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Inside Washington (03/26/2009)
* WASHINGTON (3/27/09)--The Obama administration released its plan for financial regulation overhaul Thursday, which would establish a single agency to oversee systemically important firms and critical payment and settlement systems. It also would establish higher standards on capital and risk management for systemically important firms, require hedge funds above a certain size to register and require covered institutions to fund the resolution authority--which could take the form of a mandatory appropriation to the Federal Deposit Insurance Corp. out of the Treasury’s general fund. According to The New York Times (March 26), the proposal on hedge funds may prove to be the most controversial in the financial industry. Credit Union National Association President/CEO Dan Mica testified Tuesday at a Senate Banking Committee hearing, saying that credit unions need an independent regulator, one that understands the nuances and differences between credit unions and for-profit financial institutions. Mica also said that institutions who have not posed risks, such as credit unions, should be kept out of the new regulations (News Now March 25) ... * WASHINGTON (3/27/09)--The Federal Reserve Board would take the lead to determine which financial institutions are systemically risky, if legislation by the Treasury Department sent to Capitol Hill Wednesday is approved. The bill also would give the Federal Deposit Insurance Corp. (FDIC) resolution duties. Before the Fed could recommend closing down a firm, however, it would need the support of a federal regulator such as the FDIC, the Commodity Futures Trading Commission or the Securities and Exchange Commission (American Banker March 26). The FDIC also could place a firm into conservatorship, put it into a receivership or support it financially. The costs incurred by FDIC for creating a bridge company or buying its assets would be covered through asset sales and special assessments. Congress also would fund the FDIC ... * WASHINGTON (3/27/09)--Federal regulators sent mixed messages about lending standards during a House hearing Wednesday, indicating that communication between lawmakers and regulators on the matter needs to improve (American Banker March 26). House Financial Services Committee Chairman Barney Frank (D-Mass.) said lawmakers are partly to blame for the mixed messages. Lawmakers tell regulators to lend and not to lend. However, lenders must find a way to lend again without making bad loans, Frank said. There has to be a balance, added Timothy Long, national bank examiner at the Office of the Comptroller of the Currency (OCC). The OCC is working on making sure the problems that contributed to the credit crisis are not repeated, Long said. Several lawmakers also noted that bankers are not giving credit to worthy borrowers and many small businesses are in jeopardy because they cannot get funding. At a Senate Banking Committee hearing Tuesday, Sen. Charles Schumer (D-N.Y.) questioned why credit unions’ member business lending caps should be restricted at 12.25% when small businesses are having trouble securing credit (News Now March 25) ... * WASHINGTON (3/27/09)--The Federal Deposit Insurance Corp. (FDIC) announced Thursday that it is seeking public comment for the Legacy Loans Program. The program seeks to remove bad loans and assets from FDIC-insured institutions and put them up for sale. The FDIC also offered a conference call Thursday that provided an overview of the loans. The program was announced Monday ...


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