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Inside Washington (03/16/2012)
  • WASHINGTON (3/19/12)--UnionBanCal Corp., a subsidiary of Bank of Tokyo-Mitsubishi UFJ, agreed to buy Pacific Capital--one of the banks the Treasury Department invested in through the Troubled Asset Relief Program (TARP)--for $1.5 billion in cash last week. The Treasury invested $180 million in Pacific Capital in 2008, and would get about $165 million in exchange for its 11% stake if the deal is finalized (American Banker March 16). That equates to about a 90 cents on the dollar return on the Treasury's TARP investment. In 2010, the Treasury agreed to take its stake in preferred shares, which it converted to common equity at a 63% discount as a condition of a $500 million recapitalization plan. In agreeing to discounts on recapitalizations and acquisitions, Treasury attempted to avoid more bank failures, the Banker said. As of January, 13 banks that received TARP funds had failed, squandering $600 million of investments, according to a report to Congress from the TARP special inspector general …
  • WASHINGTON (3/19/12)--Fannie Mae has issued new guidelines that prohibit servicers from billing the government-sponsored enterprise for the cost of administering force-placed insurance programs or paying themselves commissions (American Banker March 16). "Fannie Mae is clarifying its requirement for reasonable reimbursable expenses for lender-placed insurance, the guidelines said. "Any servicer request for reimbursement of lender-placed insurance premiums must exclude: any lender-placed insurance commission earned on that policy by the servicer or any related entity, costs associated with insurance tracking or administration, or any other costs beyond the actual cost of the lender-placed insurance policy premium." Fannie previously said it will request proposals from major force-placed insurers to directly provide their insurance to Fannie. The two developments indicate that Fannie will no longer bear some of the costs traditionally associated with force-placed insurance …
  • WASHINGTON (3/19/12)--Senate Democrats pressed their case for the use of principal write-downs for troubled homeowners during a hearing of the Senate housing subcommittee Thursday. Democratic Sen. Robert Menendez (D-N.J.) said while private-sector firms use principal reduction in some cases, the Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, has refused to do so (American Banker March 16). Last month FHFA Acting Director Edward DeMarco told the Senate Banking Committee that the agency believes principal reduction would be more costly to U.S. taxpayers than principal forbearance. Private banks are taking principal reductions on about 20% of their own portfolio loans, are finding it more profitable than other types of mortgage modifications, Menendez said …


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