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Inside Washington (11/10/2009)
* WASHINGTON (11/11/09)--Credit conditions are still tight, and about 35% of domestic banks said they had restricted standards for commercial real estate loans (CRE), compared with 45% in July, according to results of the October Senior Loan Officer Opinion Survey on Banking Lending Practices. The Federal Reserve Board released the results Monday. Roughly 25% of banks said they had tightened prime real estate loan standards during the third quarter--slightly higher than July but lower than 75% in July 2008 (MortgageNewsDaily Nov. 10). Loan officers said about 10% of their CRE loans were in foreclosure (American Banker Nov. 10). The loan officer study focused on CREs, commercial and industrial loans, and pending implementation of the Credit Card Accountability, Responsibility and Disclosures Act. It is based on responses from 57 domestic banks and 23 U.S. branches of foreign banks ... * WASHINGTON (11/11/09)--Critics said the Gramm-Leach-Bliley Act, which was enacted in 1999 and allowed banks and other financial services companies to consolidate, fell short in the nation’s financial crisis. The act may not be directly to blame for the financial crisis, but its shortfall paved the way for firms slated “too big to fail” to be too tough for the government to resolve and regulate, observers said (American Banker Nov. 10). Eugene Ludwig, CEO of the Promontory Financial Group, said the act failed to “produce a coherent regulatory mechanism that was up to the new powers it created.” Gramm-Leach-Bliley gave the Federal Reserve Board more power to oversee financial institutions, but some critics question whether the restrictions on the Fed’s power were too strict by allowing holes in the Fed’s “umbrella” to permit risky activity. Ludwig noted that financial holding companies had new powers, but regulators didn’t have an increasing ability to monitor how the companies used the powers--leading to a “recipe for trouble,” he said. Former Sen. Phil Gramm, who helped author Gramm-Leach-Bliley, said he could have done more to prevent the nation’s financial troubles, but shifted some of the blame to former Fed Chairman Alan Greenspan for inflating the housing market. Gramm, who chaired the Senate Banking Committee from 1999 to 2001, also said he is “perplexed” by the idea of giving the Fed the role of systemic risk regulator, because the Fed was given that role under Gramm-Leach-Bliley ...


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