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Inside Washington (06/10/2008)
* WASHINGTON (6/11/08)--A provision in the federal farm bill would allow lenders to make loans to businesses and individuals through the Small Business Administration’s (SBA) disaster program (American Banker June 10). The maximum loan limit is $2 million, and the SBA would guarantee 85%. The SBA previously had allowed only itself to make disaster loans, and had hired temporary employees to process the loans. After Hurricane Katrina in 2005, the SBA was able to process only a few thousand of the 200,000 applications it received ... * WASHINGTON (6/11/08)--The Federal Housing Administration (FHA) is solvent but cannot continue to suffer losses, said Brian Montgomery, FHA commissioner, in a speech Monday at the National Press Club. The FHA has a reserve of $21 billion, but it had to book an additional reserve of $4.6 billion after unanticipated long-term losses increased in certain types of seller-funded loans in the FHA portfolio, he said. “No insurance company can sustain that amount of additional costs year after year and still survive,” Montgomery said. “Unless we take action to mitigate these losses, FHA will soon either have to shut down or rely on appropriations to operate.” He noted that some proposed congressional actions could weaken the FHA by making it less stable. The FHA is pushing new regulations to reform the Real Estate Settlement Procedures Act (RESPA) to require mortgage lenders and brokers to display an estimate of settlement services, fees and charges ... * WASHINGTON (6/11/08)--Rep. Carolyn Maloney (D-N.Y.) is seeking support from congressional colleagues for her proposed legislation to crack down on credit card practices (American Banker June 10). She is the lead sponsor of card legislation before the House Financial Services committee. In a draft letter, she said she plans to address universal default, double-cycle billing and other issues in her legislation ... * WASHINGTON (6/11/08)--The Federal Deposit Insurance Corp. (FDIC) will launch a national advertising campaign to broaden public awareness of deposit insurance and the FDIC’s mission, Chairman Sheila Bair said in a speech Monday in Chicago. The campaign is a part of the agency’s 75th anniversary activities. It will address the increased public interest in deposit insurance issues. Four events in four cities across the country to share ideas about financial education and leadership also are planned ... * WASHINGTON (6/11/08)--On Monday, the Federal Reserve Board decided to scrutinize derivatives trading, which would prevent the failure of a major bank from creating a systemic threat as the collapse of Bear Stearns did (The Wall Street Journal June 10). Timothy Geithner, president of the Federal Reserve Bank of New York, met with 17 major financial institutions to create a system to oversee settlement and trading of credit derivatives. Meeting attendees also agreed to use a computerized system to register their trades for instant recording. Geithner has said that regulatory policy should go beyond supervision of firms and oversight should be extended beyond banks (The Wall Street Journal June 9) ...


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