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Inside Washington (12/04/2008)
* WASHINGTON (12/5/08)—Consumer protection by bank regulators is not an oxymoron, said Federal Deposit Insurance Corp. Chairman Sheila Bair in a speech Thursday, but those regulators need to change how they approach the role. Addressing the Consumer Federation of America’s Financial Services Conference here, Bair noted that the subprime “debacle” has shaken confidence in the bank regulators ability to protect consumers. “No doubt, when the next Congress convenes and looks at regulatory restructuring, there will be a robust debate on whether the federal banking agencies should maintain responsibility for consumer protection,” Bair said. She said that while “the bulk” of lending abuses were outside the banking sector, some banks were involved. Therefore, she added, if the federal banking agencies hope to keep their consumer protection jurisdiction, they need to demonstrate both to federal lawmakers and the public that they can be more proactive and effective in moving against harmful practices… * WASHINGTON (12/5/08)—Some Republican lawmakers may come back to Congress in January poised and ready to push their case that the Community Reinvestment Act (CRA) caused banks to make poor loans that lend to delinquencies and foreclosures and ultimately caused the subprime crisis. They will use that argument to try to springboard efforts to change CRA. (American Banker Dec. 4) However, at the same time, Bush administration officials have spoken out against criticism of CRA saying data does not support the idea that bankers made poor loans as a result of the requirements. Among those expressing strong support for CRA are Federal Reserve Board Governor Randall Kroszner, Comptroller of the Currency John Dugan and, most recently Federal Deposit Insurance Corp. Chairman Sheila Bair… * WASHINGTON (12/5/08)—House Minority Leader John Boehner and 11 other senior Republican members of the House sent a letter to U.S. Treasury Secretary Henry Paulson criticizing his failure to set clear goals and produce accountability for funds spent to date under the Trouble Asset Relief Program (TARP). The lawmakers signaled that they may launch an effort to clock release of the remaining $350 billion of funds (American Banker Dec. 4)… * WASHINGTON (12/5/08)—The Securities and Exchange Commission this week changed its rule for rating firms in an attempt to curb conflicts of interest and promote competition. Rating firms are now prohibited from rating a security if the firm or its affiliate helped structure it. Employees who work on ratings are barred from participating in fee arrangement. Also, the new rules ban them from accepting gifts worth more than $25 from security issuers, underwriters, or sponsors. (American Banker Dec. 4)…

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