Tiernan Is the President of Bank X,which Holds a Mortgage

question 37

Multiple Choice

Tiernan is the president of Bank X,which holds a mortgage on a company found liable for illegal disposal of hazardous waste.The company has stopped paying on its loan to Bank X.Tiernan would like to foreclose but does not want the bank to become liable under CERCLA as an owner.What should Tiernan do?

• A) Tiernan should do nothing because foreclosure would automatically result in the bank becoming liable under CERCLA for cleanup costs.
• B) Tiernan should go ahead and foreclose because as long as the bank did not participate in the management of the facility prior to foreclosure,the bank will not be considered liable under CERCLA for cleanup costs.
• C) Tiernan should immediately arrange for the bank to become involved in managing the facility because as long as the bank participated in the management of the facility prior to foreclosure,the bank will not be considered liable under CERCLA for cleanup costs.
• D) Tiernan might as well go ahead and foreclose because as a mortgage holder,the bank is already automatically liable under CERCLA for cleanup costs.

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Definitions:

Petty Cash Receipt

A petty cash receipt is a document used to record small cash payments for minor expenses, part of a system to manage incidental or minor office costs.

Petty Cash Account

A small amount of cash kept on hand for making immediate payments for miscellaneous small expenses.

Compensating Balance

A requirement by some banks requiring depositors to maintain minimum cash balances in their bank accounts.

Petty Cash Fund

A special cash fund to pay relatively small amounts.