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Washington Archive

Washington

Inside Washington (07/05/2011)

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* WASHINGTON (7/6/11)--President Barack Obama has tapped Tom Curry, a board director at the Federal Deposit Insurance Corp. (FDIC) for the past seven years, to head up the Office of the Comptroller of the Currency (OCC), succeeding Acting Comptroller John Walsh. Senate Banking Committee Chairman Tim Johnson (D-S.D.) praised the announcement in a press release and said he would move Curry's nomination through the committee "as quickly as possible." OCC has been criticized after its recent controversial interpretation of preemption under the Dodd-Frank Act, and some said the nomination will be seen as a benefit. Curry also served as former commissioner of banks in Massachusetts. Obama also indicated he would nominate Mary J. Miller, the Treasury assistant secretary for financial markets, as undersecretary for domestic affairs. She would succeed Jeffrey Goldstein, who resigned this week (American Banker July 5) …

House hearings follow July 4 break

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WASHINGTON (7/6/11)--With the Senate deciding to cancel its scheduled Independence Day constituent work period and remain in Washington, both bodies of Congress will be in session this week. However, the majority of this week’s action will take place in the House, as the Senate has not added much to the schedule for the week. The biggest action for credit unions will not take place until later in the week, with the House Financial Services Committee’s financial institutions subcommittee and its oversight and investigations subcommittee coming together on Thursday to hold a joint hearing on mortgage servicing. This hearing will focus on federal regulators’ role in settlement negotiations. Mortgage servicing standards are also on the agenda for that meeting. That same financial institutions subcommittee will cover legislative approaches to bank examination practices on Friday. H.R. 1723, the “Common Sense Economic Recovery Act,” which would permit certain loans that would otherwise be treated as non-accrual loans to be designated as accrual loans; and H.R. 2056, a bill to instruct the Federal Deposit Insurance Corp. Inspector General to study the impact on insured depository institutions’ failures. The House earlier in the week will consider H.R. 1309, the Flood Insurance Reform Act, and other legislation.

Federal financial agencies release derivatives guidance

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WASHINGTON (7/6/11)--The Federal Reserve and other financial regulatory agencies have urged financial institutions to practice effective management by using “appropriate reporting metrics and exposure limits systems” and other counterparty credit risk (CCR) mitigation measures. The Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, and the Office of Thrift Supervision joined the Fed in issuing the CCR management guidance. The regulators also advised institutions to have “well-developed and comprehensive stress testing,” and maintain systems that facilitate the measurement and aggregation of CCR.” The agencies said that the guidance “is intended primarily for use by banking organizations with large derivatives portfolios, as well as for supervisors as they assess and examine such institutions' CCR management.” The release defines CCR as “the risk that the counterparty to a transaction defaults or deteriorates in creditworthiness before the final settlement of the transaction.” The guidance is meant to supplement existing supervisory guidance and suggests that financial institutions strengthen their risk control activities by “validating models and systems, ensuring independent risk management and internal audit processes, and managing legal and operational risks.” National Credit Union Administration Chairman Debbie Matz has recently noted that credit risk "continues to constrain many credit unions' performance" and will remain a focus of examinations this year. The agency is also accepting public comment on whether to allow certain credit unions to hedge interest rates by investing in some forms of derivatives, including interest-rate swaps. For the full guidance, and more on the NCUA’s derivatives deliberations, use the resource links.