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Inside Washington (10/09/2009)
* WASHINGTON (10/9/09)--House Financial Services Chairman Barney Frank (D-Mass.) told reporters last week that action on an interchange bill is an “open question.” He called his committee’s hearing on the issue Thursday, at which the Credit Union National Association (CUNA) testified on behalf of credit unions, the beginning of a serious look at the issue, but told the press that he had no immediate plans beyond the hearing. The chairman noted that support for interchange fee legislation has been stronger in the Senate than it has been in the House. The difference between legislative bodies was the reason that interchange fee provisions were not included in credit card legislation passed earlier this year (American Banker Oct. 9). A separate story in the same issue noted that VISA Inc. launched an advertising campaign in Washington intended to spotlight the benefits of credit and debit cards over paper checks and money. Early in the week, print and digital ads appeared in D.C. and on Thursday--hearing day--television and radio ads began airing. On the other side of the issue, 7-Eleven Inc. and other retailers have run an intense campaign in favor of government restrictions on interchange fees. Gathering signatures in its shops over the summer, 7-Eleven delivered a petition to federal lawmakers with more than 1.66 million signatures backing interchange fee regulation. VISA and MasterCard have revealed studies that conclude consumers did not fully understand the issues involved in the petition. CUNA testified that regulation of interchange fees would interfere with consumer choice ... * WASHINGTON (10/12/09)--The Treasury Department announced that more than 500,000 trial loan modifications are in progress under the Making Home Affordable Program. The goal was originally set to reach 500,000 modifications by Nov. 1. Though modifications are being issued at a faster rate than new homeowners are becoming eligible, the Obama administration said it believes that “more can and should be done to assist struggling homeowners and to stabilize the housing market.” Senior Treasury Department and Department of Housing and Urban Development officials planned to discuss improving servicer efficacy and responsiveness to borrowers during the modification process in meetings Thursday ... * WASHINGTON (10/12/09)--Steps are needed to address transparency and accountability challenges in the Troubled Asset Relief Program (TARP), the Government Accountability Office (GAO) said in a report. As of Sept. 25, Treasury had disbursed $364 billion in TARP funds, but it has yet to update its projected use of funds for most programs. The projections will consider current market conditions, program participation rates and repurchases. The GAO expects the department’s ability to plan for and execute the plan’s next steps will be limited without more estimates about expected uses for the fund and the amount of money left. The GAO recommends that Treasury Secretary Timothy Geithner coordinate with the Federal Reserve and Federal Deposit Insurance Corp. (FDIC) to ensure that the decision to extend or eliminate TARP is considered in a broader market context; document and communicate the results of its determination; and update its projected use of funds. Treasury agreed with the first two recommendations, but regarding the third recommendation. The department said it regularly re-evaluates funding needs ... * WASHINGTON (10/12/09)--Senate Republicans Thursday pushed to include Fannie Mae and Freddie Mac into regulatory reform. Sen. Richard Shelby (R-Ala.) said the Obama administration made no effort to include the government-sponsored enterprises (GSEs) in its proposal. Instead, it said the GSEs would be dealt with next year--a move Shelby questioned during a Senate Banking Committee hearing. Sen. David Vitter (R-La.), agreed, saying it was odd Fannie and Freddie are “nowhere on the radar.” Committee Democrats avoided discussing the GSEs’ absence from the plan (American Banker Oct. 9). Taxpayers will have to eat the GSEs’ losses, said Peter Wallison, American Enterprise Institute fellow. Also during the hearing, Sen. Tim Johnson (D-S.D.) asked William Shear, Government Accountability Office (GAO) director of financial markets, how the proposed reform would affect mortgages. The GSE structure addressed regional disparities in mortgage rates, Shear said. The current financial system is large and diverse...a return to regional disparities is unlikely, he added ... * WASHINGTON (10/12/09)--Rep. Darrell Issa (R-Calif.) has challenged the Federal Reserve Board and the Treasury Department to explain documents indicating the government was aware of $3.6 billion in bonuses Merrill Lynch distributed, despite earlier claims that the government didn’t know about the bonuses (American Banker Oct. 9). Joe Price, the bank’s chief financial officer, said he gave the Treasury and the Fed documents about the bonuses on Dec. 17. Former Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke have said they did not know about the bonuses prior to Merrill’s merger with Bank of America. The company wasn’t hiding information from the government, Issa said in a letter to Bernanke and Paulson. If the bonuses were unfair, the government should have raised questions or objected before the company gave out another $20 billion of taxpayer money, Issa said ...


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