workplace.

How do the primary risks of credit unions differ from banks? from savings institutions (SIs)? from finance companies?

In 2013,the largest U.S. savings institution was

The largest U.S. banks are larger than the entire credit union industry.

Which of the following trends in the number and industry assets of savings institutions is/are correct? I. The number of savings institutions has fallen over time. II. The number of savings institutions has increased over time. III. Total industry assets fell during the recession of the late 2000s. IV. Total industry assets are falling over time. V. Total industry assets are stable but the number of savings institutions has fallen.

Finance companies enjoy several advantages over banks. These include all but which one of the following?

In 2013,_______________ had on average the greatest amount of equity as a percentage of assets and ______________ had the lowest.

What are home equity loans? What has happened to the average balance of home equity loans in recent years? Why do finance companies prefer home equity loans to unsecured debt?

The American Bankers Association and others are seeking to limit growth of credit unions. What is the basis for the bankers' concern? What does the credit union industry argue? What kind of limits on credit unions are the bankers seeking?

Historically,most savings institutions were established as