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Inside Washington (08/24/2010)
* MINNEAPOLIS, Minn. (8/25/10)-- Addressing the Defense Credit Union Council’s 47th Annual Conference and Showcase here Tuesday, National Credit Union Administration board member Michael Fryzel praised defense credit unions for providing “outstanding financial services to the men and women who serve in our armed forces.” Fryzel told his audience of nearly 200 that the job they do on the nation’s military bases across the world, especially in providing financial counseling to service members from their first week of basic training and throughout their lives, is “not only commendable but goes above and beyond the call of duty.” On another subject, Fryzel told the credit union representatives that he believes it will take the efforts of “both the regulator and the regulated” to face upcoming challenges and ensure the survival and growth of the credit union system. “We must keep our head high and our shoulder broad as we carry the industry forward through this difficult period” that will lead to better financial times for the nation, he said… * WASHINGTON (8/25/10)--As the government hammers out new policy regarding a revamp of the nation’s housing policy in general, and the failed mortgage giants Fannie Mae and Freddie Mac specifically, policymakers will have to take a very close look at government guarantees.(The Wall Street Journal Aug. 24) The big challenge will be to figure out what types of loans or mortgage-backed securities should be given a guarantee, and how much the government should charge the housing industry for its backing. New policy must finely delineate between pricing a guarantee to accurately reflect the level of risk it poses to the taxpayer, while not pricing it so high that the cost of the guarantee to mortgage borrowers becomes too high. Alex Pollock, resident fellow at the American Enterprise Institute, acknowledged that setting the right fee to adequately reflect the value-vs.-cost ratio will be quite a challenge. However, Pacific Investment Management's Bill Gross, said at the administration’s housing summit last week that to suggest the private market can come back to take the place of the government simply won't work… * WASHINGTON (8/24/10)--The U.S. Court of Appeals in New York, in an Aug. 20 docket entry, declared it would not reconsider its ruling that demands that the Federal Reserve Board disclose the identity of financial firms that were kept alive by a government bailout. (Bloomberg News Aug. 24) The Fed had asked the court to review its decision and now may take its case to the U.S. Supreme Court. The appeals court decision, which upheld a lower-court ruling, requires the Fed to release documents of the unprecedented $2 trillion loan program that started after the 2008 collapse of Bear Stearns Cos… * WASHINGTON (8/25/10)--While many credit the Federal Reserve Board under Ben Bernanke’s leadership as having steered the economy away from a second Great Depression, some subsequent policy decisions by that agency are just becoming more contentious as the economic recovery is showing some signs of reversal.(The Wall Street Journal Aug. 24) In fact, the most contentious issue to come over the Fed’s horizon recently is whether to infuse more money into the system and buy long-term securities beyond what was purchased through a bond-buying program that ended in March. With a back drop of a sputtering recovery, an Aug. 10 meeting of the Fed’s top officials featured perhaps some of the most diverse debate since Ben Bernanke began his tenure as Fed chairman four-and-a-half years ago. At least seven of 17 Fed officials, to some degree, spoke against a proposal that would change the way the Fed manages its huge portfolio of securities--but the move was approved…


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