Banking Exam Banking Regulations and Ethics 4

Question 1

A bank's Board of Directors has primary responsibility for:

Accepted Answer

Setting risk appetite and overseeing management

Answer

The Board of Directors is responsible for setting the bank's risk appetite, overseeing management, and ensuring sound governance and compliance.

Question 2

Under Basel III capital requirements, what is the minimum Common Equity Tier 1 (CET1) capital ratio for U.S. banks?

Accepted Answer

4.5%

Answer

Basel III requires banks to maintain a minimum CET1 capital ratio of 4.5% of risk-weighted assets to ensure financial stability.

Question 3

Which law prohibits banks from discriminating in lending based on the racial composition of a neighborhood?

Accepted Answer

Fair Housing Act

Answer

The Fair Housing Act prohibits discriminatory lending practices based on neighborhood demographics, including the illegal practice known as redlining.

Question 4

An employee who reports suspected bank fraud internally or to regulators is protected under which federal law?

Accepted Answer

Both A and B

Answer

Both Sarbanes-Oxley and Dodd-Frank provide whistleblower protections and anti-retaliation provisions for employees who report financial misconduct.

Question 5

A bank that collects mortgage application data by race, ethnicity, and gender for regulatory reporting complies with:

Accepted Answer

Home Mortgage Disclosure Act (HMDA)

Answer

HMDA requires mortgage lenders to collect and report loan application data by demographic characteristics to identify potential discriminatory lending patterns.

Banking Exam Practice Test

Banking Exam Practice Test

Banking Exam Banking Regulations and Ethics 4