CRCM Online Practice Questions and Answers

The banking agencies issued two guidances to caution depository institutions about risks involved in funding non-depository lenders that engage in predatory lending. Predatory and abusive practices include:

A. High-pressure sales

B. Excessive fees and interest rate including fees for unnecessary products

C. Balloon payments that may never cause foreclosures

D. Excessive refinancing with fees included in the new loan

First National Bank made the following loans to Mr. James Wilson during the previous calendar year:

Loan A, made on February 2, is a loan for purchasing margin stock and is secured by margin stock Loan B, made on March 15, is also for purchasing margin stock and is secured by margin stock Loan C, made on June 30, is an unsecured loan for purchasing margin stock Loan D, made on September 10, is for purchasing a car, secured by the car

All the loans are still outstanding at the end of the year. Which of the loans must be combined for purposes of the margin requirements of Regulation U?

A. All of the loans must be combined

B. Loans A and B

C. None of the loans must be combined

D. Loans A, B, and C

When may a bank pay an overdraft of $5,000 created by an executive officer of the bank?

A. When the officer is at the level of a vice president or lower.

B. When the officer has previously signed an overdraft protection credit agreement in an amount sufficient to cover the overdraft.

C. When the officer has enough funds in another account to cover the overdraft.

D. When the bank pays the overdrafts for other good customers in the ordinary course of business.

What may a creditor do when furnishing credit information?

A. May designate accounts in any manner that is convenient and reasonable

B. Must designate accounts as specified by the parties

C. Must designate accounts to show participation by both spouses if both are liable

D. Must designate accounts to show all parties, including guarantors

ACME Bank is a state nonmember bank with all of its offices in one state.However, it also has an Internet Web site where it advertises consumer credit and accepts applications from a five-state regional areA. Two of the states are community property states. The other three are not. What is the best explanation for what ACME bank's management should do to comply with the FDIC ECOA spousal signature guidance?

A. Because ACME has all of its offices within one state, it only has to be knowledgeable of the legal requirements of that state regarding spousal property rights and can apply those laws to all of its operations.

B. ACME must become familiar with the laws of each of the five states and ask for spouse signatures only when appropriate under the law.

C. ACME can choose any of the state laws where it operates to apply to its consumer lending operations.

D. ACME should make only business-purpose loans to avoid the spousal signature rules.

First National Bank receives a notice from the IRS to begin withholding 28 percent of the interest payments on the money market savings account of Myra Wilcox because of payee underreporting. What is the most proper action for First National Bank to take?

A. Send a notice to Ms. Wilcox within 15 days of the receipt of the IRS notice and begin withholding; stop withholding if Ms. Wilcox can prove to the bank that she is not underreporting

B. Begin withholding and send a notice to Ms. Wilcox within 15 days of beginning the withholding; stop withholding only on written notice from the IRS

C. Begin withholding with the first payment after 30 days and send a notice to Ms. Wilcox at least 15 days before the first payment from which funds are to be withheld; stop withholding only on written notice from the IRS

D. Send notice to Ms. Wilcox within 15 days of the receipt of the IRS notice and begin backup withholding with the first payment following 30 days after the notice; stop withholding only on written notice from the IRS

What obligation does a bank have to disclose a covered CRA agreement 40 months after it terminates?

A. It must maintain a copy in its CRA public file.

B. It must send a copy to its regulatory agency upon request.

C. It must send a copy to a member of the public upon request.

D. It has no obligation to disclose these covered CRA agreements.

Which of the following banks CANNOT select Montana as its home state for deposit production purposes?

A. ABC National Bank with its headquarters in Missoula, Montana

B. XYZ State Bank, with a Montana state charter

C. ACME National Bank with its headquarters in Minneapolis, MN, but with most of its branches and the majority of its loans in Montana

D. Friendly Bank, a U.S. branch of a foreign bank with two U.S. locations, one in Montana and one in Wyoming

State National Bank offers credit life and disability insurance on all consumer loans. This credit-related insurance is sold by a third party, but the bank collects a commission on all sales. The bank also sells hazard insurance through its affiliated insurance agency. Which of the following actions is legal for State National?

A. Require all consumers to purchase credit life insurance through the bank

B. Require only certain consumers to purchase credit life insurance through the bank

C. Require all borrowers with real property loans to provide insurance to protect the collateral

D. Require borrowers on real estate loans over $50,000 to purchase hazard insurance through the bank

In April Lillian Redmond, the teller supervisor for First National Bank, discovers five counterfeit $20 bills in several teller drawers. In May and in June she discovers two additional counterfeit $20 bills. She has no knowledge of criminal activity on the part of any of the bank's employees or customers. She does not suspect any particular person in this transaction. Which of the following statements is true?

A. Ms. Redmond must report the counterfeit funds on a SAR and must name the most likely individual(s) on the report.

B. Ms. Redmond must report the counterfeit funds on a SAR but is not required to name any individual(s) on the report.

C. Ms. Redmond need not file a SAR on this incident because the total amount is less than $25,000.

D. Ms. Redmond need not report this incident on a SAR because each incident is less than $5,000.

The BSA officer has just been notified by the chief operations officer that, due to a glitch in the bank's OFAC interdiction software, wires have been regularly transmitted to a bank on the SDN list. Based on the OFAC Enforcement Guidance, what should the BSA Officer do FIRST to attempt to mitigate any penalties?

A. Review the OFAC wire policies and procedures to determine how the errors occurred

B. Stop and hold all wires to the bank on the SDN list

C. Investigate the customer who sends these wires

D. Self-report the activity to OFAC

Transfers involving entries to accounts maintained at two different Reserve Banks are:

A. Fedwire transfers

B. Interdistrict transfers

C. Intradistrict transfers

D. Any one of these

Which of the following countries are currently subject to the Office of Foreign Assets Control Regulations?

A. North Korea

B. Jordan

C. Bahrain

D. Russia

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?

A. His ownership of 4,000 shares of stock in a local car dealership (the car dealership is not a bank customer)

B. His wife's position as chair of the board of a local bank

C. His attendance at a party hosted by one of his customers where other financial institutions were represented

D. His role as honorary chair of a fund drive for a local charitable organization

For which of the following business activities must a bank holding company obtain prior approval of the Federal Reserve Board?

A. Operating an auto club service

B. Serving as a safe deposit company

C. Operating as a management consulting firm for financial institutions

D. Selling installment loan data processing