Question

1.What insurance activities are permitted for U.S. commercial bank holding companies? a.What is shadow banking? How does the shadow banking system differ from the traditional banking system? b.What is the Basel Agreement? c.What is the difference between Basel I, Basel II, and Basel III? d.What components are used in the calculation of credit risk–adjusted assets?

Answer 1

- owing and controlling national banks and state charted commercial banks.

-activies so closly related to banking as to be properly incident thereto ( 4c activities)

owing 5 % oe less of the outstanding shares of any class of voting securties of a company (including commercial companies)

approved 4c activities include:

- consumer finance, credit card and mortgage lending

-commercial finance operations

-operating non bank depository institutions, such as trust companies and industrial loan companies

-financial counselling services

-leasing companies

-investment in community development corporations

-financial data processing services

-bank related courier services

credit life insurance

-money transmittal

-collection agency functions

-tax prepration services

consumer credit brureau services

consumer financial counseling

-govt. securities underwriting

-printing and selling checks

a) shadow banking- it is a group of financial intermidiaries facilitating the creation of credit across the global financial system but whose members are not subject to regulatory oversight. it also refers to unregulatory activities by regulatory institutions. for example : hedge funds, unlisted derevatives.

b) t-banks have access to a gurantee fund which enable them to issue risk less claims.

traditional banks have to cope with higher operating costs.

c) it is a set of international banking regulations put forth by the basel committee on bank supervision that sets out the minimium capital requirements of financial institutions witrh the goal of minimising credit risk.