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Inside Washington (09/23/2009)
* WASHINGTON (9/24/09)--House Financial Services Committee Chairman Barney Frank (D-Mass.) and Senate Banking Committee Chairman Christopher Dodd (D-Conn.) said they are moving forward with legislation to reform the financial system. Reports that financial reform has stalled are wrong, Frank said. So far, there is agreement among lawmakers on some of the reform’s basic components: creating a consumer financial protection agency, enhancing resolution authority, consolidating banking supervision and increasing financial institutions’ capital requirements (American Banker Sept. 23). However, Dodd and Frank disagree on whether to consolidate all regulators into one. Frank said he does not in favor the idea, adding that two regulators would not make much difference if an institution failed. He would prefer a “hybrid” approach to managing systemic risk, whereas President Barack Obama has proposed giving the Federal Reserve Board oversight powers, Frank said. He is drafting a bill to create a consumer protection agency. The bill could be released in a couple days ... * WASHINGTON (9/24/09)--The inspector general of the Federal Deposit Insurance Corp. (FDIC) has released a report regarding the agency’s monitoring of IndyMac Bank, which collapsed in July 2008. The report said that until late 2007, FDIC officials consistently concluded that despite IndyMac’s high-risk profile, the bank posed an ordinary--or slightly more ordinary--level of risk to the insurance fund based on its CAMEL rating. When FDIC increased its monitoring of the bank, resumed its on-site presence and assessed a higher insurance premium, IndyMac’s financial condition was irreparable due to declining real estate values, credit quality problems and the collapse of the secondary market. FDIC, citing favorable composite ratings, did not request that the Office of Thrift Supervision take or pursue its own enforcement action against IndyMac, the report said ... * WASHINGTON (9/24/09)--The Federal Deposit Insurance Corp. (FDIC) plans to meet Tuesday to discuss a plan that would boost the reserves of the Deposit Insurance Fund. At the end of last quarter, the fund held $10 billion (American Banker Sept. 23). FDIC Chairman Sheila Bair said the agency is looking at several options to boost the fund, instead of giving banks another premium assessment. Many banking trade groups have urged the FDIC not to issue another special assessment ... * WASHINGTON (9/24/09)--U.S. officials say they’re confident that an agreement will be reached at the Group of 20 (G-20) Summit in Pittsburgh on strategies to prevent the problems that triggered the financial crisis (The New York Times Sept. 23). Treasury Secretary Timothy Geithner has been pushing a framework of principles that require financial institutions to build their capital reserves to prevent investment losses and cash shortages. U.S. officials also said they were hopeful they’d reach an agreement with European leaders on executive compensation regulation. French officials have favored putting caps on bonuses for executives--which British and American regulators think is too harsh. Geithner said the goal of the G-20 meeting is to get the countries to agree on what is in their best long-term interest. The goal of the meeting is to make people look forward and at the imbalances and risks “building up,” he said. Some financial observers, such as Simon Johnson, senior fellow at the Peterson Institute for International Economics, said the meeting would not carry much weight. The G-20 leaders haven’t even set timelines for ending their own countries’ emergency economic stimulus measures, Johnson told the Times ...


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