Question 1

Which of the following is NOT a written record the bank should retain in complying with the Bank Bribery Act?

Accepted Answer

The answer of Which of the following is NOT a...

Question 2

First National Bancshares, Inc., a bank holding company, filed an application with its Federal Reserve Bank on March 1 to acquire a subsidiary bank. On March 15 the Federal Reserve Board asked First National for more information. On April 1 the Federal Reserve Bank received the completed application and accepted it. On April 5 the Federal Reserve Bank notified First National of the April 1 acceptance and referred the application to the Federal Reserve Board. Under the normal rules, by what date must the Federal Reserve Board act on the application?

Accepted Answer

The Federal Reserve Board has 60 days from the date of acceptance of the application to act on it. The application was accepted on April 1, so the Board must act by June 1.

Question 3

Bank A offers safe deposit services in a vault area that contains a door too narrow for wheelchair passage. The bank cannot widen the door because of the vault construction. Therefore, when a customer in a wheelchair needs access to a safe deposit box the customer cannot enter the vault. The bank provides viewing rooms for all safe deposit customers, and one of these rooms has a door wide enough for a disabled customer to enter. Which of the following must the bank do to provide safe deposit box service to wheelchair customers?

Accepted Answer

Bringing the safe deposit box to the customer and providing an accessible area where the customer may privately have access to the contents is the best option for providing safe deposit box service to wheelchair customers. This option ensures that the customer can access their box and its contents in a private and safe manner, without requiring the bank to make extensive and expensive modifications to their vault or building a new facility.

Question 4

The mortgage lending department of Bank XYZ received some inquiries from potential applicants who are visually impaired. The bank would like to comply with ADA concerning these potential applicants, but it does not want to spend a significant amount of money. Which of the following statements is true?

Accepted Answer

ADA regulations require banks to provide reasonable accommodations for individuals with disabilities. The bank may fulfill this obligation by providing a loan assistant to read and assist with the loan application and disclosure documents at no additional cost to the applicant. Providing additional accommodations, such as translation into Braille, would likely be considered an undue financial burden on the bank. Refusing to lend to blind persons would be a violation of ADA regulations. Requiring an applicant to bring a sighted friend or relative to assist may also be seen as discriminatory, as it places an undue burden on the applicant and assumes that they have someone who can assist them.

Question 5

Which of the following activities is permitted under ADA?

Accepted Answer

Prohibiting smoking in the bank building is permitted under ADA as it does not discriminate against any protected groups.

Answer: C
 Providing assistive technology such as readers to visually impaired loan applicants is also permitted under ADA, however, charging a fee for it may be considered discriminatory as it may be an undue burden on the individual.

Answer: D
 Requiring disabled depositors to use a specific teller window may be considered discriminatory as it limits their access to the same services as non-disabled depositors. The bank should make all teller windows accessible to all customers.

Therefore, the only permitted activity under ADA is B - Prohibiting smoking anywhere in the bank building.

Question 6

Which of the following employment practices is NOT legal under ADA?

Accepted Answer

Establishing a policy that prohibits hiring alcoholic applicants is not legal under ADA because alcoholism is considered a disability under the law. Prohibiting smoking, holding certified alcoholics to the same performance standards, and refusing to hire employees who currently use illegal drugs are legal under certain circumstances.

Question 7

First National is developing a consumer checking account that can access a line of credit. This is the first time the bank has ever had such a product, although this type of credit facility has been popular with other banks in town. To determine what interest rate to charge on this account, an officer of First National called some of his friends at other local banks offering this type of credit and asked several questions, including the interest rate charged on this type of account and what internal factors the banks use to set the rate. After obtaining this information, First National determines that it could charge approximately 2 percent more than it originally planned. Is there anything wrong with this course of action?

Accepted Answer

Communicating with competitors for the purpose of setting prices is considered anticompetitive behavior and violates antitrust laws. The bank should not have directly contacted its competitors for this information. Instead, it could have used publicly available information or hired a consultant to help determine a competitive interest rate.

Question 8

Mills Company, Inc., is a manufacturing company with a working capital line of credit from First National Bank. The credit agreement governing the loan states that Mills cannot obtain additional unsecured credit without the approval of the bank. Mills believes that such a clause violates the Bank Holding Company Act's anti-tying clause. Does it?

Accepted Answer

The clause is related to the soundness of the credit, which is a legitimate concern for the bank to ensure that Mills does not overextend itself financially, thus protecting the bank's interests.

Question 9

First National Bank owns a data processing company that sells financially related data processing services to various businesses in the community. Daniel Tyler, a loan officer, is negotiating a loan to a local CPA firm. He would like to make the loan conditional on the CPA firm's use of the subsidiary data processing firm. May he do so?

Accepted Answer

This is an example of an illegal tie-in, where the loan officer is conditioning the loan on the CPA firm's use of a subsidiary data processing company owned by the bank. Such tie-ins are prohibited by antitrust laws.

Question 10

Roger Jameson is the head of the consumer loan department at First National Bank. He is a regular participant in a lending committee of a local finance trade association. The committee meets once a month at a local hotel. After the committee meetings, Roger and several other committee members who are officers at other banks in town go to a hotel restaurant and talk for a couple of hours before leaving. During these informal conversations Roger learned that the other members require the car dealerships in town that sell consumer installment contracts to the banks to refrain from selling them to local savings and loan associations. Roger believes that this is a good idea and would like to implement it at First National. Is there a problem with doing so?

Accepted Answer

Restricting the dealerships from selling consumer installment contracts to certain institutions is a restraint of trade and is illegal under antitrust laws. It limits competition and may result in higher prices for consumers. Roger should not implement this idea at First National Bank.

Question 11

Which of the following factors would NOT be considered when evaluating whether specific behavior by a banker violates the statute?

Accepted Answer

The answer of Which of the following factors would NOT...

Question 12

Martha Smith of First National Bank is attempting to close a large commercial loan to a manufacturing equipment company. In negotiating the interest rate on the loan Martha states that if the company will move some of its demand accounts to the bank, it could get a lower interest rate. Is this wrong?

Accepted Answer

The answer of Martha Smith of First National Bank is...

Question 13

Under the ADA, what can an employer do?

Accepted Answer

According to the ADA, an employer may only inquire about a disability when it is related to job requirements. This means that an employer may only ask about a disability when it is necessary to determine if the applicant can perform the essential functions of the job with or without reasonable accommodation. Therefore, choice B is the correct answer. Choices A, C, and D are incorrect as they violate the ADA.

Question 14

Martin Taylor, a loan officer at First National Bank, is a long-time friend of Bill Evans, a local homebuilder. Bill would like a line of credit at the bank and discusses the potential loan with Martin. During the discussion, Martin expresses his desire to build a house one day and Bill offers to build him one "at cost plus 5 percent." If Martin accepts Bill's offer, can he continue to act as his loan officer?

Accepted Answer

The answer of Martin Taylor, a loan officer at First...

Question 15

Bob's wife is HIV-positive due to a blood transfusion during an appendectomy 15 years ago. She is not yet sick, but takes medication to prevent the onset of AIDS. Bob occasionally needs to take time off from work to take her for testing at Johns Hopkins in Baltimore. Because of complaints about Bob's exposure to this disease, employees have asked HR to limit his contact with them and with customers. The bank has asked Bob not to eat in the lunchroom with the other employees and has placed Bob in a position where he has limited customer contact. Does this company have any potential ADA liability?

Accepted Answer

The manager's actions suggest that he perceives Bob as having a disability, which triggers the "regarded as" provision of the ADA. Even though Bob's wife is the one with HIV and he himself is not infected, the manager's actions suggest that he believes Bob to have a disability or be at risk of developing one, which is enough to trigger ADA protections. The company may have discriminated against Bob by limiting his opportunities for contact with other employees and customers.

Question 16

Which of the following activities is NOT a permissible nonbanking activity?

Accepted Answer

Providing general courier services is not related to banking or financial services, whereas the other activities are related to financial services or support financial operations.

Question 17

When does a gift accepted by a banker clearly violate the Bank Bribery Act?

Accepted Answer

According to the Bank Bribery Act, it is illegal for a banker to accept anything of value with the corrupt intent of being influenced in their official capacity. The value or occasion of the gift is not the determining factor, but rather the intention behind giving and accepting the gift. Thus, option B is the best choice as it clearly specifies that the gift is given with corrupt intent.

Question 18

Harvey Smith is a loan officer at First National Bank. Which of the following of Harvey's outside business interests may be considered to be a conflict of interest that should be disclosed to the bank?

Accepted Answer

Harvey's wife's position as chair of the board of a local bank could potentially influence his decision-making as a loan officer at First National Bank. This creates a conflict of interest that should be disclosed to the bank. The other options do not directly relate to Harvey's role as a loan officer and therefore do not present a conflict of interest.

Question 19

Which of the following transactions does NOT require prior approval of the Federal Reserve Board?

Accepted Answer

According to the Bank Holding Company Act and the Change in Bank Control Act, transactions that require prior approval of the Federal Reserve Board include the formation of a bank holding company (A), the acquisition by a bank holding company of a subsidiary (B), and the acquisition of 25 percent or more of the voting stock of a bank by another bank (D). However, option (C) refers to the acquisition of 25 percent of voting stock of a bank by another bank in good faith, in its fiduciary capacity, and with no power to vote. This type of acquisition is exempt from prior approval by the Federal Reserve Board.

Question 20

Which of the following would NOT be acceptable under the Bank Bribery Act and the relevant guidelines?

Accepted Answer

Accepting a hunting rifle as a gift from a borrower could be seen as an attempt to influence the loan officer's decision-making process and would violate the Bank Bribery Act and guidelines. The other options do not involve gifts that could be seen as attempts to influence a bank officer's decisions.

Exam 1: Certified Regulatory Compliance Manager