What do transactions between member banks and their affiliates fall under?

Prepare for the FDIC Technical Evaluation Test with engaging questions and comprehensive explanations. Enhance your knowledge and boost your confidence for the exam!

Transactions between member banks and their affiliates are governed by Regulation W. This regulation specifically addresses the restrictions and requirements related to transactions and relationships between banks and their affiliates. It was established to avoid potential conflicts of interest and ensure safety and soundness in the banking system.

Regulation W outlines the limits on the amounts a bank can lend to its affiliates, as well as conditions under which these transactions can take place. It aims to protect the bank and its depositors from the risks that can arise due to interconnectedness between banks and their affiliates, ensuring that these transactions are conducted in a safe and sound manner.

The other regulations mentioned primarily focus on different aspects of banking practices. Regulation T pertains to the extension of credit by brokers and dealers, Regulation U deals with credit secured by margin stock, and Regulation Y covers the scope of financial holding companies and their activities. Each serves a distinct purpose in the regulatory framework, but only Regulation W specifically addresses affiliations and transactions between banks and their affiliates.

Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy