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Washington
Inside Washington (02/01/2008)
* WASHINGTON (2/4/08)--Federal Deposit Insurance Corp. Chairman Sheila Bair is worried about the next mortgage problem--1.7 million nontraditional loans with interest rates that will reset next year (American Banker Feb. 1). The loans are worth $600 billion, and 75% of borrowers owe more than what their home is worth, Bair told the Senate Banking Committee Thursday. Committee Chairman Christopher Dodd (D-Conn.) encouraged lawmakers to take action, saying he wants to propose a government entity that would purchase distressed mortgages. But Republicans, such as Sen. Richard Shelby (Ala.), advised lawmakers not to rush. Robert Steel, Treasury undersecretary for domestic finance, said two-thirds of the 1.8 million mortgages ready to reset would be adjusted. He said he was optimistic that borrowers would be helped and that the Treasury is looking after the situation ... * WASHINGTON (2/4/08)--Comptroller of the Currency John Dugan said his office is focusing on the high community bank concentrations in commercial real estate (CRE). The agency plans to tackle the problem by increasing interaction between supervisors and banks with concentrations in CRE loans declining in quality. The OCC, he said, expects banks with CRE concentrations to assess their portfolio based on current market conditions and make adjustments as conditions change. The ratio of commercial real estate loans to capital has nearly doubled in the past six years. Over one-third of the nation’s community banks have CREs exceeding 300% of their capital, and 30% have construction and development loans exceeding 100% of capital, Dugan said ... * WASHINGTON (2/4/08)--Charlie McCreevy, the European commissioner for the Internal Market and Services of the European Union (EU), said a global response is needed to solve the subprime mortgage crisis (CongressDaily PM Feb. 1). He also questioned whether anyone had thought that the U.S.’s subprime problems would cause European banks to nearly collapse. Restoring the market confidence will be a long-term process, he said. McCreevy has met with Securities and Exchange Commission Chairman Christopher Cox about U.S. and EU regulations that affect the insurance industry and securities. EU officials were disappointed to see U.S. states freezing out European companies through protectionist policies, he said ...


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