Please answer if True or False and give a valid EXPLANATION!

1. Capital provides a measure of assurance to the public that an institution will continue to provide financial services even when losses have been incurred, thereby helping to maintain confidence in the banking system and minimize liquidity concerns.

a. True/False

2. The interest rate spread between 3 month financial commercial paper and 3 month constant maturity treasury securities declined from 160 basis points on June 15^th, 2007 to 58 basis points on August 24, 2007. This is because the Fed was active in adding reserves to the banking system.

a. True/False