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Inside Washington (04/15/2011)
* WASHINGTON (4/18/11)--Lawmakers last week were critical of the risk-retention proposal made by regulators, saying it will provide fewer consumers opportunities to purchase homes (American Banker April 15). Members of the House Financial Services capital markets subcommittee said the proposal’s definition of “qualifying residential mortgages” (QRMs)--which are exempt from the risk-retention requirements but must meet strict underwriting criteria, including a 20% down payment by borrowers--could be a loss of access to credit consumers. Some said community banks would not be able to offer non-QRM mortgages, leaving the market dominated by the biggest banks. Other areas of contention were the inclusion of limited servicing standards in the risk-retention plan and an exemption for government-sponsored enterprises while they are in conservatorship. Regulators say the QRMs represent only a small slice of the market. Fannie Mae and Freddie Mac are exempt because they offer a 100% credit guarantee for any loans they purchase, and retain them when the loans are sold as mortgage-backed securities … * WASHINGTON (4/18/11)--Acting Comptroller of the Currency John Walsh Thursday defended bank regulators for moving forward with enforcement action against the 14 largest mortgage servicers even while several of those banks continue to negotiate with state attorneys general and other federal agencies (American Banker April 15). Some observers say the enforcement actions will help the services gain leverage in ongoing negotiations. But Walsh said the regulators’ actions are not in conflict with those negotiations. “My hope is that our enforcement actions will establish a framework, and the actions that state law enforcement officials and the other federal agencies may take will be complementary to, and consistent with, what we are doing,” he said. “This is a messy process, and it will take time to put things right. There may be misunderstandings and disagreements along the way” … * WASHINGTON (4/18/11)--Members of both political parties on Thursday criticized the Financial Stability Oversight Council for a lack of details on designating financial institutions as systemically important as outlined in the Dodd-Frank Act (American Banker April 15). Randy Neugebauer (R-Texas), the chairman of the House Financial Services oversight subcommittee, said the council’s guidance lacked transparency and was little more than a word-for-word restatement of Dodd-Frank’s language. The council has released two proposals outlining the process for designating nonbank financial companies as systemically important, but neither provided details of regulators’ plans …


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