* WASHINGTON (5/3/10)--The Financial Crisis Inquiry Commission said it will hold a hearing about America’s “shadow banking system” Wednesday and Thursday, with former Bear Stearns Co. CEO Jimmy Cayne and former Treasury Secretary Henry Paulson testifying (Dow Jones
April 30). Cayne will join Bear Stearns’ former chief executive, Alan Schwartz; former president and co-chief operating officer Warren Spector; and former chief financial officer Samuel Molinaro. Treasury Secretary Timothy Geithner, GE Capital’s chairman and CEO Michael Neal, former Securities and Exchange Commission head Christopher Cox and his predecessor, William Donaldson, also will testify. The commission was assembled by Congress to determine the cause of the financial crisis ... * WASHINGTON (5/3/10)--The Federal Reserve Board approved amendments to Regulation D, which addresses reserve requirements of depository institutions, to authorize the Federal Reserve Banks to offer term deposits to institutions eligible to receive earnings on their balances at Reserve Banks. The amendments, according to an announcement released Friday by the Fed
, will be effective 30 days after publication in the Federal Register
, which is expected shortly ... * WASHINGTON (5/3/10)--The federal bank and thrift regulatory agencies Friday announced final guidance
that addresses risks that can come with funding and credit concentrations arising from correspondent relationships. A correspondent relationship is one between one financial organization that provides another financial organization with services related to deposits, lending, or other activities. The regulatory guidance, according to the announcement, emphasizes the need for institutions to identify, monitor, and manage correspondent concentration risk on a stand-alone and organization wide basis. It also stressed the need for financial institutions to execute appropriate due diligence in these relationships…
ALEXANDRIA, Va. (5/3/10)--The National Credit Union Administration (NCUA) last week disclosed another letter of understanding that the agency entered into with both Massachusetts state bank regulators and a credit union. The board of the credit union accepted the regulators’ suggestions to improve its loan quality and internal controls. The credit union should also strengthen its management and end insider abuse and self dealing to “restore” itself “to safe and sound operation,” the letter added. The NCUA added that if these recommendations are not followed, the NCUA could impose “civil money penalties, cease and desist orders, removal and prohibition orders, or orders to liquidate, conserve or merge the credit union” under the Federal Credit Union Act. The NCUA late last year promised to increase public disclosure of its interactions with troubled credit unions, and a pair of similar letters were also released earlier this month. For the full NCUA release, use the resource link.
WASHINGTON (5/3/10)--Movement on regulatory reforms should pick back up this week, with amendments potentially being offered tomorrow. Dozens of amendments are expected to be introduced on Tuesday. The full Senate legislation, which was introduced by Sen. Chris Dodd (D-Conn.) earlier this year, 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. Dodd has also proposed an independent Bureau of Consumer Financial Protection (BCFP) to write and regulate rules for financial firms. While the BCFP would limit the National Credit Union Administration's oversight of credit unions to credit unions with under $10 billion in assets, CUNA has asked that the NCUA be allowed to retain full authority over the credit union system, regardless of asset size. CUNA has also asked legislators to narrow the definition of remittances, as the current definition is "overly broad" and would make it far more difficult for credit unions to continue to offer any form of international electronic fund transfer services to their members. CUNA has stayed in contact with federal authorities, including representatives of the U.S. Treasury, as this financial reform legislation has moved through the House and, now, the Senate, and has advocated for credit unions at every step of the process. Democrats late last week assured their Republican colleagues that the legislation, as currently written, would not provide for future taxpayer-funded bailout of failing financial institutions.
ALEXANDRIA, Va. (5/3/10)--National Credit Union Administration (NCUA) Chairman Debbie Matz last week disclosed that the NCUA “has been working diligently with two independent firms to ensure that the agency’s financial statements will be presented with complete accuracy and transparency.” In remarks delivered before the Illinois CU League’s annual convention, Matz said that the audit information for the NCUA’s 2008 and 2009 fiscal years was delayed due to recently enacted rules “governing the presentation of commercial financial statements.” “To this day, accountants still have differences of opinion about how to interpret the new rules, and about whether or not they apply to federal regulators,” Matz said, adding that, through her comments, she intended to “put an end to unfounded speculation over why NCUA’s audits have been delayed.” Matz said that the delay “is in no way related to the health of the National Credit Union Share Insurance Fund (NCUSIF)” and assured stakeholders that “the federal Share Insurance Fund remains strong and robust.” NCUA Chief Financial Officer Mary Ann Woodson reported on the NCUSIF at the NCUA’s April 29 board meeting. Many of the statistics in the report remained steady, but Woodson noted slight increases in the number of CAMEL Code 3, 4 and 5 credit unions, with the percentage of total insured shares held by those credit unions decreasing slightly since the start of 2010. There are currently 349 CAMEL 4 and 5 credit unions, which represent 5.68% of insured shares. The Credit Union National Association’s senior vice president and deputy general counsel Mary Dunn said that the NCUA’s update on the status of the financials is helpful. CUNA encourages NCUA to provide a through explanation to the system regarding the delay when the financials are actually released.” The NCUA delay also “illustrates that the issue of how to interpret a number of accounting issues is as real for the NCUA as it is for credit unions, and examiners should appreciate that flexibly is as appropriate for credit unions as it is for NCUA,” Dunn added. For the full NCUA release, use the resource link.