1. Sarbanes-Oxley Acctng Standards Act of 2002
    designed to prohibit public companies from publishing false or misleading financial reports & created a board to oversee the practices of the acctng & auditing professions; top corporate officers must vouch for accuracy & objectiveness; demanded tougher internal controls
  2. The Fair and Accurate Credit Transactions Act (FACT) of 2003
    addresses identity (ID) theft; individuals could easily file a theft report & the nation's credit bureaus were required to help victims resolve the problem
  3. Credit Card Accountability, Responsibility, & Disclosure Act of 2009 (CARD)
    restricted varying credit card interest rates & other terms, required at least 45 days advance notice in writing before card terms are changed, fees must be spelled out, contract provisions must be on the Internet, & customers must be told how long it will take to pay off an acct. if only the min. payment is made each due date
  4. The Dodd-Frank Wall Street Reform & Consumer Protection Act of 2010 (FINREG)
    prohibited regulators from applying "too big to fail" rules so that selected financial firms could be protected & rescued at public expense, required financial firms to maintain adequate capital & liquidity & more closely examined the activities of the insurance & credit rating industries to prevent "reckless behavior"
  5. unit banks
    offer full range of services from 1 office, small # of services (taking deposits, paying bills, & cashing checks) may be offered from limited-service facilities like drive-up windows & ATM's; can be risky if economy weakens & ppl & bus. move away to other market areas
  6. branching organization (bank)
    offer full range of services from multiple locations, including a head office & 1 or more branch offices; limited services offered through a supporting network of drive-in windows, ATM's, point-of-sale terminals in stores & shopping centers, the Internet, etc.
  7. internet banking
    the offering of info. & selected services through the World Wide Web by banks & other financial-service firms
  8. Automated Teller Machines (ATMs)
    through which a customer can access their deposit account, make loan payments, &/or obtain info. & other services
  9. point-of-sale (POS) terminals
    computer equipment in stores, gas stations, & shopping centers that allow electronic payments for goods & services
  10. virtual banks
    banking firms chartered by federal or state authorities to offer financial services to the public exclusively online; trying to pass Web-generated cost savings along to their customers
  11. bank holding company (BHC)
    a corporation chartered for the purpose of holding the stock (equity shares) of 1 or more banks (other businesses too); many hold only a small minority of the outstanding shares=escape gov't regulation
  12. full-service interstate banking
    the establishment of banks or bank branches across state lines by individual banking organizations that offer a complete menu of banking services
  13. Ben Barnanke
    Chairman of the Federal Reserve
  14. Hank Paulson
    Secretary of the Treasury
  15. Timothy Geithner
    President of the Federal Reserve Bank of NY, but currently Secretary of the Treasury
  16. economies of scale
    as output increases, productions costs decrease; producing multiple units of the same package costs less= efficiently using the firm's resources
  17. economies of scope
    a financial-service provider can save on operating costs when it expands the mix of its output b/c some resources, such as mgmt & plant & equipment, are more efficiently used in producing multiple services rather than just turning out 1 service; fixed costs can be spread over a greater # of service outputs
  18. expense preference
    an approach to mgmt of a firm in which managers draw upon the resources of the firm to provide them with personal benefits (lavish offices & country club memberships) not needed to produce or sell products; raises cost of production & reduces returns to the firm's owners; an agency cost problem
  19. agency theory
    an explanation of the risk-taking behavior of individuals & institutions; principal-agent problem in which an agent may seek to optimize their position at the expense of the principals involved; interests of managers of a firm may take precedence over the interests of its owners
  20. corporate governance
    the network of relationships between a corporation's BOD & members of its mgmt team, stockholders/stakeholders; helps to define who has control over what issues & who makes pivotal decisions within the org; can lead to lower agency costs & better company performance
  21. capital
    long-term funds contributed to a bank or other financial institution primarily by its owners; consists of mainly stock, reserves, & RE plus any long-term debt issued that qualifies under regulations; provides a cushion of protection against risk
  22. crime risk
    the danger of fraud, embezzlement, robbery, or other crimes that could result in loss for a financial institution
  23. geographic diversification
    spreading out credit accounts & deposits among customers located in different communities, regions, or countries in order to reduce the overall risk of loss to a bank or other financial institution; variety in economic conditions
  24. portfolio diversification
    spreading out credit accounts & deposits among a wide variety of customers, including many large & small businesses, different industries, & households in order to reduce the lender's risk of loss; variety of sources of income & collateral
  25. common stock
    type of capital measured by the par value of all CE shares outstanding that pays a variable return to its owner after all expenses & other claims are met
  26. preferred stock
    type of capital measured by the value of any shares outstanding that promise to pay their owners a fixed rate of return or a rate determined by an agreed-upon formula
  27. surplus
    type of capital representing the excess amount above each share of stock's par value paid in by stockholders when they purchased their shares
  28. undivided profits
    type of capital representing net earnings that have been kept in the business rather than being paid out as dividends to the stockholders
  29. subordinated debentures (notes)
    type of capital represented by long-term debt instruments contributed by outside investors whose claim against the borrowing institution legally follows the claims of depositors but comes ahead of the stockholders
  30. minority int. in consolidated subsidiaries
    partial ownership interest that a financial firm holds in other business firms
  31. equity commitment notes
    type of bank capital in the form of debt securities that is repayable only from the future sale of bank stock
  32. equity reserves
    type of capital representing funds set aside for contingencies (losses on assets, lawsuits, extraordinary events); provide a reserve for dividends expected to be paid out, but not yet declared & a sinking fund to be used to retire stock or debt in the future
  33. Basel Agreement
    negotiated between bank regulatory authorities in U.S, Canada, Great Britain, Japan, & other major nations in Western Europe to set common capital requirements for banks under their jurisdiction; were to be applied uniformly with some modifications for local conditions
  34. Basel I
    first official agreement between the countries in 1988, which imposed common minimum capital requirements on banks headquarter in those countries; if below requirement then raise new capital or reduce risky assets
  35. value at risk (VaR) models
    a statistical framework for measuring an asset portfolio's exposure to changes in stock prices, int. rates, currency values, or commodity prices over a given time period, subject to a given probability level; determine the max. amount a bank might lose
  36. Basel II
    permitted banks to employ their own internal risk-assessment methods & calculate their own min. capital requirements as well as mandating periodic stress testing to estimate the impact of changing market conditions on each bank's financial position
  37. Basel III
    an international agreement between bank & regulators that stipulates the amount of capital reserves that covered banks must hold to the newest 21st century standards; to head off future financial crises
Card Set
second half of 2, 3, & 15