The supervisory and regulatory activities of each Federal Reserve Bank in its district includes the authority to do which of the following?

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BlackTom AI · Accepted Answer

The question asks about the supervisory and regulatory activities of each Federal Reserve Bank in its district. Let's evaluate each option in turn.
Option 1: 'Approve expanded activities' — This is not typically within the district Federal Reserve Bank's remit. Approval for expanded activities usually involves broader regulatory bodies or the Federal Reserve Board at the national level, not a district-level approval to expand activities. This makes the statement inaccurate as a description of district-level supervisory duties.
Option 2: 'Issue warnings' — While Federal Reserve Banks may communicate with member banks and issue supervisory communications, the formal act of issuing warnings is not the core, defining supervisory activity described in the question. More precise regulatory actions involve examinations, inspections, and enforcement processes. Therefore this option is only partially related and not the primary supervisory function.
Option 3: 'Performs examinations and inspections' — This choice aligns with the core supervisory role of a Federal Reserve Bank in its district. Examinations and inspections of member banks and certain financial institutions are central to overseeing safety, soundness, and compliance with regulations. This is the standard description of their regulatory activity at the district level.
Option 4: 'Charter new banks' — Chartering new banks is typically a function of the appropriate chartering authorities and is not a routine district Fed supervisory activity. Federal Reserve Banks may be involved in the process in coordination with the board, but the primary responsibility for chartering new banks lies elsewhere. This makes the statement misleading as a district supervisory duty.
Option 5: 'Excuse depository institutions from reserve requirements' — The Federal Reserve sets reserve requirements, and excusing institutions from them would be a policy decision with broader implications; district banks do not independently grant exemptions from reserve requirements. Therefore this option does not describe a typical supervisory activity.
Option 6: 'Monitor the activities of insurance companies' — While financial stability eyes overlap exist, monitoring insurance companies is generally outside the core supervisory scope of Federal Reserve Banks, which focus on banks and banking activities. This makes it an inaccurate description of district-level supervisory duties.
In summary, among the listed options, the activity that most accurately describes the supervisory and regulatory duties of a Federal Reserve Bank in its district is conducting examinations and inspections, as this directly supports oversight of banks and compliance with regulations. The other choices either describe functions handled by other regulators, or misstate the scope of the Fed's district responsibilities, or imply authorities not exercised by district Fed Banks as a routine function.

The supervisory and regulatory activities of each Federal Reserve Bank in its district includes the authority to do which of the following?

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The supervisory and regulatory activities of each Federal Reserve Bank in its district includes the authority to do which of the following?

View Explanation

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