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Inside Washington (04/08/2010)
* WASHINGTON (4/9/10)--During a hearing Wednesday before the Financial Crisis Inquiry Commission, former Federal Reserve Board Chairman Alan Greenspan took little blame for the nation’s financial crisis. Instead, he urged banks to hold more capital and require higher collateral (American Banker April 8). More capital and liquidity is the only way to prevent another crisis, Greenspan said. During the hearing, Brooksley Born, panelist and former regulator, asked Greenspan if the Fed failed to meet its responsibilities during the crisis. Greenspan argued the banking system has been undercapitalized for the past 50 years. He also blamed Congress, saying that while some lawmakers criticize him for not creating rules that would curb abusive subprime lending, Congress would have been upset if he had created the rules. Greenspan was the first to testify in a three-day hearing by the commission--which was appointed by Congress to determine the cause of the nation’s financial meltdown. Comptroller of the Currency John Dugan also told the commission that a key factor in the financial crisis was poor credit underwriting, particularly by nonbank lenders that were subject to little or no regulation. “I believe the government should establish minimum, common sense underwriting standards for mortgages that can be effectively applied and enforced for all mortgage lenders, whether they are regulated banks or unregulated mortgage companies,” he said ... * WASHINGTON (4/9/10)--Bank of America Corp. said it will support legislation to create a consumer financial protection agency (CFPA). BoA has remained neutral on the subject until now (American Banker April 8). On Wednesday, the bank said the agency should focus on regulating products--not companies--and cover banks and nonbanks. BoA executives also said states should not impose federal or state standards on national banks. The Credit Union National Association (CUNA), said it could support the creation of a CFPA provided that several concerns are addressed. While CUNA agrees that the CFPA should have complete rulemaking authority on consumer protection issues, the examination, supervision and enforcement of consumer protection should be entrusted to the prudential regulator. Also, the CFPA regulatory structure should not stifle competition or innovation. Credit unions should have the ability to decide what products are appropriate to offer their membership, CUNA said ... * WASHINGTON (4/9/10)--Securities industry advocates say that the Securities and Exchange Commission’s (SEC) proposed risk-retention plan could have unintended consequences, such as driving up rates for consumers (American Banker April 8). However, SEC Chairman Mary Schapiro said Wednesday that securitization led to poor lending practices because it encouraged lenders to shift their risk of loss to investors. SEC’s proposal would require more disclosure of loan-level information such as how losses are divided among investors. Issuers also would be required to wait five business days between filing a prospectus and selling any securities to give investors more time to look at the data. The SEC proposal has a 90-day comment period ...


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