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Inside Washington (03/03/2010)
* WASHINGTON (3/4/10)--President Barack Obama will not announce his nominations to fill vacancies on the Federal Reserve Board this week, according to an administration official speaking on condition of anonymity. Obama has not made any decisions or offers, the official said (American Banker March 3). On Monday, Fed veteran and vice chair Donald Kohn announced he would step down from the position when it expires in June. His resignation will leave a third opening on the seven-member board ... * WASHINGTON (3/4/10)--Offshore-banking legislation pending in the House may not require foreign financial institutions to have every customer verify that their account does not benefit a U.S. taxpayer, according to Treasury Department officials (Dow Jones March 3). Banks would be able to rely on existing information from anti-money-laundering safeguards to confirm the accounts are not tied to U.S. taxpayers, the newspaper said. No additional reporting to the U.S. Internal Revenue Services (IRS) would be needed. The bill aims to curb offshore tax evasion. A 30% withholding tax would be applied to all payments originating in the U.S. to foreign entities that did not enter into IRS disclosure agreements ... * WASHINGTON (3/4/10)--Sen. Carl Levin (D-Mich.) proposed Tuesday a reserve fund that a bank could use when collateral posted by small business borrowers drops in value. The reserve would be funded by contributions from small businesses and matching contributions from the government and states. The move would help community banks lend to small businesses (American Banker March 3). Similar legislation has been introduced in the House by Levin’s brother, Rep. Sander Levin (D-Mich.). The bill could pass in the House, but its fate in the Senate is unclear, observers said. The Credit Union National Association (CUNA) is advocating giving more credit to small businesses. CUNA would like to see lawmakers raise the member business lending cap at credit unions from 12.25% to 25% ... * WASHINGTON (3/4/10)--A tentative agreement between Senate Banking Committee Chairman Christopher Dodd (D-Conn.) and Sen. Bob Corker (R-Tenn.) would give the Federal Reserve Board power to enforce consumer protection. House Financial Services Committee Chairman Barney Frank (D-Mass.) called the deal “a bad joke” (American Banker March 3). Sen. Richard Shelby (R-Ala.) said the new consumer protection division would operate without the Fed’s input. Regulators also should have the power to veto consumer protection proposals, he said. Dodd and Corker’s plan also would allow regulators to appeal rules to a new systemic council that could override them with a two-thirds vote. Shelby said allowing the council to override rules was “silly.” The president would appoint a Senate-confirmed director of consumer protection that could write rules for all banks and nonbanks. However, the division could only enforce the rules against institutions with more than $10 billion in assets and large mortgage lenders. Banks with fewer assets would be examined by a primary regulator. When asked by reporters how the proposal was shaping up, Corker said the talks are “continuing to go well.” Sen. Dick Durbin (D-Ill.), the No. 2 Democrat in the Senate, said he was open to what Dodd suggests. A strong consumer protection agency is needed, Durbin said ...


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