Quiz: Banks, Panics, and Trust 4 questions · 80% to pass 1. Why are banks inherently vulnerable to runs?They charge too much interestThey don't keep all deposits on handThey are poorly managedThey print too much currencyBanks lend out most of their deposits. If all depositors demand their money simultaneously, the bank cannot pay everyone because the funds are tied up in loans.2. What was a 'wildcat bank'?A bank that invested in frontier landA federal reserve branch officeA bank in a remote location to discourage note redemptionA bank that specialized in agricultural lendingWildcat banks were chartered in remote frontier areas to make it physically difficult for note-holders to travel there and demand redemption of their paper currency for gold or silver.3. Who personally intervened to stop the Panic of 1907?Andrew JacksonNelson AldrichPaul WarburgJ.P. MorganJ.P. Morgan, then 70 years old, summoned New York's top bankers to his personal library and locked the doors until they pledged their own money to backstop failing institutions.4. What did Congress create in 1908 in response to the Panic of 1907?The Federal ReserveThe FDICThe National Monetary CommissionThe Department of the TreasuryCongress created the National Monetary Commission in 1908, chaired by Senator Nelson Aldrich, to study how other nations handled banking crises and recommend a solution. Check answers Retake quiz Back to lesson Next lesson →