Bank Affiliate Relationship Quiz

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Questions and Answers

What is the primary basis for the FDIC's authority to examine affiliates of insured banks?

The FDI Act (correct)

The Bank Holding Company Act

The Consumer Protection Act

The Dodd-Frank Act

Which of the following is considered an 'affiliate' in relation to an insured bank?

Any company with a similar business model as the bank

Any company under common control with the bank (correct)

Any company that has previously been examined by the FDIC

Any company located in the same state as the bank

Under what circumstances can the FDIC bring enforcement actions against insured state non-member banks and their IAPs?

When affiliate activities are found to be non-compliant

When no IAP determination has been made

When violations are identified and documented (correct)

When potential violations of consumer protection laws are identified

Why is determining affiliate IAP status necessary for documenting violations and pursuing enforcement?

To establish accountability for regulatory compliance Signup and view all the answers

What should examiners do if potential violations of consumer protection laws are identified in relation to affiliates?

Consult Legal to determine IAP status Signup and view all the answers

Why is analysis of IAP status considered fact-specific and complex?

It requires an understanding of the relationship between the bank and its affiliate Signup and view all the answers

What factor should be identified as a threshold matter for IAP status determination?

The asset size of the bank and the affiliate Signup and view all the answers

What are the key factors for determining bank affiliation status?

Legal and contractual relationships, common control, and ownership percentage Signup and view all the answers

What does financial relationship in affiliation analysis involve?

Affiliate loans funded by the bank, proportion of credit from the bank versus outside sources, and the bank's assets to the loan ratio Signup and view all the answers

How is the bank's success linked to the affiliate's success in affiliation analysis?

Customers referred between the bank and affiliate, referral fees, and shared resources Signup and view all the answers

What does professional relationship in affiliation analysis involve?

Services performed for the bank, preparation and filing of HMDA LAR, and CRA credit for affiliate's loans Signup and view all the answers

What is involved in gathering documents in an IAP analysis?

Types of relevant documentation for conducting an IAP analysis Signup and view all the answers

What does physical proximity involve in affiliation analysis?

Shared office space, relationship to the public, and referral of loan customers Signup and view all the answers

What is considered in loan funding in affiliation analysis?

Who funds the loans, percentage of loans funded by the bank originated by the affiliate Signup and view all the answers

Which type of documentation is relevant in defining the relationship between the bank and its affiliate?

E-mails or other written correspondence between the affiliate and the bank Signup and view all the answers

What type of documents should be examined for compensation arrangements between the affiliate and the bank?

Documentation relating to transactions conducted Signup and view all the answers

Which documents are important for understanding loan terms and conditions, underwriting standards, and the extent of affiliate involvement?

Documents relating to marketing materials Signup and view all the answers

What type of documents are needed if the bank’s website refers to the affiliate?

If the bank’s website refers to the affiliate, a screen shot of that page Signup and view all the answers

Which type of documentation provides information about transactions conducted by the affiliate?

HM DA LARs Signup and view all the answers

What type of documents are essential for understanding marketing materials related to affiliates?

If the affiliate’s website refers to the bank, a screen shot of that page, and other relevant pages, if any; Signup and view all the answers

Which of the following individuals is considered an 'institution-affiliated party' (IAP) of an insured depository institution?

A consultant who participates in the conduct of the affairs of the institution Signup and view all the answers

In what circumstances should examiners use the examination procedures for reviewing bank subsidiaries and affiliates?

When potential violations of consumer protection laws and regulations are suspected in relation to an affiliate or subsidiary Signup and view all the answers

What type of person is required to file a change-in-control notice with the appropriate Federal banking agency under section 7(j)?

Any person who acquires a significant number of shares in a bank holding company Signup and view all the answers

What is the primary purpose of incorporating violations involving subsidiaries and affiliates in the Report of Examination (ROE)?

To ensure that all violations are documented for potential enforcement actions Signup and view all the answers

Who is considered an 'affiliate' in relation to an insured depository institution?

A company that has common ownership with the institution and engages in transactions with it Signup and view all the answers

Study Notes

Affiliation Analysis for Banks

No single fact or element can prove institution affiliated or non-affiliated status
Key factors: legal and contractual relationships, common control, ownership percentage, management relationship, shared resources, financial relationship, and professional relationship
Financial relationship: affiliate loans funded by the bank, proportion of credit from the bank versus outside sources, and the bank's assets to the loan ratio
Bank's success linked to the affiliate's success: customers referred between the bank and affiliate, referral fees, shared resources, and the effect of affiliate failure on the bank
Professional relationship: services performed for the bank, preparation and filing of HM DA LAR, CRA credit for affiliate's loans, and affiliate's involvement in developing the bank's loan program
Involvement in loan program: affiliate's role in developing terms and conditions, setting underwriting standards, preparing marketing materials, and review and approval of materials
Physical proximity and public definition: shared office space, relationship to the public, and referral of loan customers
Loan processing and purchases: extent of loan purchases, participation interests, and warranty obligations
Gathering documents: types of relevant documentation for conducting an IAP analysis
Affiliate's involvement in loan processing: extent of credit decisions, review by the bank, and loan closing
Website and marketing materials: shared website, references or links, and sending of marketing materials
Loan funding: who funds the loans, percentage of loans funded by the bank originated by the affiliate, and loan categories focused on by the affiliate

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Description

Test your knowledge about the legal and contractual relationship between a bank and its affiliate, including the aspect of common control and ownership. Explore the factors that determine the affiliation status.