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Inside Washington (08/09/2012)
  • WASHINGTON (8/10/12)--The Federal Housing Finance Agency (FHFA) said Wednesday it would consider taking action against municipalities that used eminent domain to revise mortgage loans (American Banker Aug. 9). The agency did not say what actions it would take, but expressed concern that losses resulting from such programs would ultimately be paid for by taxpayers. "FHFA has determined that action may be necessary on its part as conservator for the enterprises and as regulator for the banks to avoid a risk to safe and sound operations and to avoid taxpayer expense," the agency wrote in a notice. In June, California's San Bernardino County and two of its city governments, Fontana and Ontario, introduced a plan to use eminent domain powers to seize mortgage loans from private investors (News Now July 10) …
  • WASHINGTON (8/10/12)--Financial education supports not only individual well-being, but also the economic health of the nation, Federal Reserve Chairman Benjamin Bernanke said in a town hall meeting with teachers Wednesday.  "As the recent financial crisis illustrates, consumers who can make informed decisions about financial products and services not only serve their own best interests, but, collectively, they also help promote broader economic stability," Bernanke said. "Smart financial planning--such as budgeting, saving for emergencies, and preparing for retirement--can help households enjoy better lives while weathering financial shocks. Financial education can play a key role in getting to these outcomes." Students should be taught how to apply an economic way of thinking to their decisions, Bernanke suggested. Financial education also provides a context for students to develop skills that can be applied more broadly. Making good financial decisions requires that consumers seek out relevant information from trustworthy sources, and that they use critical thinking, quantitative reasoning and decision-making skills, he said …
  • WASHINGTON (8/10/12)--Sen. Bob Corker (R-Tenn.) reiterated his concerns about extending the Transaction Account Guarantee (TAG) program in a letter he wrote to Martin Gruenberg, acting chairman of the Federal Deposit Insurance Corp. (FDIC) (American Banker Aug. 9). TAG was initiated by the FDIC as a voluntary program in 2008 during the financial crisis to address concerns that a large number of account holders might withdraw their uninsured account balances from financial institutions due to economic uncertainties. The program was meant to be temporary, Corker wrote in his letter. He asked Gruenberg if extending TAG was a moral hazard and if it would affect the payment of bank deposit insurance premiums …
  • WASHINGTON (8/10/12)--Sens. David Vitter (R-La.) and Sherrod Brown (D-Ohio) sent a bipartisan letter urging Federal Reserve Chairman Ben Bernanke to increase the capital requirements of big banks. "Placing higher capital requirements on megabanks is a common sense way to fix the dangers of too-big-to-fail, and Chairman Bernanke has even said this would make our financial system safer with limited impact on the economy," Vitter wrote. "The megabanks should bear their own risks so that taxpayers won't get hung out to dry with another Wall Street bailout." Research by the Federal Reserve and other regulators shows the tougher capital requirements will reduce the threat of another financial crisis, while doing little to limit economic growth, Vitter and Brown wrote in their letter. In December, the Fed issued a package of rules implementing Section 165 of the Dodd-Frank Act. The rules addressed issues such as risk-based capital requirements, leverage, resolution planning and concentration limits …
  • WASHINGTON (8/10/12)--The Federal Deposit Insurance Corp. (FDIC) has reached settlements with Higher One Inc., New Haven, Conn., and The Bancorp Bank, Wilmington, Del., over alleged unfair and deceptive practices by the banks. Higher One is an affiliate of The Bancorp Bank. Under the settlement, Higher One has agreed to provide restitution of roughly $11 million to about 60,000 students. In addition, the FDIC imposed civil money penalties of $110,000 for Higher One and $172,000 for The Bancorp Bank. The banks were allegedly charging student account holders multiple nonsufficient fund (NSF) fees from a single merchant transaction; allowing the accounts to remain in overdrawn status for extended periods, which accrued additional fees; and collecting the fees from subsequent deposits to the students' accounts, typically funds for tuition and other college expenses. Under the settlement terms, Higher One can no longer charge NSF fees to accounts that have been in a continuous negative balance for more than 60 days; cannot charge more than three NSF fees on any single day to a single account; and cannot charge more than one NSF fee for a single automated clearing house transaction that is returned unpaid within a 21-day period …


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