By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter.
President Obama said financial institutions must make an “extraordinary commitment” to help build the economy by reconsidering their lending practices to small- and medium-sized businesses.
“We expect some results,” said President Obama, after meeting with the heads of the nation’s 12 largest banks. “Given the exceptional assistance banks received to get them through a difficult time, we expect them to explore every responsible way to help get our economy moving again,” Obama stressed. He added that the situation banks faced a year ago was “a predicament largely of their own making.”
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By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter.
The White House announced the creation of an interagency Financial Fraud Enforcement Task Force, led by the Department of Justice, to investigate and prosecute significant financial crimes and help prevent a repeat of last year’s financial meltdown.
“We will be relentless in our investigation of corporate and financial wrongdoing, and will not hesitate to bring charges, where appropriate, for criminal misconduct on the part of businesses and business executives,” Attorney General Eric Holder said November 17.
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This story appeared in Bank Digest.
House Committee on Oversight and Government Reform Ranking Member Darrell Issa, R-Calif., has sent letters to White House Counsel Gregory B. Craig, Deputy Assistant Attorney General for the Office of Legal Counsel (OLC) Daniel Koffsky, General Counsel for the Federal Housing Finance Agency (FHFA) Alfred M. Pollard and FHFA Associate Director for Internal Audit Edward Kelley expressing concern regarding the lack of an Inspector General at the FHFA, the federal agency responsible for overseeing Fannie Mae and Freddie Mac. In his letter to White House Counsel Craig, Issa wrote, “We are now eleven months into this Presidency. The President’s failure to act has left the agency charged with overseeing two of the most irresponsible government sponsored entities—Fannie Mae and Freddie Mac—without any inspector general. In light of the Democratically-controlled, filibusterproof Senate, the President’s failure to act is unacceptable and reckless.”
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By James Hamilton, J.D., LL.M., Principal Analyst, CCH Federal Securities Law Reporter; and CCH Derivatives Regulation Law Reporter.
The Obama Administration and the G-20 have determined that corporate governance failures, including compensation that encouraged short-term risk taking, were significant causes of the financial crisis. Bonuses that rewarded short term profits over the long term health and security of the firm, and other incentive-based compensation for executives to take big risks with excess leverage, threatened the stability of their companies and the economy as a whole. Thus, the draft legislation gives shareholders a say on pay and proxy access, ensures the independence of compensation committees, and requires companies to set clawback policies to take back executive compensation based on inaccurate financial statements as important steps in reining in excessive executive pay and helping shift management’s focus from short-term profits to long-term growth and stability.
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