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Inside Washington (09/30/2009)
* WASHINGTON (10/1/09)--Senate Banking Committee Chairman Christopher Dodd (D-Conn.) is drafting a bill for a single financial regulator, despite opposition from community bankers and the House. Dodd’s bill would consolidate all regulation for financial institutuins into one, except credit unions (American Banker Sept. 30). “I want to make it clear that this does not relate to credit unions. Before I get calls from around the country, I wanted to make that point. Credit unions: You are O.K.,” Dodd said during a hearing Tuesday. Dodd’s proposal goes further than the Obama administration’s plan to consolidate regulation. Obama would merge the Office of the Comptroller of the Currency and the Office of Thrift Supervision. Dodd’s plan would strip authority from the Federal Reserve Board and Federal Deposit Insurance Corp. Though community bankers have voiced opposition to Dodd’s plan because they fear it would hurt the dual banking system, several said they support it. A consolidated regulator is critical to improving the financial system, according to Sen. Mark Warner (D-Va.). A single banking regulator could eliminate “arbitrage” and preserve the dual banking system without harming community banks, he said. Having too many regulators leads to unnecessary regulatory burden, added Eugene Ludwig, former comptroller. Several Government Accountability Office (GAO) reports also make the case for a single regulator. Regulatory consolidation could decrease fragmentation in the system and improve regulatory independence, said Richard Hillman, managing director of financial markets and community investment for the GAO ... * WASHINGTON (10/1/09)--The insolvency of the Deposit Insurance Fund (DIF) will likely span years--until 2012, according to Federal Deposit Insurance Corp. (FDIC) Chairman Sheila Bair. DIF--the FDIC’s reserve--was significantly depleted this year because of 95 bank failures. But a DIF negative balance doesn’t mean the agency will “run out of money,” Bair told reporters Tuesday (American Banker Sept. 30). The FDIC is planning to raise $45 billion by requiring banks to pre-pay their premium assessments until 2012. Under that plan, the DIF will reach its minimum balance in 2017. The DIF has always been expected to have at least $1.15 (1.15%) reserved for each $100 of insured deposits, but the ratio has been pushed much lower. For instance, on June 30, the reserve ratio was 0.22% ...


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