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Inside Washington (05/24/2011)
* WASHINGTON (5/25/11)--Foreign banks with U.S. operations have expressed concerns that they will be negatively impacted by the Dodd-Frank Act. Under the law, institutions with global assets of more than $50 billion are required to provide regulators with details of how the living wills they hold can be dismantled in a crisis, and are subject to “enhanced supervision” by the Federal Reserve Board (American Banker May 24). Foreign banks are uneasy because the designation is tied to global assets, not only their U.S. operations, the Banker said. Based on that threshold, about 100 foreign banks would be subject to the living will and enhanced supervision provision, compared with 35 U.S. banks. Thomas Pax, a partner at Clifford Chance in Washington, said many foreign banks have only one or two branches in the U.S. as a way to take advantage of the benefits available to U.S. bank holding companies. Most foreign banks were unprepared for the possibility that they would be affected by Dodd-Frank, he said. Federal Reserve officials have indicated they will scale supervision to a bank’s size and complexity … * WASHINGTON (5/25/11)--Big banks are urging the Federal Deposit Insurance Corp. (FDIC) to revisit new reporting requirements. Institutions with more than $10 billion of assets are required to report subprime consumer loans and loans to highly leveraged commercial borrowers in call report data due June 30 (American Banker May 24). The information will be used with other factors to create a risk-sensitive price. In creating the rule, finalized in February, the FDIC sought to make a bank’s price reflect the risks it was taking before those risks affected its performance. But in comment letters and during a meeting with the regulator this month, banks said the FDIC’s new definition of the two factors is more burdensome, and the accuracy of the new information cannot be guaranteed by the June deadline. They have requested adjustments to the reporting demands or more time to comply. A response from the FDIC is critical because bankers say implementing the changes places a burden on resources … * WASHINGTON (5/25/11)--The Capital Purchase Program (CPP), established as part of the Troubled Asset Relief Program, officially broke even last week. If banks continue making their scheduled dividend payments, the CPP will make a profit for the Treasury Department, according to a report released Monday by Keefe, Bruyette & Woods (American Banker May 24). Treasury invested $204.9 billion in more than 700 banks and thrifts through the CPP during the financial crisis. As of May 18, $205.1 billion (including interest) had been repaid to Treasury, the report said. So far, 109 banks have repaid the Treasury in full, for an average return on investment of 9.2%. In all, the Treasury still has $22 billion invested in 555 institutions, most of which are making quarterly payments. Treasury has written off four investments, totaling $2.6 billion. More than 150 banks have missed at least one dividend payment. In all, $194.5 million in dividend payments are past due, the report indicated …


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