The Restoring American Financial Stability Act of 2010
A) prohibits banks from selling mortgage backed securities, which were largely to blame for the financial market crisis in 2007-2008.
B) cut the federal governmentʹs ties with Fannie Mae and Freddy Mac.
C) eliminated the Federal Deposit Insurance Corporation.
D) had restrictions that try to limit risky investment by banks.

Question

Quizplus · Accepted Answer

The Restoring American Financial Stability Act of 2010 had several provisions aimed at limiting the risky investments made by banks, such as the Volcker Rule, which restricts banks from making speculative investments with their own funds. It also established the Financial Stability Oversight Council to identify emerging threats to the financial system and take action to mitigate them. Options A and B are incorrect as the act did not fully prohibit banks from selling mortgage-backed securities, nor did it cut ties with Fannie Mae and Freddy Mac. Option C is also incorrect as the act did not eliminate the Federal Deposit Insurance Corporation.