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Inside Washington (09/02/2009)
* WASHINGTON (9/3/09)--Two reports criticizing federal regulators’ oversight of failed banks were issued last week. The reports come after the Federal Deposit Insurance Corp. (FDIC) was criticized in July for “slow and inefficient” oversight of the failed Franklin Bank of Houston (News Now July 9). The reports state that regulators should have been tougher with the National Bank of Ocala, Fla., and MagnetBank in Salt Lake City. Both failed in January (American Banker Sept. 2). FDIC’s inspector general said the FDIC supervised MagnetBank but could have taken more action, such as noting a 2007 exam that indicated problems with the bank’s commercial real estate lending. The report also said the Office of the Comptroller of the Currency should have been quicker to address problems it identified at National Bank, which failed because of construction and development loan losses ... * WASHINGTON (9/3/09)--The Federal Reserve Bank of New York has expanded its network of Term Asset-Backed Securities Loan Facility (Talf) agents to include investors Wells Fargo Securities LLC, Williams Capital Group LP, Loop Capital Markets LLC and CastleOak Securities LP (American Banker Sept. 2). TALF is intended to make credit available to consumers and small businesses by facilitating the issuance of asset-backed securities ... * WASHINGTON (9/3/09)--The Mortgage Bankers Association (MBA) was expected to propose a framework Wednesday that would overhaul Fannie Mae and Freddie Mac by allowing them to create securities that could be backed by certain kinds of mortgages (The Wall Street Journal Sept. 2). The companies would back the securities against defaults and pay fees into a federal insurance fund that would in return guarantee interest and principal payments to bondholders. However, the insurance fund would only go into effect if the companies suffered big losses. The framework would replace the current system--which assumes that the government would back Fannie and Freddie if they ran into trouble. The proposed backstop is needed to revive investor confidence, said John Courson, MBA president/CEO. Foreign investors have reduced their holdings in companies’ debts even though the government had infused Fannie and Freddie with capital. On Tuesday, Fannie and Freddie’s shares reportedly fell 17% in the New York Stock Exchange ...


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