Banking Exam Banking Regulations and Ethics 5

Question 1

Which regulatory framework requires U.S. banks to conduct annual stress tests to assess their ability to withstand economic shocks?

Accepted Answer

Dodd-Frank Act Stress Testing (DFAST)

Answer

DFAST, established under the Dodd-Frank Act, requires qualifying banks to conduct annual stress tests simulating adverse economic scenarios.

Question 2

A bank officer who uses inside information about a client's upcoming merger to purchase that company's stock before public announcement violates:

Accepted Answer

SEC insider trading regulations and banking ethics codes

Answer

Using material nonpublic information obtained through banking relationships to trade securities violates both SEC insider trading rules and banking ethics standards.

Question 3

The Office of the Comptroller of the Currency (OCC) primarily supervises:

Accepted Answer

Federally chartered national banks and federal savings associations

Answer

The OCC charters, regulates, and supervises all national banks and federal savings associations in the U.S.

Question 4

Under the Real Estate Settlement Procedures Act (RESPA), which practice is explicitly prohibited?

Accepted Answer

Paying kickbacks for settlement service referrals

Answer

RESPA prohibits kickbacks and unearned fees paid between settlement service providers as part of a referral arrangement, protecting consumers from inflated closing costs.

Question 5

A bank's compliance program must include all of the following EXCEPT:

Accepted Answer

Guarantee of zero regulatory violations

Answer

A sound compliance program includes policies, a compliance officer, training, and audits, but no program can guarantee zero violations — only reasonable preventive measures.

Banking Exam Practice Test

Banking Exam Practice Test

Banking Exam Banking Regulations and Ethics 5