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Inside Washington (10/15/2009)
* WASHINGTON (10/16/09)--The House Financial Services Committee approved the first-ever comprehensive regulation of the over-the-counter (OTC) derivatives marketplace. The bill, approved Thursday by a 43-26 vote, requires that all standardized swap transactions between dealers and large market participants, referred to as “major swap participants,” must to be cleared and must be traded on an exchange or electronic platform. According to a committee release, a major swap participant is defined as anyone maintaining a substantial net position in swaps, exclusive of hedging for commercial risk, or whose position creates such significant exposure to others that it requires monitoring. OTC derivatives include swaps, which are contracts that call for an exchange of cash between two counterparties based on an underlying rate, index, credit event or the performance of an asset… * WASHINGTON (10/16/09)--The Federal Deposit Insurance Corp. (FDIC) could finalize rules on Tuesday to end its temporary guarantee of unsecured debt starting Oct. 31. The agency last month proposed two options for ending the program (American Banker Oct. 15). One plan would forbid participants from issuing protected debt after the end of the month. A second option would have the same deadline but give institutions in distress another six months to apply for emergency coverage. The plan was launched last October as a part of the Temporary Liquidity Guarantee Program ... * WASHINGTON (10/16/09)--Credit and asset-quality declines for commercial real estate (CRE) loans may continue, banking regulators said Wednesday. CRE lending presents the biggest area of risk for credit losses at Federal Deposit Insurance Corp. (FDIC) institutions, said FDIC Chairman Sheila Bair at a Senate Banking subcommittee hearing (American Banker Oct. 15). FDIC-insured institutions hold a large stake of commercial mortgage debt outstanding, leaving their exposure to CRE loans at a “historic high,” she added. CRE loans backed by nonresidential or nonfarm properties account for nearly $1.1 trillion, or 14.2% of total loans. Business bank bankruptcies have increased 64% during the first half of the year, according to the Office of Thrift Supervision. Credit quality continues to worsen, added Comptroller of the Currency John Dugan ...

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