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Inside Washington (07/21/2010)
* WASHINGTON (7/22/10)--The Treasury Department’s Community Development Financial Institutions (CDFI) Fund will conduct a series of conference calls about CDFI certification. The calls will serve as a forum for potential certification applicants to ask questions. All calls will be held from 3 p.m. to 4 p.m. ET. The number is 202-927-2255. The calls are scheduled for Aug. 19, Sept. 16, Oct. 14 and Nov. 18. The CDFI Fund certifies organizations as CDFIs, which provide financing to low-wealth individuals. Credit unions are eligible to become CDFIs ... * WASHINGTON (7/22/10)--Under the regulatory reform bill, the Federal Reserve will no longer be required to defer to functional regulators when it wants to examine an entity such as broker-dealer or bank affiliate. The Fed’s new authority signals a major change in the approach to functional oversight, according to American Banker (July 21). The Gramm-Leach-Bliley Act of 1999 instructed the Fed to avoid subsidiaries regulated elsewhere and to defer questions about such subsidiaries to other regulators. Under the reform bill, the Fed can consult with “the appropriate regulator” with reasonable notice when it suspects trouble. For nonbanks, the Fed can recommend that the functional regulator of a subsidiary initiate a supervisory action. If an acceptable response is not given to the Fed within 60 days, it can take an enforcement action as if the subsidiary was supervised by the Fed. Fed officials have not indicated how the central bank would handle the new rules, but said they aim to get a broad view of the companies they monitor. Assessing risk of a holding company and its subsidiaries requires a comprehensive assessment of activities within the company, said Jon D. Greenlee, Fed associate director of banking supervision and regulation ... * WASHINGTON (7/22/10)--Regulators at a Tuesday hearing before a Senate Banking subcommittee stressed the need for foreign regulators to follow the U.S.’ financial reforms. Capital rules need to be enforced internationally to be effective in the U.S., said Lael Brainard, Treasury undersecretary of international affairs (American Banker July 21). Also, without internationally consistent standards, large financial firms will move their activities to jurisdictions with looser standards. This could create a “race to the bottom” and make systemic risk more problematic, she added. Federal Reserve Board Gov. Daniel Tarullo noted that the U.S. agrees with the Group of 20 regarding minimum capital requirements. But, it’s not practical to negotiate all of those details internationally and the U.S. should be flexible to adopt prudential regulations, he said. Regulators at the hearing largely appeared to support the reform bill, because its pieces are align with the G-20’s efforts ...


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