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Inside Washington (02/05/2010)
* WASHINGTON (2/8/10)--Senate Banking Committee Chairman Christopher Dodd (D-Conn.) expressed his frustration at the slow pace of financial reform during a hearing Thursday with bank executives. Dodd has worked on a bill the past few months that would overhaul financial regulation. The White House is on the right track with reform, but many big banks refuse to work with Congress on the effort, Dodd said. Many industry lobbyists also are working to kill “common-sense financial reforms” the public is demanding, Dodd added (The New York Times Feb. 5). Barry Zubrow, chief risk officer and executive vice president of JPMorgan Chase, said President Barack Obama’s proposal to ban proprietary trading and limit bank risk would diverge from policymakers’ work to address the roots of the financial crisis. The activities the administration wants to ban didn’t cause the crisis, he added ... * WASHINGTON (2/8/10)--Resolution of large financial firms was again a hot topic among lawmakers at a Senate Banking Committee hearing Thursday. Hal Scott, a Harvard Law School professor, said interconnectedness among financial firms is a more important issue than the Volcker Rule, which has garnered much debate from policymakers in the past week. President Barack Obama proposed two weeks ago to ban proprietary trading. If banks are too big to fail, Obama’s proposal will have no effect, Scott said. Also during the hearing, Gerald Corrigan, managing director of Goldman Sachs Group Inc., offered some perspective on what is needed to resolve big banks in the event of a failure. A critical hurdle in resolving institutions is getting financial details to regulators on short notice, said Corrigan. Needed disclosures include valuations of asset classes, legal agreements, liquidity information, exposure to all counterparties, risk management frameworks and financial positions with exchanges and clearing houses, he added (American Banker Feb. 5). The reason nobody has been able to figure out a way to wind down institutions is because it’s “hard to do,” Corrigan said. He also recommended that firms conduct their own stress tests ...

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