Bellringer Complete the Chapter 6 online pretest
www.m.g-wlearning.com
Slide 4
Section 6.1 Objectives Explain the conditions that existed in
the banking industry during the 1920s and 1930s Describe the
provisions of the Glass-Steagall Act Explain why the legislation
that created FIRREA and FDICIA was needed. Describe how the
Sarbanes-Oxley Act increases transparency and accountability in
banking.
Slide 5
Setting the Stage for Failure
Slide 6
Causes of Bank Failures During the 1920s and 1930s CauseEffect
Crop failures during the 1920s Small banks in farming areas were
affected as farms were foreclosed. ContagionLack of faith in the
soundness of banks spreads like the common cold. Branching State
banks were largely prohibited from opening branches in other
locations. National banks opened branches that provided stiff
competition to unit banks. Number of BanksThe number of banks
increased more than the populations need for banks did. Reduced
travel costs Because it was too difficult or too expensive to
travel far, people banked locally. Cars and train travel became
less expensive, which allowed people to travel outside of their
town to do their banking. Stock market crash Banks had invested in
the stock market and lost much of their assets during the
crash.
Slide 7
Consequences of the Stock Market Crash Banks and investment
banking operations that owned securities lost most of their
investment. Unemployment was quite high. Customers defaulted on
loans Banks paid higher interest rates to attract depositors. Loans
became unprofitable.
Slide 8
Bank Run Occurs when a large number of depositors withdraw all
of their money from the bank at the same time. Deposits were not
insured at the beginning of the Great Depression.
Slide 9
Checkpoint List four factors that lead to the many bank
failures during the Great Depression.
Slide 10
Glass-Steagall Video: U.S. History ProjectGlass Steagall Go to
http://www.autoenglish.org/listening/crisisRe ading.htm
Slide 11
Checkpoint What were two goals of the Glass-Steagall Act? How
did the Glass-Steagall Act affect interest rates?
Slide 12
Relaxing Depression-Era Regulation... You Research. You Learn.
You Summarize. Federal Home Loan Bank Board Financial Institution
Reform, Recovery, and Enforcement Act (FIRREA) Federal Depository
Insurance Corporation Improvement Act (FDICIA)
Slide 13
Checkpoint Name two federal agencies that were eliminated under
the FIRREA.
Slide 14
Sarbanes-Oxley Act Video: Sarbanes-Oxley Act
Slide 15
Checkpoint What is the major purpose of the Sarbanes- Oxley
Act?
Slide 16
3-2-1 Review: Prepare to Share
Slide 17
Bellringer Short Research Assignment: Google Equator Principles
A student will be randomly selected to provide a detailed
explanation of the concept. The entire class will receive 4 dots if
correct. If unprepared, the entire class will lose 4 dots.
Slide 18
Section 6.2 Objectives Describe the regulations that govern
consumer credit. Explain the need for regulations that focus on
fair access to credit.
Slide 19
ACT RIGHT! Protecting Borrowers Truth in Lending Act Fair
Credit Reporting Act Fair Credit Billing Act Credit CARD Act
Promoting and Ensuring Fair Access to Credit Community Reinvestment
Act (CRA) Home Mortgage Disclosure Act (HDMA) Equal Credit
Opportunity Act (ECOA)
Slide 20
Group Activity You will be split into 2 groups: Protecting
Borrowers Promoting and Ensuring Fair Access to Credit Create a rap
song thoroughly explaining your assigned topic Provide written (or
typed) lyrics Provide the instrumental music Be prepared to be
recorded. Rubric
Slide 21
Section 6.2 Quiz 1.What are the two most important disclosures
that are required under the Truth in Lending Act? 2.What is the
purpose of the Fair Credit Reporting Act? 3.According to the Fair
Credit Billing Act, how long does a consumer have to dispute an
error on his or her account statement? 4.Which law requires that
credit card issuers state the monthly payment amount necessary to
pay off a cardholders existing balance in 36 months? 5.Under the
Equal Credit Opportunity Act, lenders may not discriminate against
potential borrowers based on what factors?
Slide 22
Bellringer APR = Total interest paidX 360 days Loan
amountLength of loan in days Bank A will loan you the $1,000 for
six months (180 days), and you must repay the $1,000 plus $50
interest at the end of the six months. APR = $50/1,000 X 360/180
=.05 X 2 =.10 = 10%
Slide 23
Section 6.3 Objectives Compare and contrast deregulation laws.
Explain the importance of compliance in the banking industry.
Slide 24
Deregulation (Prepare for Dictation) Depository Institutions
Deregulation and Monetary Control Act (DIDMCA) Garn-St. Germain Act
Interstate Banking and Branching Efficiency Act Gramm-Leach-Biley
Act
Slide 25
Checkpoint Why did a movement to deregulate banks start in the
1980s? How much was federal deposit insurance under DIDMCA? What is
the difference between money market deposit accounts (MMDAs) and
money market mutual funds (MMMFs)? Which law did the Interstate
Banking Act override?
Slide 26
Compliance Dual banking system (both states and federal
government pass and enforce bank laws Functional areas include:
Advertising; Anti-money laundering; The Bank Secrecy Act;
Depository operations; Lending; Loan servicing; and Loss
prevention
Slide 27
Compliance Plan for compliance must be strong. Plan should:
Identify areas of high risk Establish internal controls Provide for
an audit by outside source on ongoing basis Assign someone in
organization to manage all compliance matters (compliance officer)
Provide training to all staff working in areas where compliance is
an issue Set up system to verify bank customer identity
Slide 28
Checkpoint What are the functional areas of bank
compliance?
Slide 29
Individual Activity Decide if you are in favor of bank
deregulation or not. Outline 3 main reasons for your position.
Defend your position in 3.5 essay format. Rubric
Slide 30
Unit 2 Summative Assessment Get Ready! Handout will be
provided!!!