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Inside Washington (09/14/2011)
* WASHINGTON (9/15/11)--Three years after the government seized Fannie Mae and Freddie Mac, lawmakers do not appear close to a formal proposal for reforming the government-sponsored enterprises (American Banker Sept. 14). During a hearing on housing reform--the 10th such hearing since Fannie and Freddie’s seizure--Democrats and Republicans on the Senate Banking Committee spoke in broad outlines about their preferences for reform. U.S. Sen. Tim Johnson (D-S.D.) said he was concerned about the unintended consequences if a government role is eliminated completely from the housing market. U.S. Sen. Richard Shelby (R-Ala.) was critical of the taxpayer dollars that were put at risk and lost under the former system, but he stopped short of calling for a fully privatized solution. Although the meeting included similar disagreement, no comprehensive proposals were offered. The maximum size of loans guaranteed by Fannie, Freddie and the Federal Housing Administration will decrease unless Congress takes action this month … * WASHINGTON (9/15/11)--The final rule that requires the largest financial firms to provide “living wills” will give companies more time to complete their plans than initially proposed. Randy Guynn, a partner and head of Financial Institutions Group at Davis & Polk, said that in showing more flexibility the Federal Reserve Board and Federal Deposit Insurance Corp. (FDIC) listened to the concerns of large financial institutions during the comment process after the initial rule was proposed in April (American Banker Sept. 14). The FDIC voted 3-0 to approve the final rule on Tuesday. The Fed is expected to approve the rule later this month. Living wills are required as part of the Dodd-Frank Act. They are designed to give regulators an outline of how otherwise healthy firms would wind down if they failed. Under the initial proposal, firms would have been required to submit their resolutions plans no later than 180 days after the rule became effective. The final rule provides firms with staggered phase-in periods. The largest, most complex firms will be required to go first, to inform the process, the Banker said … * WASHINGTON (9/15/11)--The Federal Deposit Insurance Corp. (FDIC) Board on Tuesday adopted guidelines outlining the process it will use to make an adjustment to the score used to calculate the deposit insurance assessment rate for large banks. The guidelines apply to institutions with $10 billion or more in assets. The new methodology combines CAMELS ratings and financial measures to produce a score that is converted into an institution’s assessment rate. The FDIC is authorized to adjust an institution’s total score by 15 points. The FDIC said it will primarily consider two types of information in determining whether to make an adjustment: (1) a scorecard ratio or measure that exceeds the maximum cutoff value for that ratio or measure or is less than the minimum cutoff value, along with the degree to which the ratio or measure differs from the cutoff value; and (2) information not directly captured in the scorecard, including complementary quantitative risk measures and qualitative risk considerations …


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