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House bill would audit FDIC closure policy
WASHINGTON (7/21/11)--A bill intended to bring more transparency to the Federal Deposit Insurance Corp.’s (FDIC) bank closure procedures was approved Wednesday by voice vote by the House Financial Services Committee. “Bank failures have hit states all across the country, posing a serious problem that’s negatively affecting our communities and stifling economic growth,” said the bill’s chief sponsor, Rep. Lynn Westmoreland (R-Ga.), in a release that also noted there were 140 bank failures in 2009 and 157 in 2010. Comparatively, 28 federally insured credit unions failed both in 2010 and 2009. Of the bank failures Westmoreland said, “We need to figure out exactly what is causing such a high number of banks across the country to fail. My bill (H.R. 2056) starts that process with an audit of the FDIC’s policies and procedures, including controversial practices like paper losses and loss-share agreements.” The committee release also said banks suffer from a regulatory “mixed messages problem,” where examiners fail to adhere to a regulator’s guidance. Westmoreland’s bill also would: * Facilitate coordination between the Inspector Generals of the FDIC, Federal Reserve, and the U.S. Treasury Department; * Require the FDIC Inspector General to submit the results of the required study and any recommendations to Congress within a year of enactment; and * Request that the Government Accountability Office, the investigative arm of the U.S. Congress, study the causes of high levels of bank failures and the “counter cyclical impact of fair value accounting standards” Westmoreland also noted that Georgia has been particularly hard hit with bank failures, with 67 closures since 2008. He added that local businesses are struggling with a resultant shortage of credit. The Credit Union National Association (CUNA) backs an increase in credit union member business lending (MBL) as a means to help small businesses access as much as $13 billion in new credit and add 140,000 new jobs to the economy—all at no cost to taxpayers. Legislation is pending in both the House and Senate to increase the MBL cap to 27.5% of total assets, up from the current 12.25%. The committee also voted on the following bills:
* H.R. 1539, Asset-Backed Market Stabilization Act of 2011 was approved 31-19; * H.R. 2527, Baseball Hall of Fame Commemorative Coin Act was approved by voice vote; and * H.R. 1751, CJ’s Home Protection Act of 2011 was approved by voice vote.
Use the resource link for more on those bills.
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