1. Prior to its failure Washington Mutual Bank was not required to maintain certain minimum capital ratios. Regulators were entirely focused on the liquidity conditions of banks.
True/False
2. In 2007 the principal sources of liquidity for Washington Mutual Bank (WAMU) were retail deposits, FHLB advances, repurchase agreements, federal funds purchased, the maturity and repayment of portfolio loans, securities held in the available-for-sale portfolio and loans designated as held for sale.
True/False
3. In the days after Lehman Brothers failed depositors withdrew $16.7 billion from WaMu. This loss of deposits further reduced the bank’s liquidity.
True/False
4. Repurchase agreements and federal funds are important sources of liquidity. The cost of using these markets spiked after Lehman Brothers failed.
True/False