Question

12 CFR 9 specifically requires that a national bank adopt a written policy governing _____________.

1) the use of external investment advisers.
2) investment of fiduciary funds, including short-term investment.
3) allocation of principal and income.
4) the designation of auditors.

Answer 1

12 CFR 9 mandates that national banks must have written policies for the investment of fiduciary funds, which is overseen by government agencies like the Office of the Comptroller of the Currency. Banks must also comply with consumer protection laws, including lending disclosure and nondiscrimination policies.

Step-by-step explanation:

12 CFR 9 requires that a national bank adopt a written policy governing the investment of fiduciary funds, including short-term investment. This regulation ensures that banks operate within certain guidelines to maintain financial stability and protect consumer interests. The policy must be in alignment with the fiduciary duties of the bank and is monitored by government agencies to ensure compliance and manage risks.

Banks are under the supervision of various government entities, such as the Office of the Comptroller of the Currency and the National Credit Union Administration, to ensure they have positive net worth and are taking appropriate levels of risk. Additionally, the Federal Reserve assures compliance with consumer protection laws, forbidding discrimination and requiring public disclosure of loan information.