Financial Risk Manager Part 1
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A junior analyst has just started working for a national banking supervisor and is training for a position as a bank examiner. As part of the training program, the analyst is asked to explain how banking regulations evolved as a result of the 2007 – 2009 financial crisis to encourage better risk governance. Which of the following correctly describes an impact of regulations that were introduced as a result of the crisis?
A
Banks were required to securitize all the mortgages they originate in order to distribute risk across financial institutions.
B
Banks were encouraged to establish an independent risk management function with access to the board of directors.
C
Proprietary trading operations were merged with traditional banking operations to provide banks better governance over their trading desks.
D
Derivatives were encouraged to be traded OTC rather than centrally cleared to provide greater transparency.