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Inside Washington (11/24/2010)
* WASHINGTON (11/29/10)--While banks and thrifts posted profits of $14.5 billion in the third quarter of 2010, a pullback in reserves helped drive the gains, and Federal Deposit Insurance Corp. (FDIC) NChairman Sheila C. Bair last week warned that capital should remain a focus amid continued housing uncertainty. An industry loan loss provision of $34.9 billion, the smallest in three years, drove earnings, as did higher interest income from recent accounting changes. The loan loss provision was 44% smaller than a year earlier. Total loss reserves dropped by 3.8%, to $242 billion, the second straight quarterly dip. Because many institutions entered the recent housing crisis with insufficient reserve levels, Bair warned against reducing the reserves without strong evidence of improved loan performance. The industry’s third-quarter asset growth--an increase of 1.2% to $13.4 trillion--was primarily the result of trading and other investment activities, not lending. Bair also warned about contingent liabilities banks could face from loan-documentation discrepancies that may result in banks being forced to take back securitized loans. Several big banks have been sued by government-sponsored enterprises for this reason … * WASHINGTON (11/29/10)--The Federal Deposit Insurance Corp. (FDIC) has issued final guidance to address the risks associated with overdraft payment programs. The guidance is intended to “ensure robust oversight of automated overdraft programs” offered by certain FDIC-insured institutions. FDIC Chairman Sheila C. Bair said when financial institutions spot a pattern of excessive use of an automated overdraft program, they should contact their customers about a more appropriate and lower-cost alternative that better suits the customers’ needs. In response to concerns about automated overdraft programs, the FDIC on Aug. 11 proposed for public comment guidance on how the banking institutions it supervises should monitor and oversee overdraft programs. The proposed guidance stemmed from both the FDIC's November 2008


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