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Inside Washington (01/07/2010)
* WASHINGTON (1/8/10)--The Federal Deposit Insurance Corp. (FDIC) could vote Tuesday on a proposal that would base the premium fees lenders pay the FDIC for deposit insurance on the risk profile of executives’ pay packages (The Wall Street Journal Jan. 7). If the plan is adopted, banks with pay structures perceived as less risky could be given a break on fees. However, firms with riskier structures could pay more. The proposal is the latest effort by government to curb executive pay structures ... * WASHINGTON (1/8/10)--With Senate Banking Committee Chair Christopher Dodd’s (D-Conn.) announcement that he will not run again for his seat on the committee, financial observers expect that his likely successor, Sen. Tim Johnson (D-S.D.) will tackle regulatory reform--including that of Fannie Mae and Freddie Mac. If government-sponsored enterprise reform is going to happen--it will happen next year, according to Jaret Seiberg, analyst at Concept Capital (American Banker Jan. 7). He said the Senate Banking Committee will be “in the middle of the debate.” Consumers groups are concerned that Johnson may not be as committed as Dodd was to making sure the underserved can access private-sector products and services. However, Johnson’s appointment could benefit community banks. He has pushed for deposit insurance limit increases and stopped Wal-Mart from buying an industrial loan company in Utah. He also is likely to ensure that the deposit insurance cap remains at $250,000. The cap is due to expire in 2014, returning to $100,000. Credit union accountholders insured by the National Credit Union Share Insurance Fund also are covered on each account up to $250,000 ... * WASHINGTON (1/8/10)--Regulatory reform may be more likely, but it also may be more moderate, financial observers said. Senate Banking Committee Chair Christopher Dodd (D-Conn.) will not seek re-election for his seat, giving him more time to focus on reform. Dodd was criticized in 2008 for running for president while the financial crisis was at its peak. The senator introduced a tough reform bill in November, but backed away from it after committee members urged him to take a more bipartisan approach. Dodd has grouped together committee members to try and reach a consensus. However, as a result, the bill may be scaled back. The shift gives more leverage to Sen. Richard Shelby (R-Ala.), committee ranking member, said Mark Calabria, former Shelby aide. While some observers expect lawmakers to compromise on consumer protection, Amos Hochstein, former Dodd adviser, told American Banker (Jan. 6) that Dodd will likely stay true to his values. He has strong views on consumer issues, and he has not pursued them for political motivation, Hochstein said ... * WASHINGTON (1/8/10)--Federal Reserve Board officials are split on how to move forward with mortgage-backed securities, minutes from a December meeting indicate (The Wall Street Journal Jan. 7). The Fed is expected to purchase $1.25 trillion of securities by March. The purchases keep mortgage interest rates down, which boost the housing and financial markets. But when the Fed quits buying, rates could go up. Officials say the Fed should expand its program beyond the first quarter to keep the recovery’s momentum going. However, at least one Fed official said the program should be scaled down because the economy is improving ...


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