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Housing bill approved by House Senate action expected

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WASHINGTON (7/24/08)—A broad housing bill intended to address the county’s current mortgage foreclosure problems was passed by the House 272-152 Wednesday. At the heart of the bill is a provision drafted to help borrowers holding $300 billion of troubled mortgages avoid foreclosure by allowing the Federal Housing Administration to insure the loans after reductions in principal. The bill also, among other things, includes public-confidence builders for Fannie Mae and Freddie Mac, proposed by U.S. Treasury Secretary Henry Paulson. For instance, the bill (H.R. 3221) increases the government-sponsored enterprises’ (GSEs’) line of credit. It also gives Treasury authority to purchase the GSEs’ equity. Both measures are effective for just 18 months. The bill also establishes a new regulator for Fannie and Freddie. The bills also creates a Fannie- and Freddie-supported affordable housing fund, as well as authorizes additional funding for community development block grants and expands opportunities for housing counseling for consumers. Another provision sets the conforming loan limits for Freddie and Fannie at the lower of $625,500 or 115% of an area’s median house cost. The new limit would go into effect when a current temporary increase expires at the end of the year. The Senate is expected to quickly follow the House with an affirmative vote on the package—which represents a laboriously sought-after compromise between the House and Senate. As if acknowledging the ping-pong nature of recent negotiations, the House clerk, on the voting calendar, described the House considerations Wednesday this way:
* H. Res. 1363: providing for consideration of the Senate amendment to the House amendments to the Senate amendment to the bill ( H.R. 3221) to provide needed housing reform and for other purposes.

House approves MSB bill to clarify compliance questions

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WASHINGTON (7/24/08)— The Money Services Business Act (H.R. 4049) was approved by the U.S. House of Representatives Tuesday by voice vote. The bill clarifies that credit unions and banks that serve a money services business (MSB) are not responsible for that entity’s compliance with anti-money laundering laws and any other applicable Bank Secrecy Act (BSA) requirements. MSBs are nonbank financial institutions that provide one or more of such services as money orders, traveler's checks, money transmissions, check cashing, currency exchange, currency dealing, or issuing, selling or redeeming stored-value cards. The bill was introduced in 2007 by Rep. Carolyn Maloney to address situations in which financial institutions could feel pushed to discontinue relationships with MSBs because of a lack of regulatory guidance about compliance liability. Although the bill was considered noncontroversial in the House and therefore placed on the Suspension Calendar for a quick vote, the fate of the legislation for the year is unclear because of the tight legislative calendar. The bill must now be taken up by the Senate. Yet, but both houses of Congress intend to adjourn for the year in late September because of the upcoming federal elections. Any bill not passed into law by then would have to be re-introduced in the new 2009 111th Congress.

Inside Washington (07/23/2008)

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*WASHINGTON (7/24/08)—The Federal Deposit Insurance Corporation is taking a close look at what IndyMac Federal Bank, the resultant institution created after the failure of IndyMac Bancorp, can offer a potential buyer and whether the bank should be sold as a whole or in parts. (American Banker July 23) Among the thrift’s advantages are: an established branch network, a large servicing portfolio, and a reverse mortgage business. John Bovenzi, the FDIC's chief operating officer and chief executive of IndyMac Federal, acknowledged in an interview that loans may not get full value, but added that the FDIC will assess the best way to market and try to get that value back. But the housing crisis will make it difficult for IndyMac to realize a good price because its specialty, alternative-A mortgages — including a chunk of payment-option, adjustable-rate mortgages — are fetching low prices. Yet, the FDIC is already acting to preserve the thrift’s value for a sale; it is paying competitive rates on certificates of deposit to bolster a deposit network that spans Southern California. Bovenzi also mentioned IndyMac's $185 billion servicing portfolio and its reverse mortgages subsidiary, Financial Freedom, as attractive parts of the whole. He said no decision has been made yet on whether to sell the bank as a whole or in pieces... * WASHINGTON (7/24/08)—Although a report that that the Federal Reserve Board and Office of the Comptroller of the Currency were “inspecting the books” at Freddie Mac and Fannie Mae was slightly off the mark, those agencies are consulting with the government-sponsored enterprises' regulator. The Fed and OCC want to understand whether the companies' problems are likely to affect commercial banks; they are concerned about billions of dollars worth of GSE debt on the books of banks. The OCC acknowledged "providing support" to the Office of Federal Housing Enterprise Oversight; members of the Fed staff have said they joined the OCC at OFHEO last week. And worry doesn’t stop there: The Office of Thrift Supervision requested information from thrifts in the Southeast regarding their investments in the government-sponsored enterprises. (American Banker July 23)... * WASHINGTON (7/24/08)—Interested parties have until Oct. 15 to comment on recently release Basel guidelines on calculating risk of assets that are losing value but not actually going into default. The Basel Committee on Banking Supervision released guidelines this week. They have been in development since July 2005, but in March international regulators began to make adjustments in acknowledgement of market turmoil. A document released by those regulators said the committee decided to expand the scope of the capital charge to better capture both prices changes attributable to defaults, as well as other sources of price risk. Those other sources of risk were defined as such things as credit migrations and significant changes in credit spreads and equity prices. The 12 largest banks in the U.S. are required to start implementing some provisions of Basel II this year. (American Banker July 23)…