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Inside Washington (05/25/2012)
  • WASHINGTON (5/29/12)--CKE Restaurants Inc., operator of such fast-food chains as Carl's Jr. and Hardee's, joined with with Burger King, 7-Eleven, International Dairy Queen Inc., Jack in the Box Inc., Starbucks Corp., The Wendy's Co. and Auntie Annie's Inc. last week to file a "friends of the court" brief in federal court backing the retailers' debit interchange lawsuit. That suit alleges that the Federal Reserve Board adopted an unreasonably high interchange cap on debit card transaction fees when it implemented provisions of the Dodd-Frank Act (Law360 May 24). The lawsuit was filed in November 2010 by the National Retail Federation, the Food Marketing Institute, the National Association of Convenience Stores and two retailers. The retailers argue that the Fed's final rule, which basically sets a 21-cents per transaction cap, included costs not permitted by the law. The Fed has filed a motion to dismiss the case, stating its rule is reasonable and within the authority granted by Dodd-Frank. As reported in the Credit Union National Association's (CUNA) News Now on March 16, CUNA and a coalition of trade associations representing thousands of small and large financial institutions filed their own amicus brief in the case, providing financial institutions' perspective regarding the Fed's rule. The joint brief underscored that consumers have not seen any pricing benefits for products and services merchants promised when they fought for a government-set cap on what card issuers may charge for their services  …
  • WASHINGTON (5/29/12)--Fannie Mae seeks to reduce the cost of force-placed insurance, in part by preventing banks from purchasing the product. In response to reports of self-dealing and kickbacks in the force-placed insurance market, Fannie said it would replace the loans it guarantees with policies acquired from providers of its choosing (American Banker May 25). Forced-place insurance is an insurance policy taken out by a lender or creditor when a customer does not carry insurance on an asset. The charges for this insurance are passed on to the customer. Fannie's request for comment, released to the public on Thursday, would cut banks out of the sales process and require insurers to bid separately for other components of the force-placed business. This would reduce the potential for insurers to sell policies aggressively and to lump administrative costs into the premiums they charge ...
  • WASHINGTON (5/29/12)--The expiration of the Transaction Account Guarantee (TAG)  on Dec. 31 could initiate a reshuffling of as much as $1.3 trillion deposits (American Banker May 25). TAG is a program in which includes made investments in more than 300 banks made during the financial crisis. It provides federal backing for noninterest bearing deposits. The Dodd-Frank Act extended the unlimited coverage, but lawmakers do not appear willing to extend it again. Some community banks could be required to obtain private market coverage if the program expires, but large banks have primarily benefited from the program, according to Joshua Siegel, CEO of StoneCastle Partners, a New York fund that invests in community banks …
  • WASHINGTON (5/29/12)--A Senate Banking Committee hearing offered hope for a bipartisan compromise on mortgage refinancing legislation. Sens. Bob Corker (R-Tenn.) and Robert Menendez (D-N.J.)  indicated they had positive discussions about the bill (American Banker May 25). Corker's approval would allow the bill to pass through the committee and help it garner the 60 votes required to to pass legislation in the Senate. The legislation would make refinancing easier for millions of homeowners holding Fannie Mae and Freddie Mac mortgages. Among the changes Corker wants in the legislation is a condition that would prevent homeowners from refinancing more than once. He would also like Fannie and Freddie retain the ability to return refinanced mortgages to their originators …
  • WASHINGTON (5/29/12)--Esther George, president of the Federal Reserve Bank of Kansas City, on Thursday said bankers should be allowed to maintain seats on the boards of the 12 regional Fed banks. Her comments were made two days after Sen. Bernie Sanders (I-Vt.) introduced legislation to prohibit banking industry executives from serving as directors of the 12 Federal Reserve regional banks. "Yes, bankers should serve," George said. "They provide valuable information about the economy, credit conditions, and the payments system." The aftermath of JPMorgan Chase & Co.'s $2 billion trading loss has raised concern about Wall Street's relationship with the Federal Reserve Bank of New York. Jamie Dimon, JPMorgan's chairman and CEO serves as a board director for the New York Fed …
  • WASHINGTON (5/29/12)--The Federal Reserve Board on Thursday released action plans for Citigroup and HSBC Finance Corporation to correct deficiencies in residential mortgage loan servicing and foreclosure processing. It also released the engagement letter between Ally Financial Inc. and the independent consultant retained by Ally to review foreclosures that were in process in 2009 and 2010. Also, the Federal Reserve released a supplemental agreement with Ally to address the institution's foreclosure review obligations following the recent action by Ally's mortgage servicing subsidiaries to seek protection under the U.S. Bankruptcy Code. The action plans are required by formal enforcement actions issued by the Federal Reserve last year. The enforcement actions require the mortgage loan servicers regulated by the Federal Reserve and the parent holding companies of mortgage servicers to submit acceptable plans to improve their procedures and controls and oversight of foreclosure activities. The enforcement actions further require the mortgage servicing subsidiaries to provide appropriate remediation to borrowers who suffered financial injury as a result of errors by the servicers …
  •  WASHINGTON (5/29/12)--The Commodity Futures Trading Commission (CFTC) will hold a public roundtable on Thursday to discuss the proposed regulations to implement Section 619--commonly known as the Volcker Rule--of the Dodd-Frank Act. Section 619 contains certain prohibitions and restrictions on the ability of banking entities to engage in proprietary trading and to have certain interests in, or relationships with, a hedge fund or private equity fund. The roundtable will consist of two panels that are composed of market participants and members of the public. The first panel, starting at 9:30 a.m. ET, will discuss the various hedging provisions and requirements of the CFTC's proposed Volcker Rule. The second panel will start at 2 p.m., and discuss the market-making sections of the CFTC's proposed Volcker Rule …


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