* WASHINGTON (6/5/09)--The Obama administration may announce its plan to overhaul the nation’s financial regulatory structure on June 17, according to a Thursday report by Reuters
. Attributing the information to a U.S. Treasury Department source and “a source familiar with thinking at the U.S. Treasury Department,” the article stated that the administration will not propose a single, super bank regulator to replace the current system. It is more likely to propose merging the Office of Thrift Supervision and the Office of the Comptroller of the Currency. The article noted that both administration officials and federal lawmakers have indicated they want to have broad legislation regarding financial reform passed this year. The lawmakers and the executive branch have been meeting to craft a proposal, which could place the Federal Reserve Board as a systemic risk monitor and allot the Federal Deposit Insurance Corp. new powers to address large, troubled financial institutions … * WASHINGTON (6/5/09)--Former Federal Reserve Board Chairman Alan Greenspan said there is no escaping the idea that some large financial institutions are “too big to fail.” Addressing the problem has drawbacks, he said (American Banker
June 4). At a minimum, the government would have to offset the borrowing cost advantage by imposing a comparable cost--like increasing capital requirements, he said. Another alternative would require nonbanking business to be conducted by partnerships. But then, nonbanks could convert to a bank charter so they could take on risk. Greenspan said he was puzzled that more banks have not formed during the housing crisis because a new bank without toxic assets could generate profit ... * WASHINGTON (6/5/09)--House Small Business Committee Chairman Nydia Velazquez (D-N.Y.) sent a letter Tuesday to Small Business Administration (SBA) Administrator Karen Mills criticizing a program SBA announced last week that would secure financing for auto dealers’ inventories (American Banker
June 4). She expressed concerns that the program is risky and would reach only a few businesses. Velazquez’s concerns are surprising, said Jonathan Swain, SBA assistant administrator for communications. The program had strong support from the White House, Congress and auto dealers. Before Mills took office, Sen. Olympia Snowe (R-Maine) and Jeanne Shaheen (D-N.H.) requested that SBA guarantee floor plan loans. Sen. Mary Landrieu (D-La.) also said she supports the program. However, banking industry groups have questioned the plan and said Velazquez raises legitimate concerns ... * WASHINGTON (6/5/09)--Federal Housing Finance Agency (FHFA) Director James Lockhart provided several frameworks for the future of Fannie Mae and Freddie Mac during a meeting with the House Financial Services Committee subcommittee on capital markets Wednesday. He suggested charging premiums for catastrophic reinsurance for the secondary mortgage market. The enterprises also could be used as a catastrophic risk insurer, a provider of subsidies or a liquidity provider of last resort for the mortgage market (American Banker
June 4). Nationalization is still a solution, but could create a moral hazard by allowing for risk, he said. The enterprises also could be privatized, remain as they are, or be merged with the Federal Housing Administration, he said. During the meeting, Lockhart also lobbied FHFA for a role to prevent systemic risk. ... * WASHINGTON (6/5/09)--The Federal Deposit Insurance Corp. (FDIC) said Wednesday that development of its Legacy Loans Program will continue but a planned pilot sale of assets by open banks will be postponed. The program would match private and government equity with FDIC-guaranteed debt to let investors buy bad bank assets. FDIC will test the funding mechanism in a sale of receivership assets this summer. The agency said it expects to solicit bids for this sale of receivership assets in July ... * WASHINGTON (6/5/09)--National Credit Union Administration (NCUA) Chairman
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Michael Fryzel toured State Farm FCU in Bloomington, Ill., on May 27. Fryzel met with CEO Tom DeWitt, and members of the board and executive staff to discuss NCUA’s Corporate Stabilization Plan and the economy. From left are: Jacquie Bristow, member services manager; Mike Mailloux, board vice-chair; Steve Gorrie, operations manager; DeWitt; Fryzel; Laura Haas, board chair; Rob Moser, associate vice president of human resources; and Bob Force, financial manager. (Photo provided by the National Credit Union Administration) ...