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Inside Washington (04/27/2012)
  • WASHINGTON (4/30/12)--The Federal Deposit Insurance Corp.'s Temporary Liquidity Guarantee Program (TLGP), a financial system stabilization program created around the same times as the Troubled Asset Relief Program (TARP),  will expire at the end of this year after receiving much less attention than TARP. Participants paid fees to take part in the program, saving it from the criticism that plagued TARP (American Banker April 27). The TLGP also included full temporary coverage of noninterest bearing checking deposits in transaction accounts. The FDIC reported this week it had started transferring unused reserves into the agency's Deposit Insurance Fund. The program--including both the debt and deposit guarantees--stands to finish up essentially with more than $8 billion in net profit—barring the failure of any banks participating in the program. Earlier this month, FDIC officials said that, $2.7 billion in funds originally set aside for potential TLGP defaults had been moved into the DIF at the end of 2011, increasing the balance for the agency's traditional deposit-coverage fund …
  • WASHINGTON (4/30/12)--The Obama administration, which had originally proposed funding a mortgage refinancing program with a tax on big banks, appears to be distancing itself from that approach. The bank tax was met with criticism as soon as it was announced during President Barack Obama's Sate of the Union address in January (American Banker April 27). That administration has yet to introduce a refinancing plan. Housing and Urban Development Secretary Shaun Donovan said Thursday that the administration is working on a bill with members of Congress, and he is hopeful that legislation will be introduced in the next few weeks. Donavan said talks with members of Congress include looking for alternate ways of funding the program. The refinancing program would allow homeowners whose mortgages are not backed by the federal government--and who have not qualified for other government refinance initiatives--to take advantage of low interest rates by locking into a government-backed loan. But the plan has been criticized by House Republicans, who have dismissed it as election-year politics …
  • WASHINGTON (4/30/12)--Sens. Jeff Merkley (D-Ore.) and Carl Levin (D-Mich.) led a group of 22 senators in calling on regulators meet the July 21 deadline for writing a rule that would ban banks from participating in proprietary trading.  In a letter to Federal Reserve Chairman Ben Bernanke and other regulators, the senators reminded the agency heads of the major role high-risk trading had in the makings of the financial crisis, and the need for the Volcker Rule protection. "The American people suffered greatly because of the financial crisis," the senators wrote. "The Volcker Rule is a critical protection to help ensure that such a crisis does not happen again.  The economy needs these protections, our constituents deserve these protections, and the law demands these protections.  Please implement a clear, strong, and effective Volcker Rule without delay." The letter lists out specific issues with the proposed Volcker Rule, but asks that it not be delayed or scrapped. It urges the regulators to adopt the best elements from the proposed rule; eliminate loopholes; draw clear lines based on objective data and observable markets; strengthen CEO and board-level accountability and public disclosure; and provide coordinated and consistent enforcement, including data sharing by regulators …


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