BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The Depository Institutions Deregulation and Monetary Control Act of 1980
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The Interstate Banking and Branching Efficiency Act of 1994
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The Garn-St. Germain Act of 1982
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Detailed explanation-1: -Signed by President Ronald Reagan in October 1982, the Act aimed to ease pressures on depository institutions as the Fed raised interest rates to curb the high inflation of the 1970s. During the 1970s, the US economy was plagued by high inflation.
Detailed explanation-2: -The savings and loan crisis of the 1980s and 1990s (commonly dubbed the S&L crisis) was the failure of 32% (1, 043 of the 3, 234) savings and loan associations (S&Ls) in the United States from 1986 to 1995.
Detailed explanation-3: -The roots of the S&L crisis lay in excessive lending, speculation, and risk-taking driven by the moral hazard created by deregulation and taxpayer bailout guarantees. Some S&Ls led to outright fraud among insiders and some of these S&Ls knew of-and allowed-such fraudulent transactions to happen.
Detailed explanation-4: -Second, S&Ls primarily made long-term fixed-rate mortgages. When interest rates rose, these mortgages lost a considerable amount of value, which essentially wiped out the S&L industry’s net worth. Policymakers responded by passing the Depository Institutions Deregulation and Monetary Control Act of 1980.