19-43 During the 1980s,a high proportion of brokered deposits at a DI became an early warning signal of its risk for failure.

Question

Quizplus · Accepted Answer

This statement is true. During the 1980s in the US, brokered deposits became a popular source of funding for troubled banks, and the FDIC found that banks with a high proportion of brokered deposits were more likely to fail. This led to regulatory changes and limits on brokered deposits as a way to manage bank risk.

19-43 During the 1980s,a High Proportion of Brokered Deposits at a DI