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Inside Washington (06/26/2009)
* WASHINGTON (6/29/09)--The Supreme Court is slated to announce Monday its decision on a banking preemption case, Cuomo v. Clearing House Association LLC. The court will decide if the Comptroller of the Currency has the sole power to enforce laws, even state statutes, over national banks. The decision will be made as President Barack Obama pushes for eliminating preemption to strengthen consumer protection at banks (American Banker June 26). The case is related to a 2005 investigation conducted by former New York Attorney General Eliot Spitzer, who asked Citigroup, Wells Fargo and Co., and JP Morgan Chase and Co. to provide him with data so he could determine if they engaged in discrimination. The banks did not give him the data, so Spitzer threatened to sue them. The agency said they did not have to give up the data because of visitorial powers. Current New York Attorney General Andrew Cuomo, who took on the case after Spitzer, argued that a federal preemption does not prevent a state from prosecuting its laws (News Now April 28) ... * WASHINGTON (6/29/09)--The Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, and Office of Thrift Supervision Friday invited public comment on an interim final rule that provides that mortgage loans modified under the U.S. Department of the Treasury's Making Home Affordable Program (MHAP) will retain the risk weight applicable before modification. On March 4, the Treasury announced guidelines under the MHAP to promote sustainable loan modifications for homeowners at risk of losing their homes to foreclosure. The interim final rule would provide a common interagency capital treatment for mortgage loans modified under MHAP. For example, mortgage loans risk weighted at 50% prior to modification would remain at 50% after modification provided they continue to meet other applicable criteria ... * WASHINGTON (6/29/09)--Uncertainty surrounding Federal Reserve Board Chairman Ben Bernanke’s role in Bank of America’s acquisition of Merrill Lynch and Co. could affect whether the government will give the central bank more power under a financial system revamp plan, according to financial industry observers. Lawmakers have expressed that they do not want to give the Fed more power until Bernanke’s role in the Bank of America deal is clarified (American Banker June 26). A hearing by the House Oversight and Government Reform Committee last week focused on whether giving the Fed more power is a good idea. Republicans on the committee leaked e-mails Wednesday that suggest the Fed left out the Securities and Exchange Commission (SEC) and the Office of the Comptroller of the Currency when it decided how the Merrill deal should be completed. The Fed’s cover-up of information raises questions about how it can work collaboratively with its partners in the federal government, said Rep. Darrell Issa (R-Calif.). Rep. Edolphus Towns, House Oversight and Government Reform Committee chair, said there are too many “sweetheart deals” and regulatory reform must ensure the agencies cooperate. Bernanke has said it wasn’t as important to keep the SEC informed about the Merrill deal because it does not supervise Bank of America. Bernanke’s role in the Bank of America deal is especially important because his term as Fed chief expires in January. It is not known whether President Barack Obama intends to reappoint him ...


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