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Inside Washington (09/22/2009)
* WASHINGTON (9/23/09)--The hangover from the Troubled Asset Relief Program (TARP) will be felt for a long time, even after the TARP money is repaid, according to a former Federal Reserve Board lawyer. Cornelius Hurley said TARP was a “massive injection of taxpayer dollars.” It will be hard to recover from that, he added. William Isaac, former Federal Deposit Insurance Corp. chair, said TARP turned the banking system into a “public utility,” which will be hard to turn around. Financial observers have criticized TARP, saying that it was a mistake (American Banker Sept. 22). TARP ruined the working relationship between banks and the Treasury, said Robert Clarke, a former comptroller of the currency. The program could have been offered on an optional basis, he added. Alan Blinder, former Fed vice chair, agreed. The program should have been more voluntary, he said. About 37 institutions have repaid more than $70 billion in TARP funds. Of the first nine banks that received money, all but Wells Fargo, Citigroup and Bank of America have repaid their funds. The Treasury expects to receive $50 billion in repayments in the next year ... * WASHINGTON (9/23/09)--The push continues for legislation that would create a consumer protection agency. Many financial industry lobbyists have argued that the agency would limit access to credit, but the Obama administration is moving forward. House Financial Services Committee Chairman Barney Frank (D-Mass.) is working on the Treasury’s draft of the bill to lift concerns about the measure. Rep. Ed Perlmutter (D-Colo.) is concerned about the agency’s enforcement powers, while Rep. Melissa Bean (D-Ill.) is arguing for greater federal pre-emption (CongressDailyAM Sept. 22). Frank is expected to clarify in the draft who is included under the bill’s scope. He has said he would push for more disclosures on products offered in the marketplace. Frank’s goal is to get a pro-consumer bill out of the House so it has room for negotiations with Senate Banking Committee Chair Christopher Dodd (D-Conn.). Dodd has to get Richard Shelby (R-Ala.) to agree on the bill for the Senate to pass it ...


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