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Inside Washington (05/12/2009)
* WASHINGTON (5/13/09)--A deal between Sen. Richard Shelby (R-Ala.) and Senate Banking Committee Chair Christopher Dodd (D-Conn.) could push a bill forward that would crack down on abusive credit card practices. The bill passed the House April 30 and is expected to be taken up in the Senate this week. The senators’ deal incorporates tougher changes than those President Barack Obama sought. The changes include requiring credit card companies to get cardholders’ permission before charging cardholders over-the-limit fees (American Banker May 12). The deal allows card companies to increase interest rates if the consumer is 60 days late on payments, but they would have to re-evaluate if the cardholder’s credit improved. The legislation’s effective date would be 90 days after enactment, although the industry has argued that it would not be ready to implement before July 2010. Shelby said he compromised on the bill because card reform is “overdue.” He included a provision requiring the Federal Reserve Board to report to Congress every two years on the cost and availability of credit ... * WASHINGTON (5/13/09)--The Federal Reserve Board’s estimates of needed capital buffers are “appropriately conservative,” said Ben Bernanke, Fed president, during a speech at a Federal Reserve Bank of Atlanta conference. Bernanke was referring to stress tests that were given to 19 of the nation’s largest banks. Results of the tests were released last week and indicated that several banks may need to raise more capital. Bernanke cautioned that the tests did not address some risks that institutions will have to cover in their own internal tests--such as operational, liquidity and reputational risks. “The stress used in the assessment program should be part of a broader palette of internal stress tests conducted by firms,” he said ... * WASHINGTON (5/13/09)--The Office of Management and Budget (OMB) and the Federal Deposit Insurance Corp. (FDIC) have conflicting estimates regarding bank failure-related expenses (American Banker May 12). The OMB said the expenses would cost $91 billion through 2010, while the FDIC projected net losses of $65 billion through 2013. The Obama administration likely weighs systemic risk more heavily than the FDIC, said George Pennachi, finance professor at the University of Illinois at Urbana-Champaign and former OMB consultant. However, the OMB also projected revenue into the FDIC that could offset some costs. The FDIC is expected to earn $21 billion through assessments this year and $24 billion next year. It also could raise $27 billion from regular premiums and a 20-basis point special assessment to cover losses to the Deposit Insurance Fund ...

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