Exam CRCM topic 1 question 326 discussion

Actual exam question from ABA's CRCM

Question #: 326
Topic #: 1

Which of the following relationships does NOT violate Regulation L?
"¢ Relationship A: First National Bank is located in the same city as an affiliate of First Savings and Loan. First National and the affiliate share a board member.
"¢ Relationship B: State Bank and an affiliate of First National Bank are located in the same RMSA but not in the same town. State Bank has assets of $60 million, and the affiliate has assets of $7 million. The two institutions share a board member.
"¢ Relationship C: Savings and Loan Association and Bank Holding Company do not have offices within the same RMS
Bank Holding Company's assets are in excess of $1.75 billion, and Savings and Loan Association's assets are in excess of $2.5 billion. These institutions share a board member.

A. Relationship A
B. Relationship B
C. Relationship C
D. All the relationships violate Regulation L

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Suggested Answer: B 🗳️

by Cam22 at March 19, 2024, 2:53 a.m.

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Cam22

8 months, 2 weeks ago

Selected Answer: C

elationship C (C) is the most likely to not violate Regulation L because it involves institutions in different RMSAs (RMSA: Retail Metropolitan Statistical Area) with significant asset sizes, where the regulation's primary concern—anticompetitive practices within the same market—does not apply as directly. Thus, the correct answer under the assumptions based on Regulation L and its intent to prevent anticompetitive interlocks within the same market would be C. Relationship C. However, it's important to note that specific details about Regulation L's current thresholds and exemptions (which can vary and be updated) are essential for a definitive assessment.

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