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Inside Washington (05/21/2009)
* WASHINGTON (5/22/09)--A discussion on how to reform the U.S. financial system’s regulatory structure took different directions at a Wednesday Senate Banking Committee hearing. Sen. Bob Corker (R-Tenn.) said he was opposed to legislation that would give the government resolution powers over systemically important financial institutions. The Treasury should be given the power to resolve the institutions on a case-by-case basis, he said (American Banker May 21). Sen. Richard Shelby (R-Ala.) said he was against any plan that would give the Federal Reserve Board more power over systemic risk. Treasury Secretary Timothy Geithner said he was open to re-evaluating every regulator--including the Fed--for reform. He also defended the Fed, saying the central bank has policies to prevent any conflict of interest and that the directors do not have a role in supervision or in the Fed’s money programs. Shelby disagreed, saying banks supervised by the Fed choose presidents of the 12 Fed banks by their board representation. The Obama administration is expected to release more details about its restructuring plan, though debates have sprung up regarding which agency should receive power. Some also have suggested that a new council to oversee systemic risk should be created ... * WASHINGTON (5/22/09)--The Federal Deposit Insurance Corp. (FDIC) is expected to vote on a rule today regarding a special assessment fee that would be charged to financial institutions based on their asset sizes. In February, the FDIC said it would charge 20 basis points per $100 of second-quarter domestic deposits to raise $15 billion for the Deposit Insurance Fund (American Banker May 21). The fee is expected to total $6 billion ... * WASHINGTON (5/22/09)--The Federal Reserve Board Wednesday approved final amendments to Regulation D--Reserve Requirements of Depository Institutions--which would allow banks to earn interest on their excess reserves and liberalize the types of transfers consumers can make from savings deposits. The Fed said in a release that it is authorizing excess balance accounts to relieve pressure on correspondent-respondent business relationships in the financial environment. It also will evaluate the need for the accounts as market conditions evolve ... * WASHINGTON (5/22/09)--On Wednesday, the White House sent a memo to all executive departments and agencies asking them to review pre-emption doctrines (American Banker May 21). The memo did not mention banks or bank regulators, but the Supreme Court next month is expected to decide the case of Cuomo v. Clearing House LLC., which will determine whether states can enforce their own laws over national banks. In the case, justices will decide if the Office of the Comptroller of the Currency overshot its pre-emption interpretation of visitorial powers in 2004 ... * WASHINGTON (5/22/09)--A Treasury Inspector General report indicated that it was alarmed that officials at the Office of Thrift Supervision (OTS) directed or approved backdating of capital at six thrifts--including IndyMac Bank, which failed in July (Reuters May 21). The other five thrifts were unnamed, but the report said backdating took place from January 2007 to August 2008. Backdating allowed IndyMac to remain “well-capitalized” and avoid a requirement that could have prevented it from taking on risky deposits. The OTS, in its response, said it has devoted resources to the issue of backdating, and provided guidance to staff and the institutions it oversees about proper capital contribution recognition. Scott Polakoff, OTS director, was placed on leave because of allegations of backdating last year. The report by the Inspector General did not release details on the review of those allegations ...


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