Financial Crisis News Center

Fed Grants Regulatory Reporting Relief

This story appeared in Bank Digest.

The Federal Reserve Board has granted temporary relief from the agency’s regulatory reporting requirements for bank holding companies to CIT Group Inc., New York, N.Y. The bank holding company sough the relief so as to include information regarding its debt restructuring process in its regulatory reports and filings with the Securities and Exchange Commission.

FDIC Issues Policy Statement on Private Capital Investments

By Richard Roth, J.D., Editor, the CCH Federal Banking Law Reporter, CCH Bank Compliance Guide and Bank Digest.

The Federal Deposit Insurance Corp. has approved a Statement of Policy on the Acquisition of Failed Insured Depository Institutions that provides guidance to private capital investors interested in acquiring or investing in the deposit liabilities of failed banks or thrifts. The final statement includes a number of changes from the proposed statement issued in July, such as refining the description of the types of investors covered, changing the capital standard to one that is intended to be a better measure of the capital available to absorb losses and clarifying the circumstances in which the cross support obligation would apply.  The statement is intended to open the door to additional sources of the capital needed to support the industry as the agency is called upon to take over more institutions.

CFTC Chair Gensler Urges Changes to Administration's Draft Legislation Regulating Derivatives

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

In a letter to Congress, CFTC Chair Gary Gensler has asked for specific changes in the Obama Administration’s draft legislation to regulate the OTC derivatives markets. While praising the legislation as an important step toward comprehensive regulation of both derivatives dealers and derivatives markets, the CFTC Chair said that the legislation must cover the entire marketplace without exception and also remain true to its vision of parallel SEC-CFTC swap regulatory regimes.

SEC Warns Investors About Investing in Bankrupt Companies

This story appeared in SEC Today.

The SEC and FINRA have issued an alert to address what they believe is a misunderstanding by investors that shares of General Motors Corporation, which is now known as Motors Liquidation Company, are related to the newly formed General Motors Company. The bankruptcy court, in its decision approving the sale of old GM's assets, noted that GM is hopelessly insolvent and nothing is left for shareholders. GM has taken steps to discourage trading in its shares, which currently trade on the Pink Sheets, but the trading has remained "more than minimal," according to the company's recent no-action request to cease its reporting obligations under 1934 Act Sections 13(a) and 15(d).

Recent Legislation Signed into Law to Have Broad Impact on Consumers/Economy

John M. Pachkowski, J.D., Editor, CCH Federal Banking Law Reporter and Bank Digest; Author, Anti-Money Laundering and Bank Secrecy: Compliance and the USA PATRIOT Act; Co-Author CCH Financial Privacy Law Guide, May 29, 2009.

Credit Cardholders' Bill of Rights Act 

Keeping his promise to sign credit card reform legislation by Memorial Day, President Barack Obama signed the Credit Card Accountability Responsibility and Disclosure Act of 2009 or the Credit CARD Act of 2009, as Public Law 111-24 on May 22, 2009. The Act is also referred to as the "Credit Cardholders' Bill of Rights Act."

In signing the law, President Obama noted "we're putting in place some common sense reforms designed to protect consumers." He added that "Credit card companies provide a valuable service; we don't begrudge them turning a profit. We just want to make sure that they do so while upholding basic standards of fairness, transparency, and accountability. Just as we demand credit card users to act responsibly, we demand that credit card companies act responsibly, too. And that's not too much to ask." The President also remarked that "we're not going to give people a free pass; we expect consumers to live within their means and pay what they owe. But we also expect financial institutions to act with the same sense of responsibility that the American people aspire to in their own lives."

Treasury Comments on GM Dealership Consolidation

This story appeared in Bank Digest.

The Treasury Department has issued a statement following General Motor's announcement regarding its consolidation of car dealerships. The statement noted that the Presidential Task Force on the Auto Industry was not involved in deciding which dealers, or how many dealers, were part of GM's announcement and added that “as difficult as these announcements are for the dealers that will no longer be selling GM and Chrysler cars and the communities in which they operate, without the President's intervention, the entire GM and Chrysler dealer networks could have been lost.” http://www.financialstability.gov/latest/tg_05152009.html

Treasury Department Comments on Chrysler Dealership Losses

This story appeared in Bank Digest.

Responding to the decision by Chrysler to eliminate a significant number of dealers as part of its reorganization in bankruptcy, the Treasury Department noted that in the absence of bankruptcy, all of the dealers would have lost their contracts. “We understand that this rationalization will be difficult on the dealers that will no longer be selling Chrysler cars and on the communities in which they operate. However, the sacrifices by the dealer community alongside those of auto workers, suppliers, creditors, and other Chrysler stakeholders are necessary for this company and the industry to succeed,” Treasury said.

Senate Rejects Mortgage Cramdown Provision

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter, May 4, 2009.

The Senate defeated by 51 to 45 votes an amendment to the Helping Families Save Their Homes Act that would have granted bankruptcy judges broad authority to modify the mortgage terms for at-risk homeowners.

Assistant Senate Majority Leader Dick Durbin, D-Ill., chief sponsor of the ‘cramdown’ provision, said he was disappointed with the vote but would continue to bring the issue to the floor “until the Senate decides to put the interests of homeowners above the interests of bankers.” Durbin noted that the number of homeowners at risk of losing their homes now stands at over eight million, compared to nearly two million only two years ago.

Chrysler Found to Have Satisfied Administration's Requirements for Assistance

This story appeared in Bank Digest.

The federal government has commtted to provide Chrysler up to $3.3 billion in debtor-in-possession financing as the company goes through bankruptcy and an additional $4.7 billion after the bankruptcy is complete, the Treasury Department has announced. The commitments are based on the company's completion of agreements with Italian automaker Fiat and the company's labor unions.

Rep. Bachus Op-Ed Piece Calls for Examining Other Alternatives

This story appeared in Bank Digest

In an Op-Ed item in a recent edition of USA Today, Rep. Spencer Bachus, R-Ala., the Ranking Member of the House Financial Services Committee, called the Treasury draft legislation granting federal regulators greater resolution authority “overreach[ing] and grant[ing] powers that are far beyond what is necessary.” Bachus added “Before we grant this exceptional authority to an executive branch agency, we should examine other alternatives. One obvious process is bankruptcy. The difference between bankruptcy court and the process proposed by [Treasury] Secretary Geithner is that the bankruptcy courts operate in a public forum with long established policies, rules, procedures and stakeholder protections.”  http://republicans.financialservices.house.gov/index.php?option=com_content&task=view&id=468&Itemid=43