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House Financial Services schedules votes today

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WASHINGTON (4/22/10)—The House Financial Services Committee announced it will conduct a mark up today of a series of bills, including The Flood Insurance Reform Priorities Act of 2010. Also scheduled for a vote:
* H.R. 2336, Green Resources for Energy Efficient Neighborhoods Act, which would amend the Housing and Community Development Act of 1992 to require the director of the Federal Housing Finance Agency to assign an additional housing credit for compliance with Federal Mortgage Insurance Association and Federal Home Loan Mortgage Corporation housing goals for energy-efficient and location-efficient mortgages. It also would require Fannie Mae and Freddie Mac to develop loan products and flexible underwriting guidelines to facilitate a secondary market for energy-efficient and location-efficient mortgages for low and moderate income families, for second and junior mortgages made for purposes of energy efficiency or renewable energy, or both, and amends the Home Mortgage Disclosure Act of 1975 to require the collection of information on energy-efficient and location-efficient mortgages, among other things; * H.R. 5017, Rural Housing Preservation and Stabilization Act, intended to ensure the availability of loan guarantees for rural homeowners; * H.R. 2555, Homeowners’ Defense Act, which would establishe the National Catastrophe Risk Consortium as a nonprofit, nonfederal entity to: maintain an inventory of catastrophe risk obligations held by state reinsurance funds, state residual insurance market entities, and state-sponsored providers of natural catastrophe insurance; issue, on a conduit basis, securities and other financial instruments linked to catastrophe risks insured or reinsured through Consortium members; coordinate reinsurance contracts; act as a centralized repository of state risk information accessible by certain private-market participants; and establish a database to perform research and analysis that encourages standardization of the risk-linked securities market; * The FHA Reform Act, which would amend the National Housing Act to make exceptions to the prohibition against mortgage insurance for mortgages involving a downpayment using funds furnished by: the seller or any party that benefits financially from the transaction (seller-financed downpayment); or any third party that is reimbursed by the seller or any such party; as well as make eligible for mortgage insurance, in spite of a seller-financed downpayment, any mortagors with credit scores equivalent to a FICO score of: 680 or more; at least 620 but less than 680; or 619 or less; and * H.R. 1264, Multiple Peril Insurance Act, to amend the National Flood Insurance Act to require the national flood insurance program to enable the purchase of multi-peril coverage and optional separate windstorm coverage to protect against loss resulting from physical damage or loss of real or related personal property located in the United States.

Senate moves steps closer to financial reform

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WASHINGTON (4/22/10)--The Senate Agriculture Committee's Wednesday passage of "The Wall Street Transparency and Accountability Act of 2010" was "another step towards (sic) comprehensive financial reform," U.S. Treasury Secretary Tim Geithner has said. The derivatives legislation, which had support from both Republican and Democratic committee members, would, according to a committee statement, prohibit the Federal Reserve and the Federal Deposit Insurance Corporation from using federal funds to bail out Wall Street firms that "engage in risky derivative deals." The legislation will also require banks that take part in swaps transactions to "spin off their swap dealer desks." These banks would be "barred from receiving any federal assistance" if they failed to do so. The bill will also create "mandatory clearing and trading requirements" and ensure that all derivatives trades are reported in "real-time," the statement added. In a statement following the committee action, Geithner said that the Treasury would work with Senate Banking Committee Chairman Chris Dodd (D-Conn.) and Agriculture Committee Chairwoman Blanche Lincoln (D-Ark.) "to craft strong derivatives provisions that close loopholes, provide necessary transparency, and reduce threats to financial stability as part of a final, comprehensive financial reform bill." Debate on the Senate version of that comprehensive reform bill is expected to begin this week and could continue into next week. The bill language was filed yesterday by the Senate Banking Committee, which means lawmakers can now proceed with a vote on the motion to proceed with the bill, perhaps as early as today. The legislation, which was introduced by Dodd last month, would allow the Federal Reserve to continue to oversee both large banks and smaller state-chartered banks while also adding authority over some non-bank financial firms to the Fed's list of responsibilities. The Credit Union National Association has expressed some concern over portions of the legislation that address remittances and that limit the National Credit Union Administration's examination authority to credit unions with under $10 billion in assets.

Inside Washington (04/21/2010)

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* WASHINGTON (4/22/10)--A bipartisan regulatory reform bill could be in the works, said American Banker (April 21). Sen. Richard Shelby (R-Ala.) said the Senate Banking Committee is making progress, and a consensus could be reached. One concern lawmakers have about the bill is including resolution language so no troubled bank can be propped up. The “overriding issue on too big to fail” is that the language will send the message that no bank is going to be bailed out, Shelby said. Lawmakers also are nearing an agreement on regulating derivatives, he added. Sen. Christopher Dodd (D-Conn.), who authored the regulatory reform bill, said he also was confident that a bipartisan deal could be reached ... * WASHINGTON (4/22/10)--Lawmakers are debating whether a pending regulatory reform bill could have prevented Lehman Brother’s fall if the bill had been enacted two years ago (American Banker April 21). House Democrats, regulators and the Obama administration said the reform would have given regulators the power to detect problems earlier and unwind the bank. However, Republicans said regulators already have a lot of power that they failed to use. Rep. Spencer Bachus (R-Ala.) said regulators did not catch Lehman’s accounting manipulation, and that regulatory reform proposals would have only doubled down the failed policies already in place. Federal Reserve Board Chairman Ben Bernanke said the Fed had few options when Lehman collapsed. If the reform bill were enacted, the Fed would have had more ability to force Lehman into precautionary measures, he said. Tim Geithner argued that under the bill, large firms would have had consolidated oversight by the Fed and would have higher capital and liquidity requirements ... * WASHINGTON (4/22/10)--Lawmakers are divided on whether or not a financial crisis responsibility fee that would be charged to big banks should be included in a regulatory reform bill. Sen. Charles Schumer (D-N.Y.) said Congress should not wait to pass legislation that would assess a 15-basis-point fee on firms with more than $50 billion in assets. The proposal is a common sense way to ensure taxpayer money is repaid, he said. However, Senate Banking Committee Chairman Christopher Dodd (D-Conn.) said the tax proposal has merit, but that he wasn’t sure he wanted to add it to the reform bill. It’s unclear how the tax would be levied, and more hearings will likely be held on the topic (American Banker April 21) ... * WASHINGTON (4/22/10)--The Federal Deposit Insurance Corp. (FDIC) announced two bond sales (American Banker April 21). The FDIC said it raised $2 billion by selling failed-bank assets. In one sale, the agency generated $1.3 billion from notes guaranteed by $4.5 billion of assets from Corus Bank in Chicago. In the other sale, FDIC received $652 from selling notes backed by $1.2 billion of assets from Franklin Bank in Houston ...

New 100 bill with security features unveiled

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WASHINGTON (4/22/10)--Federal authorities on Wednesday joined to unveil the new hundred dollar bill, a bill that will combine the usual portrait of Ben Franklin, and some previously added security enhancements, with a pair of brand new, advanced counterfeit-deterrent security features. The bill was introduced by members of the Federal Reserve, the U.S.
Click to view larger image The government's new design of the $100 bill combines a portrait of Benjamin Franklin and some security enhancements.
Treasury, and the U.S. Secret Service, and features a blue three-dimensional security ribbon and an interpretation of the classic liberty bell image which, when tilted, changes colors from copper to green, making the bell appear to disappear and reappear in an inkwell. U.S. Treasurer Rosie Rios said these new security features “come after more than a decade of research and development to protect our currency from counterfeiting.” “To ensure a seamless introduction of the new $100 note into the financial system, we will continue global public education of retailers, financial institutions and industry organizations to ensure that consumers and merchants are aware of the new security features,” she added. A watermark portrait of Ben Franklin, a security thread, and a large, color-shifting “100” have been carried over from the previous design, and the new $100 bill will also includes phrases from the Declaration of Independence and a newly designed, larger image of Independence Hall. The $100 bill “is the most widely circulated and most often counterfeited denomination outside the U.S.,” according to the release. Fed Chairman Ben Bernanke said that the 6.5 billion $100s that are currently in circulation “will remain legal tender,” adding that “U.S. currency users should know they will not have to trade in their old design notes when the new notes begin circulating.” Exactly when the new notes will be circulated has not yet been determined. For more on the new note, use the resource link.

Proposed rule would limit Fed. benefit garnishments

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WASHINGTON (4/22/10)—The U.S. Treasury, the Social Security Administration, the Department of Veterans Affairs, the Railroad Retirement Board, and the Office of Personnel Management this week issued for public comment a proposed rule” to implement statutory restrictions on the garnishment of Federal benefit payments.” The notice, as published in the Federal Register, states that the rule is a response to “recent developments in technology and debt collection practices that have led to an increase in the freezing of accounts containing federal benefit payments.” The proposed rule, which would affect all financial institutions, including federal- and state-chartered credit unions, would “require financial institutions that receive a garnishment order for an account to determine whether any Federal benefit payments were deposited to the account within 60 calendar days prior to receipt of the order and, if so, would require the financial institution to ensure that the account holder has access to an amount equal to the sum of such payments in the account or to the current balance of the account, whichever is lower.” The proposed rule aims to “ensure that benefit recipients have access to exempt funds” while garnishment orders are being resolved. The rule also attempts to protect credit unions and other financial institutions that are involved in cases where accounts that are receiving federal benefit payments have also received garnishment orders. The rule provides “a safe harbor” and protects credit unions and other financial institutions that follow these federally established procedures “from the risk of liability, contempt of court, or civil penalties when they permit account holders to access funds in the account in accordance with the requisite procedures.” However, under the proposal, credit unions and other financial institutions would not be permitted to charge garnishment fees “against protected amounts.” The rule would not limit an account holder’s right to assert any additional protections against garnishment that might be available under Federal or state law,” the agencies added. Comments on the proposed rule must be submitted by June 18. For the proposed rule, as published in the Federal Register, use the resource link. The Credit Union National Association will soon issue a comment call asking for credit union remarks regarding the plan.