Question 1. Give a brief description of FDICIA and discuss the meaning of defacto insure? Under the guidelines of FDICIA what new role does capital play?
Question 2. What is meant by prompt corrective action and how is it implemented in the current regulatory environment. What role does capital play in prompt corrective action? Also, how do we categorize capital under this approach and how do we know the wire has been "tripped". Also what is meant by CAMEL. Please be very specific.
Question 3. What are the 3 pillars of BASEL II? what are the two approaches are put in place regarding credit risk and capital for large international banks Under Basel II? Please provide an example of the use of market discipline under Basel II and please explain the difference between market discipline from the bond and equity markets. How is market disclosure differing from market discipline?