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Inside Washington (04/25/2012)
  • WASHINGTON (4/26/12)--The Small Business Lending Fund (SBLF) helped several healthy banks exit the Troubled Asset Relief Program (TARP), but the most troubled banks have remained in TARP, according to a report released Wednesday. Of the 351 banks remaining in TARP as of March 31, 46% were behind on their dividend payments, and about one-third had missed five or more dividends payments to Treasury, according to report released by the TARP special inspector general. The report provides the first analysis of the 137 banks that used SBLF to refinance out of Tarp's Capital Purchase Program. In an interview with American Banker (April 25) on Tuesday,  Christy Romero, the special inspector general for TARP called for the Treasury Department and the banking regulators to implement an exit plan for the mostly small community banks left in the government program. The SBLF program was implemented in 2010 as part of the Small Business Jobs Act. It provided $30 billion to banks with less than $10 billion of assets, including banks that wished repay TARP funds. In exchange, the institutions are required to increase their small business lending or pay higher dividends …
  • WASHINGTON (4/26/12)--The Consumer Financial Protection Bureau (CFPB) Tuesday launched a public inquiry into how consumers and financial services companies are affected by arbitration and arbitration clauses. "Arbitration clauses are found in many contracts for consumer financial products," said CFPB Director Richard Cordray. "We want to learn how arbitration clauses affect consumers, and how effective arbitration is in resolving consumers' issues. This inquiry will help the Bureau assess whether rules are needed to protect consumers." Through the Dodd-Frank Act, Congress requires the CFPB to study the use of pre-dispute arbitration clauses in consumer financial markets and gives the bureau the power to issue regulations for the protection of consumers consistent with the study. For purposes of conducting the study, the CFPB is asking the public about the prevalence of arbitration clauses in consumer financial products and services; what claims consumers bring in arbitration against financial services companies; if claims are brought by financial services companies against consumers in arbitration; how consumers and companies are affected by actual arbitrations; and how consumers and companies are affected by arbitration clauses outside of actual arbitrations …
  • WASHINGTON (4/26/12)--Democratic members of the House Financial Services Committee today issued dissenting views to the budget reconciliation legislative recommendations which passed the committee last week on a straight party line vote. Republican members of the committee claim that the legislation will cut the deficit by roughly $35 billion during a 10-year period.  One section of the budget reconciliation language would repeal a key title of the Dodd-Frank Act.  Committee Democrats wrote that "the Republicans have used the reconciliation vehicle as a means of achieving what they have been unable to do through the regular legislative process, namely repeal the section of the Financial Reform bill … that provides for a way to deal with large financial institutions that have become too indebted to exist."  The Republican language would eliminate Orderly Liquidation Authority (OLA), the provision in the Financial Reform law which makes it possible to wind down failing firms while minimizing damage to the greater economy.  Democrats argue that that Dodd-Frank's liquidation authority will not increase the deficit over the long term …
  • WASHINGTON (4/26/12)--Citizens Financial Corp. has agreed to pay $137.5 million settle a class action lawsuit over its of manipulating the posting order of debits to customer accounts. By reordering the charges from high to low, Citizens and other banks peers maximized additional overdraft fees on debit-card customers (American Banker April 25). More than a dozen banks involved in the case have previously settled. Cases involved PNC Financial Services , Toronto-Dominion Bank , Capital One Financial and Comerica are still in litigation. Plaintiffs' attorneys, Robert Gilbert, said the $137 million settlement is a "a very significant percentage" of the alleged harm done to Citizens' customers. Previous settlements in the case have ranged from roughly 10% to 63% of alleged damages …


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