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Inside Washington (11/15/2010)
* WASHINGTON (11/16/10)--The nomination of Joseph Smith, commissioner of banks in North Carolina, to serve as director of the Federal Housing Finance Agency (FHFA) won acclaim from a number of sources who said he is a consensus broker and careful listener. FHFA will play a crucial role in the upcoming reform of the housing finance system. Both consumer advocates and banking industry leaders praised Smith’s nomination, which must be confirmed by the U.S. Senate (American Banker Nov. 15). In North Carolina, Smith helped develop strong regulations for nonbank mortgage lenders and backed the development of a national mortgage licensing system. Colleagues also described him as one who seeks practical solutions while balancing the needs of consumers and bankers. Smith has yet to share his opinion on the reform of government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac. The Dodd-Frank Act requires the administration to present its plan for reshaping U.S. housing policy, including the housing finance GSEs, no later than January 2011. Edward DeMarco has been FHFA acting director since Sept. 1, 2009 … WASHINGTON (11/16/10)--The Basel III rules on global capital represent an important step forward despite their flaws, said Federal Reserve Governor Daniel Tarullo. Speaking during a Dodd-Frank Act conference at George Washington University, Tarullo said the Basel III rules address some areas of capital regulation that were lacking, such as a new minimum common equity ratio (American Banker Nov. 15). The Group of 20 (G-20) nations last week approved Basel III standards calling for banks to hold common equity of 4.5% by 2015. In addition, banks must hold a 2.5% conservation buffer, which will be gradually introduced by 2019, and increase Tier 1 levels from 4% to 6% by 2015. But the Basel III rules failed to address some issues, such as the impact of economic cycles on capital regulation and the amount of additional capital “surcharge” needed for systemically important financial institutions. Tarullo also called for consistent implementation of Basel III rules … * WASHINGTON (11/16/10)--National figures emphasized the need to address America’s budget deficit in weekend television interviews and appearances. Sen. Kurt Conrad (D-N.D.) told “This Week with Christine Amanpour” that borrowing 40 cents of every $1 spent is an “unsustainable” practice that dooms America to become a second-rate economic power (The New York Times Nov. 14). Conrad is chairman of the Senate Budget Committee and a member of the president’s bipartisan commission on reducing the national debt. The bipartisan committee’s chairmen recently proposed reining in the deficit by cutting military and domestic spending, gradually increasing the retirement age for Social Security to 69 and eliminating major tax deductions. Speaking on “Meet the Press” and “Fox News,” David Axelrod, senior adviser to President Obama, said extending tax cuts for wealthy Americans would cost $700 billion in the next decade and favored permanently retaining cuts only for couples earning less than $250,000. Also speaking on “Meet the Press,” Sen. John McCain (R-Ariz.) favored extending tax cuts for all income groups, including Americans earning more than $250,000, until the recession ends … * WASHINGTON (11/16/10)—Whistle-blowers who expose corporate wrongdoing that leads to penalties of more than $1 million could qualify for substantial financial rewards from a $451 million reward fund established by the Dodd-Frank Act. The fund will pay for tips about violations of specific securities and commodity laws to help overcome the tendency to remain silent within the financial services industry (The New York Times Nov. 14). The whistle-blowers’ fund replaces a bounty program that was supposed to reward whistle-blowers but paid out only $160,000 over 20 years. People assigned to investigate corporate wrongdoing and those involved in violations are excluded from receiving rewards. The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission oversee the program, which mandates payment of 10% to 30% of the penalty or the amount recovered when a tip provides the basis for a case. Employees are encouraged to report violations to corporate compliance departments first, with a 90-day grace period for bringing the issue to the SEC …


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