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Inside Washington (10/20/2009)
* WASHINGTON (10/21/09)--TierOne Corp., Lincoln, Neb., and Citizens First Bancorp, Port Huron, Mich., are among several financial institutions that are being required by regulators to restate their second quarter financial statements. The restatements will result in capital ratios below regulator minimums at both companies (American Banker Oct. 20). The restatements will likely become more common at financial institutions as regulators scrutinize banks’ loan and asset value assessments. In the past, a bank could give its estimated values of a loan and that would be sufficient, according to Douglas Landy, partner, Allen & Overy LLP. Now, that’s not good enough, he said. Citizens First’s re-assessment was driven by differences with the Federal Deposit Insurance Corp. In a securities filing earlier this month, the bank said its $35.3 million allowance for losses was not adequate. At TierOne, the bank differed with the Office of Thrift Supervision on the value of its underlying collateral. Before the restatement, TierOne’s numbers came out looking better than they had, said Theodore Kovaleff, Horwitz and Associates analyst, but now, “all bets are off.” TierOne told American Banker it tries to be as realistic as possible with its numbers, but new information often arises ... * WASHINGTON (10/21/09)--The Federal Reserve Bank of New York said Monday that it is testing a market tool that could potentially absorb excess cash from the financial system, but said it was not ready to use the tool. The tool would reverse repurchase agreements to drain excess reserves from the central bank to avoid the risk of inflation (The New York Times Oct. 20). During a reverse repurchase agreement, the Fed sells assets like treasuries in exchange for cash with an agreement to re-purchase them later at a higher price--thus removing cash from the system, the newspaper said ... * WASHINGTON (10/21/09)--National Credit Union Administration board member Michael E. Fryzel spoke at the Valley of the Sun Chapter of the Arizona Credit Union League’s dinner celebrating International Credit Union Day in Phoenix. He urged credit union officials to speak out about the good things credit unions are doing--like providing scholarships, supporting community events, holding fundraisers and going to the extra mile to help credit union members. “They truly exemplify the credit union philosophy of people helping people,” Fryzel said ...


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