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Inside Washington (06/09/2009)
* WASHINGTON (6/10/09)--Though a Treasury Department announcement that 10 of the largest U.S. financial institutions participating in the Capital Purchase Program have met the requirements for repayment, financial industry observers argue that regulators’ confidence in capital infusions to stabilize banks could be too optimistic. Treasury has notified the institutions that they can complete the repayment process, and if the funds are repaid, Treasury will receive $68 billion (American Banker June 9). There are still bad assets on some institutions’ balance sheets, critics say. The asset problem was there before the Troubled Asset Relief Program (TARP) and it will be there after TARP is gone, according to Karen Shaw Petrou, Federal Financial Analytics Inc. managing director. Douglas Elliott, a Brookings Institution fellow, said the government shouldn’t be overly optimistic, because there is much the industry doesn’t know yet. Lawrence White, finance professor at New York University, said if troubled assets don’t “come around,” there will be another TARP program ... * WASHINGTON (6/10/09)--Many financial institutions have not yet created an effective process or system to measure and manage risk, according to a Global Risk Management Survey by Deloitte and Touche LLP. Only about one-third of institutions have implemented enterprise risk management (ERM) solutions. Another one-third said they are establishing ERM, while 18% said they are planning to create ERM. “Most institutions have an unfinished agenda when it comes to the development of sophisticated risk-management capabilities, enabling an integrated, enterprise wide approach to managing the varied and dynamic risks they face. Financial institutions that can understand risk holistically--managing the full range of risks they confront--can strategically use risk-taking as a means to strengthen their competitive position and create value. Deloitte surveyed 130 financial institutions worldwide ... * WASHINGTON (6/10/09)--The 10 banking organizations required to bolster their capital buffers have all submitted capital plans that, if implemented, would provide sufficient capital to meet the required buffer, the Federal Reserve Board said Monday. The Fed said it would work with the institutions to ensure their plans are implemented quickly and effectively. Earlier this year, federal regulators deployed stress tests at 19 of the nation’s largest institutions. Results of the tests were released last month ... * WASHINGTON (6/10/09)--The U.S. Supreme Court is delaying the sale of Chrysler to Fiat because it is considering whether to hear the objections of three Indiana state funds and consumer groups (The New York Times June 9). The delay could be resolved by Thursday, but if the court decides to hear an appeal that lasts several weeks or months, Chrysler could be put at risk of going out of business, the Times said. Legal experts noted that the delay should not be interpreted as a sign of the court’s intentions. The delay comes after President Barack Obama said he would work to implement a quick bankruptcy process for Chrysler. A lawyer for Chrysler argued in a recent filing that the auto manufacturer loses $100 million per day while in bankruptcy. Under the Fiat deal, Chrysler would have a union retiree trust owning 55%; Fiat would own a 20% share that could increase to 35%; and the U.S. and Canadian governments would hold the minority stakes. Fiat can exit the deal with Chrysler if it is not complete by Monday ... * WASHINGTON (6/10/09)--National Credit Union Administration (NCUA) Chairman Michael E. Fryzel commended New Jersey Credit Union League members for being proactive in serving their members, and enthusiastic and skillful in working with congressional legislators, during a speech to the league June 4 in Township, N.J. “The credit union industry and NCUA have been through a difficult and challenging 10 months,” Fryzel said. “Despite unprecedented upheavals during what some are calling the most difficult year in the first century of the credit union industry, the record we have established is unarguably positive. In short, despite tremendous stresses on both the corporate and natural person credit union parts of the industry, we were able to make “business as usual” the word of the day. And for that, I believe we all deserve credit.” Fryzel also commended New Jersey credit unions for their proactive efforts involving chartering new credit unions, student loan participation and seeking a new state law that would allow credit unions to accept government deposits ... * WASHINGTON (6/10/09)--Twenty-two credit union leaders from Michigan and four representatives from the Michigan Credit Union League visited Capitol Hill last week to meet with lawmakers (Michigan Monitor June 8). “Legislators were thankful for the benefits of the Invest in America program in assisting our domestic automakers and the ongoing efforts of credit unions to serve their local communities,” said MCUL Executive Vice President Patrick La Pine. “As many lawmakers and their staff have heard the stories of struggling small businesses in their districts, we made sure they understood the advantage of lifting the member business lending cap.” In addition to visiting all 17 members of the Michigan congressional delegation, the group met with National Credit Union Administration (NCUA) Executive Director David Marquis about NCUA’s corporate stabilization plan. From left are: La Pine; Melinda Bouie of Oakland County CU; Scott Pauly, Onaway CU CEO; and Jeff Noe, Co-op Services CU executive vice president. (Photo provided by the Michigan Credit Union League) ...


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