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The Financial Services Modernization Act of 1999 (FSMA) brought dramat

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The Financial Services Modernization Act of 1999 (FSMA) brought dramat  [#permalink]

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New post Updated on: 09 Oct 2019, 22:39
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New Project RC Butler 2019 - Practice 2 RC Passages Everyday
Passage # 181, Date : 02-Jul-2019
This post is a part of New Project RC Butler 2019. Click here for Details


The Financial Services Modernization Act of 1999
(FSMA) brought dramatic changes to the American
financial system. Most notably, affiliations are
now permitted between banks, brokerage firms, and
(5) insurers. To some degree, the laws that
constitute the FSMA formally recognize that new
financial products, as well as new
technology-driven ways of delivering these
products, were already blurring the boundaries
(10) between institutions. Nevertheless, the FSMA
represents a serious departure from
Depression-era legislation that had been in place
for years, such as the Banking Act of 1933; this
act prohibited cross marketing of financial
(15) services and generally gave the government a
tight rein on banking practices.

While some are concerned about the financial
stability of the multi-purpose institutions that
will form as a result of the new laws, many have
(20) concerns about issues of privacy. It is now
possible for a bank that is affiliated with an
insurance company or brokerage firm to share data
about its customers with its new partners. This
data may not only be financial, but also could
(25) include medical records, job histories, and other
biographical information that a customer might
reasonably feel is private. Even if this shared
information is not used to directly harm the
customer, a perceived knowledge of his or her
(30) interests could lead to unwelcome marketing
efforts, and further dissemination of the data
through the sale of marketing lists to other
businesses.

Defenders of the FSMA point out that provisions
(35) meant to protect private information are included
in the new laws. These provisions include the
requirement that customers be given the
opportunity to “opt out” of having their
information shared with third parties, the
(40) disclosure of financial affiliations, and a ban
on “pretext calling,” whereby businesses obtain
customer information under false pretenses.
However, many people point to loopholes in these
provisions, and remain skeptical that any
(45) measures can now ensure a level of customer
confidentiality comparable to that which existed
before the FSMA laws took effect.




The primary purpose of the passage is to

A) suggest new ways in which the banking industry can better protect the privacy of its customers
B) criticize the FSMA for infringing on the privacy rights of bank customers
C) discuss a specific concern arising out of the passage of the FSMA
D) detail the ways in which biographical data can be shared among the multi-purpose financial affiliations made possible by the FSMA
E) present a balanced view of the pros and cons of the FSMA


The Banking Act of 1933 was designed to regulate banking activities by

A) limiting the manner in which banks marketed their loans to consumers
B) increasing enforcement of customer privacy laws
C) banning financial institutions from intermingling their marketing efforts
D) guaranteeing loans for small businesses that were badly hurt by the Depression
E) establishing laws that recognized certain banking procedures that were already in practice


The author's attitude toward the Financial Services Modernization Act is best described as

A) uncaring, but thorough
B) adulatory, but clearly biased
C) skeptical, but knowledgeable
D) balanced, though alert to problems
E) analytical, though troubled


According to the passage, the laws that make up the Financial Services Modernization Act

A) legitimize a trend that had already been set in motion
B) fulfill a purpose not unlike that of the Banking Act of 1933
C) supersede privacy laws regarding biographical data on bank customers
D) are viewed with suspicion by most people outside the banking industry
E) contain no measures designed to protect customer confidentiality



According to the passage, all of the following statements describe ways in which a customer could be affected by the Financial Services Modernization Act EXCEPT

A) the fact that the customer has high blood pressure is shared by a bank and its affiliated insurance company
B) information regarding the customer’s last occupation is given by a bank to a brokerage house without the customer’s knowledge
C) a call is made to the customer by a local political party that wishes to determine his party affiliation
D) the customer receives sales information through the mail from a business that has bought a profile on the customer’s buying habits
E) the same institution that has handled the customer’s savings now sells him life insurance


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Originally posted by globaldesi on 05 May 2019, 04:55.
Last edited by SajjadAhmad on 09 Oct 2019, 22:39, edited 3 times in total.
Updated - Complete topic (904).
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Re: The Financial Services Modernization Act of 1999 (FSMA) brought dramat  [#permalink]

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New post 23 May 2019, 04:11
2
All correct in 9 mins 40 seconds, including 4 mins to read

Para 1- FSMA- affiliations are now permitted between banks, brokerage firms, and insurers
Para 2- some concerned about stability, many about privacy
Para 3- Defenders of the FSMA- provisions to protect privacy included

1. The primary purpose of the passage is to
A) suggest new ways in which the banking industry can better protect the privacy of its customers- incorrect, the ways are discussed in the last para and we are not even sure whether this a new way
B) criticize the FSMA for infringing on the privacy rights of bank customers- incorrect,
C) discuss a specific concern arising out of the passage of the FSMA - Correct - the passage is concerned with privacy concern arising out of FSMA
D) detail the ways in which biographical data can be shared among the multi-purpose financial affiliations made possible by the FSMA- incorrect
E) present a balanced view of the pros and cons of the FSMA- incorrect, pros are not even discussed and only an issue of privacy is discussed

Answer C

2. The Banking Act of 1933 was designed to regulate banking activities by
C) banning financial institutions from intermingling their marketing efforts

the Banking Act of 1933; this act prohibited cross marketing of financial services and generally gave the government a tight rein on banking practices.

3. The author's attitude toward the Financial Services Modernization Act is best described as
D) balanced, though alert to problems- Correct - the author is neutral though he believes that privacy concerns can't be just brushed aside

4. According to the passage, the laws that make up the Financial Services Modernization Act
A) legitimize a trend that had already been set in motion

To some degree, the laws that constitute the FSMA formally recognize that new financial products, as well as new technology-driven ways of delivering these products, were already blurring the boundaries between institutions

5. According to the passage, all of the following statements describe ways in which a customer could be affected by the Financial Services Modernization Act EXCEPT

A) the fact that the customer has high blood pressure is shared by a bank and its affiliated insurance company- incorrect; This data may not only be financial, but also could include medical records, job histories, and other biographical information that a customer might reasonably feel is private.
B) information regarding the customer’s last occupation is given by a bank to a brokerage house without the customer’s knowledge- incorrect
C) a call is made to the customer by a local political party that wishes to determine his party affiliation- Correct
D) the customer receives sales information through the mail from a business that has bought a profile on the customer’s buying habits- incorrect
E) the same institution that has handled the customer’s savings now sells him life insurance- incorrect, cross marketing of financial services
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Re: The Financial Services Modernization Act of 1999 (FSMA) brought dramat  [#permalink]

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New post 02 Jul 2019, 06:14
Hi,

Please explain the options of 5th question in detail.
Why is option C correct?
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Re: The Financial Services Modernization Act of 1999 (FSMA) brought dramat  [#permalink]

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New post 03 Jul 2019, 10:07
Explanation


5. According to the passage, all of the following statements describe ways in which a customer could be affected by the Financial Services Modernization Act EXCEPT

Difficulty Level: 600

Explanation

This is an Except question, we have to find something which is not supported by the passage and information in option C cannot be validated by reading passage.

Read lines 20-33 from the passage

It is now possible for a bank that is affiliated with an insurance company or brokerage firm to share data about its customers with its new partners. This data may not only be financial, but also could include medical records, job histories, and other biographical information that a customer might reasonably feel is private. Even if this shared information is not used to directly harm the customer, a perceived knowledge of his or her interests could lead to unwelcome marketing efforts, and further dissemination of the data through the sale of marketing lists to other businesses.

Now find option which is not supported by these lines

A) the fact that the customer has high blood pressure is shared by a bank and its affiliated insurance company
medical records It is available in the passage so this option is Incorrect

B) information regarding the customer’s last occupation is given by a bank to a brokerage house without the customer’s knowledge
job histories It is also available in the passage so this option is Incorrect

C) a call is made to the customer by a local political party that wishes to determine his party affiliation
This information is not available in the passage so this option is Correct

D) the customer receives sales information through the mail from a business that has bought a profile on the customer’s buying habits
perceived knowledge of his or her interests could lead to unwelcome marketing efforts Incorrect

E) the same institution that has handled the customer’s savings now sells him life insurance
further dissemination of the data through the sale of marketing lists to other businesses So this is also Incorrect

Answer: C


Hope it helps

Aprajita760 wrote:
Hi,

Please explain the options of 5th question in detail.
Why is option C correct?

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Re: The Financial Services Modernization Act of 1999 (FSMA) brought dramat  [#permalink]

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New post 03 Jul 2019, 20:07
hi please explain question 3 in detail
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Re: The Financial Services Modernization Act of 1999 (FSMA) brought dramat  [#permalink]

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New post 03 Jul 2019, 23:55
Kanvi wrote:
hi please explain question 3 in detail


8 minutes all correct.

The author is not inclined to any perticular viewpoint as he has been quoted saying" some believe X" , some believe "Y" and also the author , perhaps towards the end, has mentioned that "some are still skeptical" . He never takes a stand but still highlights the possible warning signs. So "Balanced and warning "would be correct.
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Re: The Financial Services Modernization Act of 1999 (FSMA) brought dramat  [#permalink]

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New post 15 Aug 2019, 16:20
The primary purpose of the passage is to

A) suggest new ways in which the banking industry can better protect the privacy of its customers - The author is not suggesting new ways of any sort.
B) criticize the FSMA for infringing on the privacy rights of bank customers - The author mostly does not take a stand and rather presents what promoters and haters are saying about FSMA.
C) discuss a specific concern arising out of the passage of the FSMA - Correct.
D) detail the ways in which biographical data can be shared among the multi-purpose financial affiliations made possible by the FSMA - True but not the primary purpose. Too detailed and goes a bit beyond scope
E) present a balanced view of the pros and cons of the FSMA - The author is presenting a balanced view but if you think about it he is kind of discussing rather than mentioning pros and cons of FSMA. Pros can be a lot bigger than just privacy. Economy, jobs and what not. But none of that is discussed. So if you were to pick between C and E, C is a better choice.

The Banking Act of 1933 was designed to regulate banking activities by

A) limiting the manner in which banks marketed their loans to consumers - No Mention
B) increasing enforcement of customer privacy laws - No mention
C) banning financial institutions from intermingling their marketing efforts - Correct
D) guaranteeing loans for small businesses that were badly hurt by the Depression - No Mention
E) establishing laws that recognized certain banking procedures that were already in practice - No Mention
Note : If you think about it there are only 2 lines where author mentions this old law. If you reread then it will make sense that B is just rephrased version of what is already in the passage.

The author's attitude toward the Financial Services Modernization Act is best described as

A) uncaring, but thorough - I won't call it thorough for sure. But uncaring is not right. The author seems to be concern about the issue or privacy arising out of FSMA
B) adulatory, but clearly biased - He is not biased.
C) skeptical, but knowledgeable - We can argue he is skeptical but you can't prove he is knowledgable. If I just state the fact that defenders of recent policy introduced by US government are mentioning so and so; that does not make me knowledgeable.
D) balanced, though alert to problems - Makes this the right choice.
E) analytical, though troubled - He is not analytical.

According to the passage, the laws that make up the Financial Services Modernization Act

A) legitimize a trend that had already been set in motion - Again, first paragraph and already mentioned. Just rephrased.
B) fulfill a purpose not unlike that of the Banking Act of 1933
C) supersede privacy laws regarding biographical data on bank customers
D) are viewed with suspicion by most people outside the banking industry
E) contain no measures designed to protect customer confidentiality

According to the passage, all of the following statements describe ways in which a customer could be affected by the Financial Services Modernization Act EXCEPT

A) the fact that the customer has high blood pressure is shared by a bank and its affiliated insurance company - Relates to medical data ( And it is true as well in this world, take Apple watch for example sending data to your doctors :P)
B) information regarding the customer’s last occupation is given by a bank to a brokerage house without the customer’s knowledge - Related to employment
C) a call is made to the customer by a local political party that wishes to determine his party affiliation - No Mention. But I checked twice to make sure there is no mention of the word Policital
D) the customer receives sales information through the mail from a business that has bought a profile on the customer’s buying habits - kinda related to mention of customer "opting out". I could not find a strong reference but it is mentioned.
E) the same institution that has handled the customer’s savings now sells him life insurance - Related to insurance company[/box_in][/box_out][/quote]
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Re: The Financial Services Modernization Act of 1999 (FSMA) brought dramat   [#permalink] 15 Aug 2019, 16:20

The Financial Services Modernization Act of 1999 (FSMA) brought dramat

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