gmat740 wrote:295.
Federally imposed restrictions on how much they may pay small savers has made difficulties for savings banks as they are competing with such unregulated investment vehicles as money market certificates.

(A) has made difficulties for savings banks as they are competing with such
(B) has made difficulties for savings banks competing with such
(C) have made difficulties for savings banks as they are competing with
(D) have made it difficult for savings banks to compete with such
(E) have made it difficult for savings banks as they are competing with such

[spoiler]OA-D
IMO-C[/spoiler]

What has made difficulties for the banks? Restrictions ...........hence a plural verb. Thus A and B can be eliminated.

There is a diction error as well, difficult is better suited than difficulties here, many difficulties have not been made the act of competition has been made difficult. Suppose this is not apparent -
since there is an as in the section following the underlined portion, thus such should be used in the underlined portion. That leaves D and E on the table.
E is wordy.

[spoiler]Hence pick D[/spoiler]

Hope this helps!

inactived wrote:Can someone please explain what "it" in answer choice D & E refers to?

Many thanks

"It" is a placeholder to make the sentence stylistically better, do not look for its antecedent.

Hope this helps!