Chapter 8- Review Questions 31. As a result o They subprime lending crisis, what happened to Fannie Mae and Freddie Mac? A) B) They were put into conservativeship. They were sold to a foreign central bank DJ C) The Fed seized their assets and auctioned them off. 32. Which of the following allowed Fannie Mae and Freddie Mac to pay relatively low interest on their bonds? e of business. They A) They were implicitly backed by the U.S. government. Most B) C) D their mortgage portfolio was composed of subprime mortgages. Mortgage loans historically had high rates of default. 33. In 2008 the Federal Government Fannie Mae and Freddie Mac. A) B put into conservatorship released from private ownership D) C' None of the answers are correct. 34. The U.S. government encourages home ownership by: seizing homes that have been vacant for more than a year. B) building homes and assigning them to low-income families. C) D) buying homes for the poor. 35. Community banks have less than in assets. A) B) C) D) $1 billion $500 thousand $100 million $500 million 36. The process of transforming loans into securities is called: A) collateralization. securitization. subordination. hypothecation. B) C) DI 37. Recipients of Stafford student loans receive their funding from one of two different programs: A) Ford Direct Loan Program or Federal Family Education Loan Program. PLUS loan or FHA loan. B) Marks loan or Spencer loan. C) Sarbans loan or Oxley loan. D) 38. Which of the following statements about community banks in the United States is true? A) Due to the consolidation process in the banking industry, fewer than 500 community banks are still in business. B) Community banks have a niche in small-business lending. Economists agree that community banks will soon completely disappear. D) C) Community banks will exist as long as the big corporations they lend to are in business. 39. The government abolished the students finance their education. A) program to reduce the government's cost to help program in 2010 in favor of a loan guarantee; direct loan Sallie Mae; Stafford loan B government-spons ored; private-lending C) private-lending; government-sponsored D) 40. Savings institutions focus primarily on: underwriting securities. B) A) private equity firms. making loans making home mortgage loans. making loans to big corporations C D)