Dodd-Frank News Center

Bachus Responds to Comments on Financial Reform

This story appeared in Bank Digest.

“Many Republicans believe the role of misguided government policy is a critical factor in the genesis of the financial crisis, and GSEs, as the chosen instrument of housing policy, are arguably at the center of the causation,” stated Financial Services Committee Ranking Member Spencer Bachus, RAla., in response to comments made by Senate Banking Chairman Chris Dodd, D-Conn., and Financial Services Committee Chairman Barney Frank, D-Mass., on Democrat financial regulatory reform legislation. According to Bachus, “The separation of the consumer oriented mission of Fannie and Freddie from safety and soundness regulation was a significant contributor to their failure. The pursuit of any social agenda, no matter how beneficial, to the exclusion of safety and soundness exposes the consumer to the most serious hazard of all—the failure of the institution on which they depend.”

SIGTARP Report Criticizes HAMP

This story appeared in Bank Digest.

The Special Inspector General for the Troubled Asset Relief Program (SIGTARP) has released a report that examines the implementation of the $75 billion Home Affordable Modification Program (HAMP), the most active and highest profile of the Obama Administration’s foreclosure mitigation programs. The report addresses HAMP’s status, whether the program has met participation goals and what challenges confront the Treasury in implementing the program.

Key Senator Scores Protectionist EU Proposed Hedge Fund Directive

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

Joining the growing outcry over protectionist tendencies in the proposed EU Directive regulating hedge funds, Senator Charles Schumer, a key member of the Banking Committee, expressed deep concern that the Directive would overtly discriminate against US hedge funds. In a letter to Treasury Secretary Tim Geithner, he said that the multiple proposals under consideration would all have the effect of significantly limiting or even prohibiting non-EU investment funds from marketing in the EU, despite the fact that EU-based funds have full access to US markets.

Manager Amendments to Senate Reform Bill Give Systemic Risk Regulator Derivatives Role and Streamline SRO Process

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

The Managers Amendment to the Senate Banking Committee draft reform bill gives the new Financial Stability Oversight Council veto power over SEC and CFTC exemptions from the derivatives regulation regime. For example, the amendment provides that the Commission can exempt a security-based swap only of if the Commission has provided a written notice to the Council describing the proposed exemption and the Council has not made a determination that the exemption would pose a threat to the stability of the US financial system The Council has 60 days to make such a determination.

Republican Hand Weakened on Financial Reform, Corker Says

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

The Republican hand has been weakened in financial reform legislation, now that a bill has left the Senate Banking Committee on a party line vote, Sen. Bob Corker, R-Tenn., said March 24, 2010.

“Over the past six months there have been multiple opportunities to achieve a bipartisan consensus, and allowing the bill to leave committee without doing so is, in my opinion, a strategic error,” Corker said. Senate Majority Leader Harry Reid, D-Nev., can call the bill up to the floor at any time now, Corker said, “and the White House is obviously very aware of that fact.”

Dodd Comments on Financial Reform Bill Markup

This story appeared in Bank Digest.

Vowing to pass financial regulatory reform this year, Senate Banking Committee Chairman Chris Dodd, D-Conn., stated, “We must reform our regulatory structure so a crisis on Wall Street doesn't wipe out working families and businesses.” Dodd recognized the work of the committee members in drafting a financial reform bill that would keep pace with innovation in the financial sector and prevent future crises. Noting that the proposal has 11 titles, Dodd highlighted four critical areas: a system to resolve failing financial firms without the need for public bailouts; an “advance warning system” to identify and prevent future economic crises; transparency of all financial practices; and consumer financial protection.

Bachus Calls on Administration to Phase Out GSEs

This story appeared in Bank Digest.

House Financial Services Committee Ranking Member Spencer Bachus, R-Ala., urged Treasury Secretary Timothy Geithner and the Democrat majority to act quickly on a meaningful plan to phase out taxpayer support for Fannie Mae and Freddie Mac and restore long-term stability and private capital to the housing finance market. “The collapse of the GSEs in the summer of 2008 helped precipitate the financial meltdown that followed in September. Attempting to prevent another destabilizing financial shock without recognizing and addressing the GSEs is a failure to come to grips with reality,” Bachus said in advance of a Financial Services Committee hearing on March 23, 2010, on the future of housing finance with Geithner as the main witness. Bachus noted several Republican legislative proposals introduced in the committee that would, in part, phase out the operations of Fannie Mae and Freddie Mac within four years.

FDIC Holds Roundtable With Private Investors of Failing Banks

This story appeared in Bank Digest.

Senior officials of the Federal Deposit Insurance Corp., on March 22, 2010, held a roundtable discussion with a wide variety of interested groups, including public interest organizations, pension funds, private investors, investment managers and others, to discuss the application of the FDIC Statement of Policy on the Acquisition of Failed Insured Institutions, published on Sept. 2, 2009. The FDIC Statement of Policy on the Acquisition of Failed Insured Institutions provides guidance to investors interested in acquiring or investing in the acquisition of failed banks or thrifts about the standards they will be expected to meet in order to qualify to bid on a failed institution. The roundtable was part of the six-month review of the Statement of Policy mandated by the FDIC Board of Directors when it was adopted. “Bringing responsible new investors into the banking system is an important step towards a strengthened banking system,” said FDIC Chairman Sheila C. Bair.

Matz Shares Progress Toward Corporate Resolution Plan

This story appeared in Bank Digest.

National Credit Union Administration Chairman Debbie Matz said the NCUA aims to announce a plan to remove corporate credit unions' “legacy assets” by the end of June. Speaking to nearly 100 officials at the Missouri Credit Union Association's 2010 Advocacy and Business Meeting in Jefferson City, Mo., Matz revealed that after months of effort, NCUA is “close to proposing a plan that would remove the riskiest legacy assets from ongoing corporates, while carrying forward the most valuable pieces of the corporate system.” If the plan proceeds as NCUA envisions, Matz added, “It could even allow retail credit unions to recover future earnings from legacy assets that out-perform current loss projections.” Matz noted, however, that the plan is a work-in-progress and asked credit unions for their patience as the NCUA does not want to rush this critically important process.

Special Master Issues 2010 Compensation Rulings

This story appeared in Bank Digest.

The Special Master for Troubled Asset Relief Program (TARP) Executive Compensation, Kenneth R. Feinberg, announced his rulings on 2010 executive pay packages for the “Top 25” executives at the five remaining firms that received exceptional assistance from taxpayers: AIG, Chrysler, Chrysler Financial, GM and GMAC. Because Bank of America and Citigroup repaid their exceptional assistance, they are not subject to the Special Master's 2010 rulings. The Special Master also released a letter requesting information on compensation paid to the “Top 25” executives at each firm that received TARP assistance before Feb. 17, 2009, to obtain information needed for the “look back” review required by the American Recovery and Reinvestment Act.