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House subcommittee looks at bank failures
WASHINGTON (1/22/10)—A House Financial Services subcommittee Thursday took a look at the condition of financial institutions through a case study of a recent bank failure. The House subcommittee on financial institutions and consumer credit, which is chaired by Rep. Luis Gutierrez (D-Ill.), heard from representatives of the banking industry and the U.S. Treasury Department, as well as federal bank regulators. In written testimony, Director Mitchell Glassman of the Federal Deposit Insurance Corp’s (FDIC’s) division of resolutions and receiverships reiterated the agency’s 2009 bank-failure experience. Glassman noted that the FDIC resolved 140 insured institutions with over $171 billion in total assets. He added, “While the economy is showing signs of improvement, recovery in the banking industry tends to lag behind other sectors. We expect to see the level of failures continue to be high during 2010.” Glassman testified that the FDIC is prepared and ready to handle the situation. Due to staffing enhancements that began several years ago and other changes, such as last year’s expansion of the agency’s Receivership Assistance Contractors and geographic expansion through temporary satellite offices on both the west and east coasts, Glassman said the FDIC stands ready to manage bank closing and receivership activities throughout the country. Other witnesses included representatives of: Bethel New Life Inc., a faith-based community group with a focus on Chicago’s West Side; FBOP Corporation; U.S. Bank; Austin Bank; Treasury, and the Office of the Comptroller of the Currency. Today, the parent Financial Services Committee intends to take a look at compensation in the financial industry. Three scheduled witnesses are: Lucian Bebchuk, from Harvard Law School; Nell Minow, editor and founder of The Corporate Library, and Joseph Stiglitz, from the Columbia Business School.


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