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Inside Washington (10/11/2011)
* WASHINGTON (10/12/11)--The Federal Reserve Board and the Office of Comptroller of Currency (OCC) Tuesday issued a proposal outlining a ban of proprietary trading and limitations on private equity investments. Part of the Dodd-Frank Act, the proposal, which will be issued jointly with the Fed, the OCC, Federal Deposit Insurance Corp., and the Securities and Exchange Commission, clarifies the scope of the act’s prohibitions and provides certain exemptions. The proposed rule would require banking entities to establish an internal compliance program, subject to supervisory oversight, that is designed to ensure and monitor compliance with the statute’s prohibitions and restrictions. Banks with significant trading operations would be required to report to the appropriate federal supervisory agency certain quantitative measurements designed to assist agencies and banking entities in identifying prohibited proprietary trading in the context of certain exempt activities and identifying high-risk trading assets and strategies. Transactions in certain instruments--including obligations of the U.S. government or a U.S. government agency, government-sponsored enterprises, and state and local governments--are exempt from the statute’s prohibitions. Activities exempted include market making, underwriting and risk-mitigating hedging. The statute also would allow banks to offer a hedge fund or private-equity fund subject to certain conditions. The proposal distinguishes permitted market making-related activities from prohibited proprietary trading activities and includes elements to reduce its effect on smaller, less-complex banks … * WASHINGTON (10/12/11)--Faced with hundreds of comment letters objecting to their risk-retention proposal, regulators may issue a new proposal rather than make an attempt to finalize the existing plan, according to industry observers (American Banker Oct. 11). The proposal seeks to implement a Dodd-Frank provision requiring banks to retain 5% of the credit risk when reselling mortgage loans. But industry feedback has been critical of the plan’s scope, including how risk retention would be calculated, what regulators di to prohibit securitizers from avoiding retention and proposed exemptions. If too many changes to the initial proposal are made, regulators must seek comment again or issue an interim final rule with a comment period. Agencies said they would meet about rule, but did not indicate if they had decided to issue a new proposal … * NEW ORLEANS (10/12/11)--National Credit Union Administration (NCUA) Board Member Michael E. Fryzel spoke to the National Coalition of Firefighter Credit Unions summit in New Orleans on Monday, drawing comparisons between the firefighter family and how credit unions support their members. “For firefighters, success or failure depends on cooperation,” said Fryzel. “This is why firefighters, first-responders and credit unions are such a natural fit together. Credit unions embrace and reinforce the family of their members. They are cooperatives.” Discussing the member business lending (MBL) needs of firefighter entrepreneurs, Fryzel said, “Making firefighter credit unions a greater source of credit to firefighter family businesses can be very helpful for members, and continue the bond that firefighters share.” The Credit Union National Association (CUNA) and credit unions are urging Congress to increase the credit union MBL cap to 27.5% of assets from 12.25%. Doing so would open up more opportunity for credit unions to offer MBLs, inject $13 billion in loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers, CUNA said …


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