CCH Financial Reform News Center

Mortgage Servicers Chided for Slow Pace of Permanent Modifications

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter.

Mortgage servicers have not done enough to help homeowners permanently modify their loans, and will “suffer consequences” if they fail to meet their obligations under the Home Affordable Modification Program (HAMP), Treasury Department Assistant Secretary Michael Barr said November 30.

In a conference call with reporters Barr said the Treasury plans to meet with top mortgage servicers in Washington D.C. next week to “reinforce the message.”

ComE-IN Meeting Agenda Released

This story appeared in Bank Digest.

The Federal Deposit Insurance Corporation's Advisory Committee on Economic Inclusion (ComE-IN) will meet on Wednesday, Dec. 2, 2009, to discuss the results of the agency's National Survey of Unbanked and Underbanked Households, issues related to overdrafts, and the strategic focus of ComE-IN's future work. The committee will also hear a summary of the FDIC Study of Overdraft Programs and an overview of current and pending guidance regarding overdrafts. Finally, ComE-IN members will discuss the strategic focus of the committee's activities going forward, including future agenda topics, and policy and project options for increasing access to the financial mainstream.

Bank Notified of Capital Rules for HAMP Loans

This story appeared in Bank Digest.

Banks supervised by the Federal Deposit Insurance Corp. have been notified of an  interagency final rule that clarifies that a banking organization may retain the risk weight assigned to a mortgage loan before the loan was modified under the Treasury Department's Making Home Affordable Program (HAMP). The FDIC also noted that mortgage loans whose HAMP modifications are in the trial period, and not yet permanent, qualify for the risk-based capital treatment contained in the final rule.

HAMP Servicer Agreements Released

This story appeared in Bank Digest.

The Treasury Department has posted the following servicer participation agreements for the Home Affordable Modification Program (HAMP): First Keystone Bank; Home Financing Center Inc.; and Marix Serving LLC.

These agreements are the first step servicers need to take to participate in HAMP for loans that are not owned, securitized or guaranteed by Fannie Mae or Freddie Mac.

Acting on Obama Proposal, House Legislation Would Regulate Hedge Funds and Private Equity Funds

By James Hamilton, J.D., LL.M., Principal Analyst, CCH Federal Securities Law Reporter; and CCH Derivatives Regulation Law Reporter.

The Obama Administration asked Congress to pass legislation requiring SEC registration of advisers to hedge funds and other private pools of capital, including private equity funds and venture capital funds, with assets under management over a certain threshold. The Administration’s proposal is broadly in line with proposals advanced by the G-20, which recommended the adoption of a confidential reporting regime pursuant to which hedge funds would be required to register and provide a regulator with information relevant to the assessment of systemic risk.

Walker Report Recommends Creation of Board Risk Committee and Links Risk to Compensation

This story appeared in Jim Hamilton's World of Securities Regulation.

The Walker report on corporate governance and executive compensation contains far reaching and groundbreaking recommendations that very likely will be incorporated into UK legislation. The core principles of the Walker recommendations center on risk management, disclosure, and delinking excessive risk taking from compensation, including the creation of a board risk committee with real powers and a duty to provide meaningful information about risk in the company’s annual report.

At the same time, the Walker report supports the continued use of the comply or explain doctrine for corporate governance codes, as well as endorsing the unitary board structure. The report concluded that the two-tier model of separate executive and supervisory boards, such as in Germany, did not yield better outcomes than unitary boards in the crisis period.

House Legislation Significantly Amends Securities Investor Protection Regime

This story appeared in Jim Hamilton's World of Securities Regulation

The $65 billion Madoff fraud exposed faults in the Securities Investor Protection Act (SIPA), the law that returns money to the customers of insolvent fraudulent broker-dealers. Legislation moving through the House fixes these shortcomings.

Passed in 1970, SIPA authorized the formation of the Securities Investor Protection Corporation (SIPC), a private nonprofit corporation of which most broker-dealers registered with the SEC are required to be members. Whenever SIPC determines that a member firm has failed or is in danger of failing to meet its obligations to customers, and finds certain other statutory conditions satisfied, it may ask for a protective decree in federal district court. Once a court finds grounds for granting such a petition, it must appoint a trustee charged with liquidating the member firm.

Barnier Named New EU Commissioner for Internal Market and Services

This story appeared in Jim Hamilton's World of Securities Regulation

At a time when European financial regulation is at the threshold of significant legislative overhaul, the new Commissioner for the Internal Market and Services will be Michel Barnier of France. Currently, Mr. Barnier is a member of the European Parliament. He will be joining the second Barrasso Commission at a momentous time for EU securities and banking regulation. He will replace Commissioner Charlie McCreevy, under whose remit the most sweeping changes in financial regulation were proposed, including the regulation of hedge funds, credit rating agencies, and systemic risk. Before joining the European Parliament, Mr. Barnier was a member of the Prodi Commission, serving as Commissioner for Regional Policy.

With the G-20 emphasizing the need for a global regulatory response to the financial crisis, Mr. Barnier is aware of the challenges of globalization and the need to craft a harmonized cross-border response. In earlier remarks, he has noted that not long ago financial exchanges were nation-centric and, in all countries, capital exchanges were forbidden or restricted and the approval of the Ministry of Finance was needed before any capital could leave or enter a country. Noting that change now happens very quickly and abruptly, he recognizes the need for new paradigms and thus a need for a new governance.

Audit Committees Receive Guidance on Issues Arising from Financial Crisis

This story appeared in Jim Hamilton's World of Securities Regulation

As the financial crisis continues, audit committee are facing more and more challenges involving risk and uncertainties and valuing financial instruments. The UK Financial Reporting Council has issued guidelines to help audit committees navigate the issues. The FRC has oversight of corporate governance. In 2003, the FRC set up an independent group to clarify the role and responsibilities of audit committees, which culminated in the Smith Guidance for Audit Committees within the overall corporate governance code.

Problem Bank List Rises Despite Earnings Improvement

By Gregg D. Killoren, J.D., CCH State Banking Law Reporter, Bank Digest and Individual Retirement Plans Guide.

The Federal Deposit Insurance Corp. has reported that the number of institutions on its “Problem List” rose to its highest level in 16 years. At the end of September 2009, there were 552 insured institutions on the “Problem List,” up from 416 on June 30, 2009. This is the largest number of “problem” institutions since Dec. 31, 1993, when there were 575 institutions on the list. Total assets of “problem” institutions increased during the quarter from $299.8 billion to $345.9 billion, the highest level since the end of 1993, when they totaled $346.2 billion. Fifty institutions failed during the third quarter, bringing the total number of failures in the first nine months of 2009 to 95.