Core Banking Operations Flashcards

Which federal agency primarily supervises nationally chartered banks in the United States?

Answer: Office of the Comptroller of the Currency (OCC)

The OCC charters, regulates, and supervises all national banks and federal savings associations.

What is the primary purpose of a bank's reserve requirement?

Answer: To ensure banks maintain enough liquid funds to meet withdrawal demands

Reserve requirements ensure banks retain a minimum percentage of deposits as liquid assets to meet customer withdrawal demands.

When a bank sells a mortgage loan to Fannie Mae but continues to collect payments, the bank is acting as a:

Answer: Mortgage servicer

A mortgage servicer collects payments, manages escrow accounts, and handles customer service on loans owned by another entity.

Which type of bank account typically offers the highest interest rate but restricts the number of monthly withdrawals?

Answer: Money market deposit account

Money market deposit accounts offer higher rates than standard savings accounts but are limited to 6 convenient transactions per month under Regulation D.

A bank issues a $10,000 cashier's check. Who is primarily liable for payment of this instrument?

Answer: The issuing bank itself

A cashier's check is a direct obligation of the issuing bank, making it more secure than a personal check.

Under the Bank Secrecy Act, a Currency Transaction Report (CTR) must be filed for cash transactions exceeding:

Answer: $10,000

Banks must file a CTR with FinCEN for any cash transaction exceeding $10,000 in a single business day.

What does 'overdraft protection' linked to a savings account do when a checking account balance is insufficient?

Answer: Transfers funds from savings to cover the shortfall

Savings-linked overdraft protection automatically transfers available funds from a savings account to cover a checking account deficit.