Indicate whether the following statements are true or false. 1. The Interstate B
ID: 1116986 • Letter: I
Question
Indicate whether the following statements are true or false.
1. The Interstate Banking and Branching Efficiency Act (IBBEA) of 1994 was passed to increase the availability of credit to economically disadvantaged areas and to correct alleged discriminatory lending practices.
2. The American International Group, AIG, was the world’s largest investment bank in 2008, responsible for underwriting the issue of new stocks, bonds and financial instruments such as mortgage backed securities.
3. In a principal-agent setup with regulators as the principal and managers of financial firms as the agents; agents may shirk by making investments which are too conservative and safe but which do not provide a high return to investors.
Explanation / Answer
1. The statement is false. The main purpose of this act was to promote interstate branch banking by adequately capitalized banks.
2. The statement is true. AIG was the largest insurance company in as well as responsible for underwriting the issue of new stocks, bonds and financial instruments such as mortgage backed securities.
3. The statement is true.