CLFP 2024 Recertification Quiz Quiz 1071 Section 1071 of the Dodd-Frank Act requires financial institutions to gather and report data on business credit applications to _________________. * The Federal Reserve Board (FRB). The Consumer Financial Protection Bureau (CFPB). The Federal Deposit Insurance Corporation (FDIC). The Office of Comptroller of the Currency (OCC). Pursuant to Section 1071, if a business has _______ or more employees, data collection is required to begin on October 1, 2024. * Less than 100. 100-499. 500-2,499. 2,500 or more. Which of the following best describes the general purpose of Section 1071? * To support fair lending enforcement by creation of a comprehensive public database on small business lending practices. To enhance marketplace competition by enabling financial institutions to determine competitor’s pricings and funding practices. To support transparent lending by creating a comprehensive public database on consumer leasing and lending practices. To enhance industry competition by enabling large businesses to review financing arrangements their small business competitors are receiving from financial institutions. According to Section 1071, financial institutions must collect approximately ___ data fields for each “covered” transaction. * 41 71 91 81 5. According to the article, which of the following are potential Section 1071 compliance issues that a financial institution needs to consider (select all that apply)? * Procedural formalities. Transparency of pricing decisions. Underwriting and exception rates. Verification of applicant-provided information. Sources of Funding/Capital Allocation The fallout from the 2023 U.S. bank failures has prompted lenders/lessors to do which of the following (select all that apply)? * Carefully consider their capital bases. Carefully consider their internal compliance policies. Carefully consider their risk/reward appetite. Carefully consider their hybrid/remote/office location decisions. According to the U.S. Government Accountability Office, the primary drivers for the 2023 U.S. bank failures was/were the following (select all that apply)? * Limited market focus. Slow market growth. Rapidly increasing interest rates. Bank UDAAP violations. Individuals/consumers consider a deposit a(n) ______. However, banks consider deposits a(n) ________. * Liability; Asset. Asset; Liability. Equity interest; Liability. Asset; Equity interest. Regulatory requirements require certain large banks to identify unrealized losses on their investment portfolios. This causes which of the following to occur? * Reduction of the bank’s liabilities. Increase in the bank’s assets. Reduction of the bank’s regulatory capital position. Increase in the bank’s risk tolerance. What is the name of the international regulatory requirement that is anticipated to result in increased capital requirements for banks? * Basel I Basel II Basel III Basel IV Synthetic Identity Theft Fraudsters use which type of information to create synthetic identities (select all that apply): * Stolen personally identifiable information. Fictitious information. Publicly available information. Commercial use information. Fraudsters use the synthetic personal identities to do which of the following (select all that apply): * Create non-profit organizations. Steal the identity of existing companies. Create false companies. Steal personally identifiable information. In 2020, the Federal Reserve reported that synthetic identity theft accounted for an estimated _____ in losses for U.S. financial institutions. * 5 billion dollars. 10 billion dollars. 15 billion dollars. 20 billion dollars. To protect your institution from potential losses resulting from synthetically created identities, it is crucial that you do all of the following, except for ________. * Validate the data to third-party data providers. Conduct open-source internet searches. Collect key customer identifying information prior to onboarding. Review fraudulent information with friends and family. To safeguard your institution from synthetic entities, key data points to collect on all entities/individuals might include the following (select all that apply): * Full legal name of the entity/individual. Taxpayer identification number. Physical and mailing addresses. Photo identification for all guarantors and signers. Benefits of Leasing According to the article, ____________ has prompted many organizations to offer leases instead of loans. * Increased popularity among borrowers. New regulations and monitoring in the industry Changes in ownership requirements. Tax incentives for lessors. In rapidly evolving industries, how does leasing provide an advantage regarding asset utilization? * Leasing ensures a lessee will have complete ownership of the assets. Leasing allows a lessee to complete free asset upgrades Leasing provides a lessee with access to the latest asset models without ownership commitment. Leasing restricts a lessee’s access to newer technologies for the long-term How does leasing contribute to the preservation of capital and credit lines for borrowers? * Leasing requires a borrower to make substantial upfront payments. Leasing restricts the borrower's ability to strategically allocate its funds. Leasing allows borrowers to maintain cash flow and liquidity by avoiding substantial upfront payments. Leasing requires borrowers to invest all available capital in the latest asset models. Which of the following is considered the primary purpose of a lease? * To facilitate the lessee’s ownership of the financed assets. To maximize the lessee’s credit line utilization. To provide the lessee with temporary use of the assets. To offer the lessee a mechanism to build equity in the asset. How does ownership differ between a lease and a loan? * The lessee takes ownership in a lease, while the lender retains ownership in a loan. The lessor retains ownership in a lease, while the borrower takes ownership in a loan. There is no difference. The lessor/lender is the owner until the end of the contract. Ownership is irrelevant. If you are human, leave this field blank. ContinueSubmit Use Shift+Tab to go back