Washington National Bank has the following balance sheet Washington National Bank Assets Liabilities Reserves $50 million Checkable deposits $365 Million US Treasury Securities $75 million Loans Residential mortgages $100 million Commercial $150 million Bank Capital (Tier 1) $10 Million Calculate the banks risk weighted capital Assume that assets are risk weighted as follows 0 for US Treasury securities, 50 for residential mortgages and 100 for commercial loans Describe some actions Washington National Bank can pursue to obtain a well capitalized risk weighted ratio of 6 5 Why is the Federal Reserve described as an independent government agency Describe some of the features of its independence and discuss the advantages and disadvantages of the independence of the Fed Explain the goals and the risks associated with a central banks decision to place negative interest rates on bank excess reserves Explain the purpose of reserves on deposits and specified ratios of bank capital Discuss whether required reserves on deposits are necessary or useful for a healthy banking sector and the economy as a whole Identify reasons why and why not

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 29, 2024

. Washington National Bank has the following balance sheet: Washington National Bank Assets Liabilities Reserves $50 million Checkable deposits $365 Million US Treasury Securities $75

. Washington National Bank has the following balance sheet:

Washington National Bank
Assets	Liabilities
Reserves $50 million	Checkable deposits $365 Million
US Treasury Securities $75 million Loans Residential mortgages $100 million Commercial $150 million	Bank Capital (Tier 1) $10 Million

Calculate the banks risk-weighted capital. Assume that assets are risk-weighted as follows: 0% for US Treasury securities, 50% for residential mortgages and 100% for commercial loans. Describe some actions Washington National Bank can pursue to obtain a well capitalized risk-weighted ratio of 6.5%?

Why is the Federal Reserve described as an independent government agency? Describe some of the features of its independence and discuss the advantages and disadvantages of the independence of the Fed?

Explain the goals and the risks associated with a central banks decision to place negative interest rates on bank excess reserves.

Explain the purpose of reserves on deposits and specified ratios of bank capital. Discuss whether required reserves on deposits are necessary or useful for a healthy banking sector and the economy as a whole. Identify reasons why and why not.