* WASHINGTON (9/29/09)--The Federal Reserve Board appears to be enhancing systemic risk and consumer protection regulation efforts. However, the Fed’s efforts may not silence critics in Congress, according to financial observers (American Banker
Sept. 28). The Fed recently announced it is working on a proposal that would limit executive compensation at financial institutions. It also said it would supervise nonbank subsidiaries of holding companies to ensure compliance with consumer protection rules. The Fed’s efforts send a message that the central bank is looking to fill oversight gaps, said Cornelius Hurley, a former Fed lawyer. The actions also remind policymakers that a financial overhaul is needed while the healthcare debate continues, added Chris Low, FTN Financial chief economist. But the Fed’s actions may not make any difference to several members of the Senate Banking Committee, including Chair Christopher Dodd (D-Conn.), who say that the central bank contributed to the financial crisis. Also, House Financial Services Committee Chair Barney Frank (D-Mass.) released a report last week that indicates the Fed has not used its power to protect consumers from “abusive industry practices” ... * WASHINGTON (9/29/09)--House Financial Services Committee Chairman Barney Frank (D-Mass.) is seeking a compromise that would require the Federal Reserve Board to disclose information about its operation. Rep. Ron Paul (R-Texas) has proposed a bill since 1983 that would let the Government Accountability Office (GAO) audit the Fed. The bill has received 295 co-sponsor signatures (American Banker
Sept. 28). The Fed views the bill as a threat to its independence, but Frank indicated that Scott Alvarez, Fed general counsel, said the Fed may accept a watered-down version--which would be added to regulatory reform. The GAO is not the only agency looking to investigate the Fed. Phil Angelides, chair of the Financial Crisis Inquiry commission, said he wants to investigate what role monetary policy had in the financial crisis ... * WASHINGTON (9/29/09)--Borrowing from banks may not be the best way to boost the Federal Deposit Insurance Corp.’s (FDIC) reserves, said FDIC Chairman Sheila Bair. Bair spoke Tuesday at the Clinton Global Initiative in New York (American Banker
Sept. 28). The agency can issue debt to banks, and though it’s a possibility, it’s not a preferred option, Bair said. However, James Dimon, CEO of JPMorgan Chase and Co., said Tuesday that the bank would lend money to the FDIC. The FDIC also could receive credit from the Treasury or charge banks another assessment. The Deposit Insurance Fund has dropped to $10 billion from $45 billion this year ... * WASHINGTON (9/29/09)--Recorded phone conversations that took place between public officials and borrowers at Countrywide Financial Corp. has triggered more questions from Congress about a controversial mortgage program, the VIP loan program. Rep. Darrell Issa (R-Calif.) attempted to subpeona records of the loan program, but his request was turned down by committee Chair Edolphus Towns (D-N.Y.). Bank of America, which bought Countrywide in July 2008, confirmed that a recording system existed, but said all of the program’s calls had been eliminated (The Wall Street Journal
Sept. 28). Issa wrote the bank asking what happened to the recordings and saying that the records could help provide information about what public officials were told by Countrywide personnel about favorable treatment they had received ... * WASHINGTON (9/29/09)--The Obama administration could commit up to $35 billion to help state and local housing agencies provide mortgages to low- and moderate-income families. The effort, which could be announced this week, aims to lift some pressure on government-operated housing agencies, known as HFAs (The Wall Street Journal
Sept. 28). The agencies offer rates 0.5% lower than commercial lenders. The program could be in place for three years and would be funded by Fannie Mae, Freddie Mac and the Treasury. HFAs fund 100,000 mortgages a year. To qualify for an HFA loan, borrowers must fulfill income requirements, have good credit and verifiable income ... * WASHINGTON (9/29/09)--World Bank President Robert Zoellick said the Treasury Department is better suited to manage financial crises than the Federal Reserve Board. He spoke Monday at a Washington university (The Wall Street Journal
Sept. 28). Zoellick said it would be hard to give the Fed more authority. The Fed is considered a contender to oversee systemic risk ... * WASHINGTON (9/29/09)--The Minnesota Credit Union Network (MnCUN) visited the National Credit Union Administration (NCUA) headquarters in Alexandria, Va.
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NCUA board member Michael Fryzel welcomed the group, saying that he appreciated their open dialogue with NCUA about key issues. From left are: Ken Blazing, Mayo Employees FCU; Bill Raker, US FCU; Russ Plunkett, Postal CU; Fryzel; Chuck Albrecht, Mid Minnesota FCU; Mark Cummins, CEO of the MnCUN; Dave Boden, Hiway FCU; and Mara Humphrey, MnCUN vice president of governmental affairs. (Photo provided by the Minnesota Credit Union Network) ...