1) Disclose and support the rating.

2) Describe the principal factors that contributed to rating.

3) State overall improvement or decline of compliance posture since LX.

-Scope

-Complaince rating and basis for rating

-ECC on the CMS

-Violations and other matters of supervisory concern

-Enforcement actions

-CRA evaluation

-Meeting with management

When one or more of the following circumstances are present:

-Significant problems that require consultation with the RO

-An informal or formal enforcement action is recommended

-The proposed compliance rating is a 3, 4 or 5

-The proposed composite CRA rating, state rating or multi-state rating is "Needs to Improve" or "substantially noncompliant"

-The Board requests a meeting

When a lender applies a racially or otherwise neutral policy or practice equally to all credit applicants, but the policy or practice disproportionately excludes or burdens certain persons on a prohibited basis.

EXAMPLE: Bank won't make loans on single family residence for less than $60k.  This policy could disproportionately exclude potential minority applicants.

-Overt evidence of disparate treatment

-Comparative evidence of disparate treatment

-Evidence of disparate impact

ECOA

-Race

-Nat Origin

-Color

-Sex

-Religion

-Marital Status

-Age

-Income from Public Assistance

-Exercise rights under the Consumer Credit Protection Act

FHA

-Race

-Color

-Nat Origin

-Religion

-Sex

-Familial Status

-Handicap Status

Outstanding at LX - no more than once ecery 60 months

Satisfactory at LX - no more than once every 48 months

Procedures for an appeals process for the review of material supervisory determinations by the Supervision Appeals Review Committee (SARC).

Institution has 60 calendar days from receipt of ROE to file request for review of determination with Director of DCP.

30 calendar days from receipt of above review results to appeal to SARC.

-Termination of insurance

-C&D

-Temporary C&D

-Removal and Prohibition Order

-Temporary suspension order

-Suspension Order

-CMPs

-Review compliance posture of a newly chartered institution.

-Bank involved in a recent or proposed merger.

-Recently converted state non-member bank.

-Review process on corrective action since LX.

-To ascertain an institution's compliance with an enforcement action.

-To investigate problems brought to the FDIC's attention.

At least 2 years or until the next exam, whichever is later.  Retain for longer (or until corrective action or other resolution):

-TIL violation with reimbursement

-FL violation with referral to DOJ or HUD

-When enforcement action is in place

-Criminal referral has been made

-Other reasons as directed by RD or FOS

What is the primary function of a bank’s management?

a.  Establish CEO and executive vice president pay and benefits

b.  Establish overall policy, including oversight of the Board of Directors

c.  Serve as an independent director of the audit and asset/liability committee

d.  Ensure compliance with Board policies and directives

Which of these should be considered in risk-scoping an examination?

1.  Proposed consume regulations

2.  Management changes

3.  Prior enforcement activity

4.  Consumer complaints

a.  1, 3, and 4

b.  2, 3, and 4

c.  2 and 3

d.  3 and 4

Michelle Cahill, the bank’s new president and compliance officer, plans to introduce a new overdraft protection plan.  She has read FDIC guidance on ODP and wants to make certain that the bank follows this guidance.  Thus, she holds a meeting with new account-opening personnel and tellers, describing the program and each employee’s responsibility.  What CMS component does Ms. Cahill’s actions demonstrate?

a.  Audit

b.  Training

c.  Monitoring

d.  Board oversight

An institution that receive a compliance rating of  a 3 at the last exam should be examined again within:

A.      12 – 24 months

B.      24 – 30 months

C.      48 – 60 months

D.      Less than 12 months

A.12 – 24 months

Which of the following is not an element of an effective compliance program?

A.    Policies and Procedures

B.     Training

C.     Audit

D.    Monitoring

Answer: C

5. Which of the following is NOT a component of a Compliance management system?

a)         Board of Director minutes

b)         Monitoring

c)         Policies and Procedures

d)         Training

6. Since the previous examination, the bank has received more than 50 percent more requests for financial information from the IRS, Cook County Circuit Court, DuPage YMCA, and the office of US Senator Obama.  Which of the following actions would the FDIC examiners like to see the bank do regarding these requests?

a)         The bank has put all requests in a box in the safe deposit vault

b)         The bank created policies and procedures establishing guidelines to fulfill these requests; provided responses to the IRS, Cook County, Du Page County YMCA; and US Senator Obama; and retained all applicable documentation.

c)         The bank created policies and procedures establishing guidelines to fulfill these requests; provided responses to the IRS, Cook County, and US Senator Obama; and retained all applicable documentation.

d)         The bank instructed the mailroom attendant to file all requests in a drawer until the compliance officer returned from medical leave in two months.

c)The bank created policies and procedures establishing guidelines to fulfill these requests; provided responses to the IRS, CookCounty, and US Senator Obama; and retained all applicable documentation.

7. During the current examination, the EIC has noted that Board and Senior Management Oversight and the Compliance Program are weak, and audit is adequate.  The bank has repeat violations in HMDA and flood with unintentional but serious harm to consumers, and reimbursable violations in Truth in Lending.  Additionally, the compliance officer position is vacant and the most recent safety and soundness examination was rated a “3.”  Which of the following actions would be appropriate for the EIC to pursue?

a)         Assign a “2” rating with a Cease and Desist Order

b)         Assign a “2” rating along with a Memorandum of Understanding

c)         Assign a “3” rating along with a Memorandum of Understanding and CMPs for HMDA and Flood

d)         Assign a “3” rating along with a Memorandum of Understanding

8. Which of the following require consultation with the Regional Office?

a)         Civil Money Penalties for Privacy infractions

b)         Indications of Unfair or Deceptive Act or Practices

c)         A “2” rated de novo bank

d)         A visitation only report for a de novo institution

b)Indications of Unfair or Deceptive Act or Practices

9. Which of the following are non-deposit products?

a)         Mutual funds, annuities, and life insurance

b)         Savings, NOW, and MMDA accounts

c)         Savings account

d)         Private Mortgage Insurance

a)Mutual funds, annuities, and life insurance

1. Examiners should utilize the following guidance when determining if a pattern or practice exists for reimbursement purposes during the review of their initial sample of loans:

A. If the frequency of a violation represents at least 10 percent of the credit transactions sampled that have the same features or that are subject to the same regulatory requirements.

B. Within the particular category of credit transactions, 2 or more violations of the same type have been identified. 

C. Examiners should determine if the cause of the violation is other than a random error.  This may require the examiner to expand the sample of types of loans with violations to verify if the hypothesis of a particular pattern or practice is correct.

D. None of the above.

E. All of the above.

1. The bank you are examining is being accorded a “3” rating for Compliance.  The RO agree to accept a Bank Board Resolution to address the weaknesses identified.  During your Board of Directors meeting you inform the Board that the:

A. Board Resolution is a formal agreement between the Regional Director and the Board.

B. Board Resolution is an informal agreement between the Regional Director and the Board.

C. Board Resolution is a formal agreement enforceable by the FDIC.

D. Board Resolution is an informal agreement not enforceable by the FDIC.

    _______ is a proactive approach by the institution to identify procedural or training    weaknesses in an effort to preclude regulatory violations.

For a large bank, which is not a test used in an evaluation?

A. Lending

B. Information

C. Investments

D. Services

1         Which of the following institutions is exempt from the coverage of CRA?

a.       State National Bank, a $15 Million bank in a rural community, not located in an MSA.

b.       Trust Company, Inc., and institution offering only trust services located in large urban area.

c.        ACME Savings Association, a federal thrift institution located in a medium-sized Midwestern city, included in an MSA

d.       First National Bank, a $250 million bank located in a rural area, not in a MSA

What is not the primary objective of conducting interviews with community contacts?

a.   Gather information that might assist in the development of a community profile.

b.   Determine opportunities for participation by financial institutions in helping to meet local credit needs.

c.   Understand perceptions on the performance of financial institutions in helping meet local credit needs.

d.    A summary of the consumer’s liability for unauthorized transfers

e.   Provide a context on the community to assist in the evaluation of an institution’s CRA performance.

1^st State bank is examined under the lending test.  Which of the following is not relevant under the lending test?

a.       The number of mortgage loans FSB made during the calendar year

b.       The racial and gender characteristics of FSB’s lending staff

c.        The geographic distribution of FSB’s small business loans.

d.       FSB’s new small balance home improvement loan program, which allows loans in amounts as small as $500

a.       The bank’s CRA strategic plan                   

b.       The bank’s loan-to-deposit

c.        The geographic distribution of loans

d.       The % of loans in the bank’s assessment area