Term
| Why did Thomas Jefferson dislike banks? |
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Definition
felt they were the
symbol of concentrated power |
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Term
| What did Alexander Hamilton want to do about banks? |
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Definition
wanted to establish a
central bank like the Bank of England |
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Term
| When was the first bank of the US charted? |
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Definition
|
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Term
| How long was the Second Bank of the US charted for? |
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Definition
|
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Term
| How did Thomas Jefferson try to kill the Central Bank? |
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Definition
| by withdrawing government deposits and putting them in his favorite state banks |
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Term
| When was the charter removed for the Second Bank of the US? |
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Definition
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Term
| What did the National Banking Acts of the 1800's accomplish? |
|
Definition
~ Banks could receive national charters
~ Established capital and reserve
requirements on deposits and banknotes
~ Banknotes could be backed only by U.S. government securities owned by the bank but held with the U.S. Treasury
~ Office of the Comptroller of the Currency (OCC) under the control of the Treasury |
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Term
| What were the weaknesses of the National Banking System in the 1800's? |
|
Definition
-Lacked an efficient national payments system
-Money supply was not flexible so it could respond to changes in demand for money
-No lending/borrowing mechanism to address liquidity problems when they occur
-the money Supply depended on interest rates in the government bond market
rather than on the seasonal/cyclical needs of the nation for currency |
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Term
| What was the Federal Reserve Act? |
|
Definition
| A compromise between the previous system of independently owned banks and other countries' system of a single central bank |
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Term
| How many governors does the Federal Reserve System have? |
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Definition
|
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Term
| How many districts does the Federal Reserve System have? |
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Definition
|
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Term
|
Definition
| Federal Open Market Committee |
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Term
| What does the Federal Open Market Committee consist of? |
|
Definition
| Board of Governors and 5 Reserve Bank Presidents |
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Term
| How much must member banks purchase from the Fed in stocks? |
|
Definition
| 6% in an amount equal to their own capital and surplus |
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Term
| What is unique about the stock member banks must purchase from the Fed? |
|
Definition
| It does not have ownership rights, but they do give dividends |
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Term
| What do member banks vote for in regards to the Fed? |
|
Definition
| Class and Class B directors |
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Term
| What does the Federal Reserve's board of directors encompass? |
|
Definition
3 Class A directors
3 Class B directors(commerce, agriculture, industry)
3 Class C directors |
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Term
| Who appoints the 3 Class directors on the Fed's board of directors? |
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Definition
|
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Term
| What does the board of governors do? |
|
Definition
-determine the monetary of policy of the Fed
-Approves discount rates and sets a federal funds target rate
-Controls the money supply through the Fed Open Market Committee
-Supervises member banks
-Establishes and administers protective regulations and consumer finance
-Oversees Fed banks |
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Term
| Who appoints members to the Fed's board of governors? How long is their term? |
|
Definition
|
|
Term
|
Definition
| Federal Open Market Committee |
|
|
Term
| Whom does the Federal Open Market Committee consist of? |
|
Definition
| The Board of Governors and 5 Reserve Bank Presidents |
|
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Term
| What does the Federal Open Market Committee do? |
|
Definition
| -Coordinates the timing of purchases and sales of securities by the reserve banks |
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Term
| What does Open Market Operations mean? |
|
Definition
| the Fed's buying and selling of securities in the open market |
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Term
| What reserve bank has a permanent president position? How do the other banks fill the president position? |
|
Definition
| New York, serve one year on a rotating basis |
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Term
| Who votes on policy decisions in the Reserve Bank system? |
|
Definition
| Only the 5 presidents who are committee members |
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Term
| Where are most of the Fed Reserve Banks open market operations carried out at? |
|
Definition
| The Fed Reserve Bank in NY |
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Term
| What does the Federal Advisory Council do? |
|
Definition
| Provides advice and general information to the Board |
|
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Term
| What does the Consumer Advisory Council do? |
|
Definition
| Advises the Board on its responsibilities under the Consumer Credit Protection Act and other matters in the area of consumer financial services |
|
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Term
| What does the Thrift Institutions Advisory Council do? |
|
Definition
| Provides info and views on the special needs and problems of thrift institutions |
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Term
| What do most people want the Fed Reserve to do for the country? |
|
Definition
-encourage econ growth
-reduce unemployment
-control inflation
-moderate long term interest rates
-regulate the nations money supply
-influence the value of the dollar relative to other currencies |
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Term
| What is a Monetary Policy? |
|
Definition
| involves regulation the growth of the money supply and regulating its cost and availability |
|
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Term
| Why was the Fed Reserve established? |
|
Definition
-Help the money supply to contract and expand as required by economic/financial conditions
-Serve as bankers' bank in times of economic/financial crisis
-Provide a more effective check clearing system
-Establish a more effective regulatory system |
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Term
| What is the primary function of the Fed? |
|
Definition
| promote economic/financial stability |
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Term
|
Definition
Fed actions that stimuh1te or repress the level of prices
or economic activity |
|
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Term
| What are Defensive Activities? |
|
Definition
| Fed activities that contribute to the smooth, everyday functioning of the economy |
|
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Term
| What is a Accommodative Function? |
|
Definition
| Fed effort to meet credit needs of indv. and institutions, clearing checks, and supporting depository institutions |
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Term
| What are the basic policy instruments of the Fed? |
|
Definition
-Changing reserve requirement
-Changing the discount rate and/or the federal funds target rate
-Conducting open-market operations |
|
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Term
| What is a Fractional Reserve System? |
|
Definition
| a system in which banks are required by the Fed to hold reserves equal to a specified percentage of deposits |
|
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Term
| What is the Discount Rate Policy? |
|
Definition
| interest rate that a bank must pay to borrow from it's regional Reserve Bank |
|
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Term
| Can each reserve bank set it's own discount rate? |
|
Definition
| yes, but usually they keep it the same across the board |
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Term
| If the fed lowers the discount rate what would happened and what would cause them to do it? |
|
Definition
-interest rates would decrease
-recession period |
|
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Term
| What does Open-market Operations mean? |
|
Definition
| buying and selling of securities in the "open market" by the Fed through the FOMC to alter bank reserves |
|
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Term
| What happens if the Fed buys securities? |
|
Definition
| It puts money into the economy and interest rates decrease |
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Term
|
Definition
|
|
Term
| What does Quantitative Easing mean? |
|
Definition
| a non-traditional monetary policy designed to stimulate economic activity when conventional monetary policy methods are ineffective |
|
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Term
| What is an example of Quantitative Easing? |
|
Definition
the fed buys assets form banks with newly created money
=
larger banks excess reserves and increase money supply and increased liquidity |
|
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Term
| What does Monetary policy try to do primarily? |
|
Definition
| control the rate of change or growth in the money supply (M1) or it has targeted a level for a specific type of interest rate |
|
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Term
| What is the Federal Funds Rate? |
|
Definition
| rate on overnight loans from banks with excess reserves to banks that have deficit reserves |
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Term
| What are the Fed's regulatory and supervisory functions? |
|
Definition
-responsible for on site examinations of comm banks
-focuses it's attention on state banks and all holding companies |
|
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Term
| What does the Office of the Comptroller of the Currency focus on? |
|
Definition
|
|
Term
| What does the FDIC focus it's supervisory role on? |
|
Definition
| insured nonmember comm banks |
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Term
| What are the Central Banks in other countries responsible for? |
|
Definition
-regulating the money supply
-safeguard the currency
-carry out the monetary policy |
|
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Term
| Why was the Federal National Mortgage Association(Fannie Mae) created? |
|
Definition
| to support the financial markets by purchasing home mortgages from banks which allows to loan the proceeds to other borrowers |
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Term
| What does Federal National Mortgage Association(Fannie Mae) do? |
|
Definition
| It purchases indv mortgages or mortgage pools from financial institutions and packages or repackages them into mortgage-backed securities to aid the development of the secondary mortgage market |
|
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Term
| What was the Government Nations Mortgage Association(Ginnie Mae) created for? |
|
Definition
| to issue it's own debt securities to obtain funds that are invested in mortgages made to low-income to moderate-income home purchases |
|
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Term
| What does Government Nations Mortgage Association(Ginnie Mae) do? |
|
Definition
| it purchases Federal Housing Administration and Veterans Affairs federally insured mortgages, packages them into mortgage backed securities which are sold to investors |
|
|
Term
| Why was the Federal Home Loan Mortgage Corporation made? |
|
Definition
| formed to aid mortgage markets by purchasing and holding mortgages |
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