Financial Crisis News Center

“Too Big To Fail” Plan Highlighted in Treasury Official's Remarks

This story appeared in Bank Digest.

In remarks before the Remarks to ALI-ABA Conference on Life Insurance, in Washington, D.C., on Nov. 5, 2009, Assistant Treasury Secretary Michael S. Barr discussed the Obama Administration's comprehensive plan for regulatory reform and focus in particular on the problem that has come to be known as “too big to fail.”

New Efforts to Improve to Small Businesses Credit for Announced

This story appeared in Bank Digest.

The Obama Administration has announced new measures as part of an ongoing effort to help small businesses access credit and create jobs. These measures include:

• Taking further steps to provide small businesses with access to credit by supporting community bank lending through the Financial Stability Plan.
• Seeking legislation to increase maximum SBA loan sizes to allow more businesses to access the credit they need to expand and create new jobs.
• Convening a Treasury/SBA Small Business Lending Conference to work with regulators, lenders and congress to ensure credit is available to small business

House Speaker Nancy Pelosi, D-Calif, commended the plan, stating, "Providing incentives for community banks and community development financial institutions to lend in low- and moderate-income communities will help create jobs, fueling our economic recovery."

Obama Urges Creation of Consumer Financial Protection Agency

This story appeared in Bank Digest.

Speaking at the White House on Oct. 9, 2009, President Barack Obama said the “patchwork system of regulations” now in place has failed to prevent abuses that can “threaten the stability of the entire economy.…With seven different federal agencies each having a role, there's too little accountability.” Obama said the proposed Consumer Financial Protection Agency “will be charged with setting clear rules of the road for consumers and banks, and it will be able to enforce those rules across the board.” He also said that the agency “will have the power to make certain that consumers get information that is clear and concise—in plain language—so they can compare products and know exactly what they're getting themselves into.”

http://www.whitehouse.gov/the_press_office/Remarks-by-the-President-on-Consumer-Financial-Protection/

CFPA Mark-Up Likely Week of October 12

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

Mark-up of legislation to create a new Consumer Financial Protection Agency (CFPA) is expected to occur the week of October 12, House Financial Services Committee chairman Barney Frank, D-Mass., said September 30.

At a committee hearing Frank also said he anticipates finishing the marking-up process for the various parts of financial reform legislation by late October or early November.

Congress Reacts to Obama’s Financial Reform Speech

By J. Preston Carter, J.D., LL.M., Editor, the CCH Federal Banking Law Reporter, CCH Financial Privacy Law Guide, CCH State Banking Law Reporter and Bank Digest.

Senate Banking Committee Chairman Christopher Dodd, D-Conn., issued a statement following the President's September 14, address on financial reform in New York City. Dodd noted, “The President got it right. We need ‘change and change now.’” However, Financial Services Committee Ranking Member Spencer Bachus, R-Ala., stated that the President “failed to put forward constructive proposals to address the lessons learned from the events of September 2008, and the solutions being offered would in many respects make matters worse.”

Obama Predicts Passage of Financial Regulatory Reform

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

In a speech at Federal Hall in New York City on the one-year anniversary of the collapse of Lehman Brothers, President Obama predicted that his administration’s efforts to overhaul financial regulation will pass Congress and become law. He also urged the financial industry not to shirk its obligation to the goal of a wider recovery and more stable system.

Obama reiterated the need to pass reform legislation this year. He called again for the creation of a Consumer Financial Protection Agency, and enhanced authority for the Federal Reserve as regulator of the largest, most interconnected firms. Other elements of Obama’s plan include a regulatory oversight council and ‘resolution authority’ to wind down firms once considered too-big-to-fail.

Fed as Systemic Risk Regulator Haunts US Regulatory Reform Effort

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

There is a fierce debate raging at the center of the effort to pass financial regulatory reform in the US, while the EU has already crossed that Rubicon. It is over the issue of whether the Federal Reserve Board or a council of financial regulators will be given the role of systemic risk regulator. While the Obama Administration favors the Fed as systemic risk regulator, there is a growing consensus in Congress that the Fed is ill-suited for that role. Instead of the Fed being the sole systemic risk regulator, a number of voices are calling for a Council of Federal Financial Regulators, including the Fed and the SEC, to be placed in the position of systemic risk regulator.

Making Home Affordable Program Report Released

This story appeared in Bank Digest.

The Obama Administration has released its second monthly Servicer Performance Report detailing the progress to date of the Making Home Affordable loan modification program. The purpose of the report is to document the number of struggling homeowners already helped under the program, provide information on servicer performance and expand transparency around the initiative.

Urgent Need for Regulatory Reform

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

With Congress reconvening from its summer recess, Neal Wolin, Deputy Treasury Secretary submitted an op-ed to the McClatchy Newspapers citing an urgent need for financial regulatory reform.

After recounting the events that occurred since September 2008, Wolin noted that “In the coming months, the debate over the administration's proposed reforms will grow lively, as it should. There is room for honest disagreement on the details of the plan we have put forward. And as usual, there are many who have an interest in maintaining the status quo. But one year after the breakdown last September, there should be no disagreement that fundamental reform is urgently needed. It is time to bring our financial regulations into the twenty-first century.”

Treasury Outlines Plans for International Regulatory Reform

This story appeared in Bank Digest.

The Treasury Department has announced a set out the core principles the Obama administration believes should guide reform of the international regulatory capital and liquidity framework. The administration is calling for stronger liquidity and capital standards for all banking firms and adds that capital standards for firms that could threaten the financial system should be higher still. The Treasury also says that banking firms should be subject to a simple, non-risk-based leverage constraint and a conservative, explicit liquidity standard. The administration is calling for agreement on new international capital and liquidity standards by Dec. 31, 2010, and for the implementation of those standards by Dec. 31, 2012.