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from Financial Regulatory Forum:
U.S. says banks getting help cut lending in July
WASHINGTON, Sept 15 (Reuters) - The U.S. Treasury Department said on Tuesday that banks receiving government bailout funds cut their new lending by 10 percent in July.
A monthly survey of lending activities at the top 22 banks that have received capital injections showed their overall outstanding loan balance was down 1 percent from June to July because of less demand from borrowers and charge-offs by banks, the Treasury said.
"Total origination of new loans at the 22 surveyed institutions decreased 10 percent from June to July," the Treasury report said, adding that the value of new loans by all the banks was about $282 billion in July.
The decision to pump taxpayers' money into banks was motivated largely by lawmakers' wish for banks to keep lending, but a sluggish economy and more cautious consumers appear to be leading to more cautious use of credit.
Treasury said banks again reported that demand in the commercial real estate and the commercial and industrial loans markets "is well below normal levels," adding that "none of the respondents predicted change in demand in the near term."
Banks said real estate developers were reluctant to begin new projects "under current poor economic conditions, which include a rising supply of office space as firms downsize and vacancies rise."
In addition, total credit card outstanding balances fell by 1 percent from June to July, indicating that consumers were spending conservatively and paying down balances.
"Job losses, generally low levels of consumer spending and higher savings rates contributed to the decline in credit card balances," Treasury said. (Reporting by Glenn Somerville; Editing by Leslie Adler)
((glenn.somerville@thomsonreuters.com; +1-202-898-8377; Reuters Messaging: glenn.somerville.reuters.com@reuters.net)) Keywords: USA TREASURY/LENDING
Tuesday, 15 September 2009 22:52:52RTRS [nN1579620 ] {C}ENDS
from Financial Regulatory Forum:
U.S. Treasury to wind down financing program -WSJ
Sept 16 (Reuters) - The U.S. Treasury Department is expected to begin winding down the Supplementary Financing Program, which provides cash for Federal Reserve initiatives, to avoid hitting the $12.1 trillion debt ceiling, the Wall Street Journal reported, citing people familiar with the matter.
The Treasury is expected to wind down the program to as little as $15 billion but government officials want to keep it in place in case it is needed in the future, the paper said.
The Treasury Department could not be reached for comment.
The Supplementary Financing Program was announced in September last year in which the Treasury issued bills apart from its regular borrowing program. Last fall, the Treasury had raised almost $560 billion by issuing bills under the program. (Reporting by Santosh Nadgir in Bangalore; Editing by Dan Lalor) ((santosh.nadgir@thomsonreuters.com; within U.S +1 646 223 8780; Outside U.S +91 080 4135 5800; Reuters messaging: santosh.nadgir.reuters.com@reuters.net))
Keywords: TREASURY/FEDERALRESERVE
Wednesday, 16 September 2009 06:40:26RTRS [nLG711102 ] {C}ENDS
from FaithWorld:
U.S. religious conservatives and progressives profiled
The first ever comparative surveys of U.S. conservative and progressive (or liberal) religious activists has just been published by the Bliss Institute of Applied Politics at the University of Akron and Public Religion Research. Click here for a link to the survey.
Many findings of the study -- based on a detailed survey answered by 1,866 progressive religious activists and 1,123 conservative ones -- will come as no surprise to followers of the U.S. political scene. But they will no doubt be closely scrutinized by both Republican and Democratic strategists.
from Financial Regulatory Forum:
US’ Geithner – less need for government in markets
By Glenn Somerville and David Lawder
WASHINGTON, Sept 10 (Reuters) - U.S. Treasury Secretary Timothy Geithner said Thursday a strengthening economy means the government can end some of the extraordinary support it put in place for markets and prepare for a slow recovery.
Appearing before the Congressional Oversight Panel for the $700 billion Troubled Asset Relief Program, Geithner said the economy was in far better shape now than a year ago when it was "on the verge of collapse," though it still had problems.
"As we enter this new phase, we must begin winding down some of the extraordinary support we put in place for the financial system," he said. "We are now in a position to evolve our strategy as we move from crisis response to recovery."
Geithner faced a grilling from the TARP panel members, who wanted to know why taxpayer-provided aid was so available for financial firms but not to other types of businesses. He suggested the decision to aid banks was paying off.
At a later town hall meeting carried by CNBC television, Geithner told questioners that he was confident China will remain a big buyer of U.S. debt securities because it also wants to see the global economy regain its balance.
But he said there must be tighter controls over risk-taking by banks, calling that "a critical part of creating a more effective financial system." He also said they will include tying executives' pay more tightly to performance in future.
Geithner said banks that received capital injections have repaid more than $70 billion, reducing the government's total investment to $180 billion. and estimated another $50 billion will be repaid over the next 12 to 18 months.
STILL A ROCKY ROAD
"We still have a long way to go before true recovery takes hold," he told the panel, adding it will be necessary to keep applying stimulus measures as necessary to get growth firmly back on track.
Another senior Treasury official told reporters earlier that Treasury will allow its money market mutual fund guarantee program to expire on Sept. 18.
The backstop program was created a year ago to prevent panic withdrawals of $3.4 trillion in savings after a key fund "broke the buck" when its net asset value per share fell below $1. The program took in $1.2 billion in fees from funds, but has not had any payouts.
Geithner boasted that the economy now was "back from the brink" of the free fall that it was in when the Obama administration took office in January even though recovery likely will be gradual at best.
TOXIC ASSETS AN ISSUE
Treasury intends to press ahead with so-called public-private investment funds to buy toxic assets. The senior Treasury official predicted that the first purchases should occur by early October.
The official said there was a "great deal of interest" in purchasing toxic assets among investors and money managers running the funds, but the appetite among banks to sell their toxic assets has been less than anticipated.
"We thought it would be necessary for banks to sell some of these assets in order to attract private capital. It turned out that they were able to raise the capital without selling the assets," the official said.
Geithner said that by providing support for U.S. automakers, the government avoided substantial job losses and that a specially assembled Auto Task Force had avoided intervening in day-to-day decisions by management of General Motors Corp and Chrysler Corp.
"Such intervention could seriously undermine the companies' long-term viability and, consequently, their ability to repay the taxpayer for its investment," Geithner said.
He cited a litany of problems still facing the economy, including "unacceptably high" unemployment, a shaky mortgage market outside those covered by mortgage finance sources Fannie Mae <FNM.N> and Freddie Mac <FRE.N>, strained financing for commercial real estate enterprises and tight credit for small business.
Given those conditions, "it is realistic to assume recovery will be gradual, with more than the usual ups and downs," Geithner warned.
(Editing by Kenneth Barry) ((glenn.somerville@thomsonreuters.com; Tel: +1-202-898-8377; Reuters Messaging: glenn.somerville.reuters.com@reuters.net))
Keywords: FINANCIAL/BAILOUT GEITHNER
Friday, 11 September 2009 01:03:18RTRS [nN10401052] {C}ENDS
from Financial Regulatory Forum:
US Treasury bans lobbying on pending TARP requests
WASHINGTON, Sept 10 (Reuters) - The U.S. Treasury on Thursday posted new lobbying restrictions to curb political influence on investments from the government's $700 billion bailout program, prohibiting most communications once a funding application has been filed.
The new rules, under development since January, allow Treasury officials to speak with registered lobbyists and other outside persons concerning general questions about the logistics and implementation of funding requests from the Troubled Asset Relief Program.
But Treasury officials contacted about specific applications that are not logistical in nature must "immediately end the conversation," according to guidance published on the Treasury's website.
The Treasury employees must report the incident immediately and the name of the lobbyist and other participants, along with a brief description of the conversation, will be posted on the Treasury website within three days, according to the guidance.
In a set of frequently asked questions, the Treasury said once a company applies for funding, "its representatives cannot initiate communications with you (Treasury employees) orally about the merits of the application or proposal."
Communications from an outside party at a "widely attended" industry gathering are exempted from the ban but not private conversations that may occur at such a gathering.
The Treasury has similar rules in place to curb political influence on tax matters.
Since the bailout program was launched in October 2008, the Treasury has invested over $200 billion into more than 600 banks in its Capital Purchase Program, of which more than $70 billion has been repaid.
It has put up over $80 billion in support for the auto industry and invested another $115 billion to prop up American International Group <AIG.N>, Citigroup <C.N> and Bank of America <BAC.N>.
The special inspector general for the TARP program, Neil Barofsky, recently conducted a study that found no evidence that the Treasury's TARP investments were unduly influenced by lobbyists or politicians, but he recommended that the controls over these decisions be improved. (Reporting by David Lawder; Editing by Kenneth Barry) ((rachelle.younglai@thomsonreuters.com; +1 202 898 8411)) Keywords: FINANCIAL/BAILOUT LOBBYING
Friday, 11 September 2009 01:11:53RTRS [nN10420373] {C}ENDS
from DealZone:
Road to fortune or highway to hell?
That will ultimately be the question asked about what kind of a future the German carmaker Opel faces.
Parent General Motors said on Thursday that it indeed wanted
to sell a majority stake in the unit to Canadian auto parts
group Magna and Russia's Sberbank, a decision long favoured by the German government under Chancellor Angela Merkel.
from Financial Regulatory Forum:
U.S. lobbying rules for bailout firms seen soon
WASHINGTON, Sept 4 (Reuters) - The U.S. Treasury Department is expected to soon issue final lobbying restrictions for companies receiving taxpayer funds from the government's $700 billion bailout program, two sources familiar with Treasury's thinking told Reuters on Friday.
The rules to curb outside influence in allocation of bailout funds are expected to severely restrict contacts with lobbyists in applications for investments in banks and other firms under the Troubled Asset Relief Program (TARP).
The new rules have been under development since January and could be published as early as next week, one source said.
The Treasury has indicated the rules will be modeled on the approach taken in the Obama administration's $787 billion economic stimulus program to shield disbursements from lobbyist influence.
Under those rules, once government employees establish they are speaking to a federally registered lobbyist regarding stimulus expenditures, they must decline or immediately end the conversation and report the incident. Similar restrictions would apply to the Treasury and financial regulators that evaluate TARP investment requests.
The Treasury has similar rules in place to curb political influence on tax matters.
A Treasury spokeswoman declined to comment on the timing of the new lobbying restrictions for TARP bailouts.
When the Treasury announced the rule-making effort in January, it said it would be required to certify to Congress that "each investment decision is based only on the investment criteria and the facts of the case."
Since the bailout program was launched in October 2008, the Treasury has invested $204.5 billion into over 600 banks in its Capital Purchase Program, of which more than $70 billion has been repaid.
It has put up over $80 billion in support to the the auto industry and invested another $115 billion to prop up American International Group, Citigroup <C.N> and Bank of America <BAC.N>.
The special inspector general for the TARP program, Neil Barofsky, recently conducted a study that found no evidence that the Treasury's TARP investments were unduly influenced by lobbyists or politicians, but he recommended that the controls over these decisions be improved.
(Reporting by David Lawder and Rachelle Younglai; Editing by Andrew Hay)
((rachelle.younglai@thomsonreuters.com; +1 202 898 8411))
Keywords: FINANCIAL/BAILOUT LOBBYING
Friday, 04 September 2009 22:35:04RTRS [nN04189459] {C}ENDS
from Financial Regulatory Forum:
Europe split over U.S. bank capital plans
By Anna Willard and Huw Jones
LONDON, Sept 4 (Reuters) - Continental European officials defended the globally-agreed Basel II capital rules for banks on Friday despite a U.S. call for its effective replacement with a tougher new regime within three years.
Britain and Canada offered broad support for U.S. Treasury Secretary Timothy Geithner's plan for a radical reform so that banks set aside enough capital to avoid a rerun of the government bailouts during the credit crunch.
But France and Germany were cool as they pushed for more countries to adopt the Basel II rules in full, something which the United States has resisted.
Geithner wants the new framework to be broader and tougher, requiring banks to hold more capital and be in place by the end of 2012 -- an ambitious target as Basel II took a decade to thrash out. [ID:nN03126032]
He was due to present his proposal to a meeting of G20 finance ministers in London on Friday and Saturday but was already meeting some opposition.
French Economy Minister, Christine Lagarde, said revisions to Basel II would ensure banks have sufficient capital, and suggested that simply a "good and sound" explanation of what Basel II was needed to persuade G20 ministers it was enough.
"It has been significantly improved, amended over time to take into account the... liquidity principle that was not part of the Basel II solution," Lagarde told reporters on the sidelines of the G20 meeting.
"I think we need to see clearly what is the problem, where is the issue, and what is the position of Basel II as amended before we jump to any new rules."
A G7 source said Germany was also wary and a board member of its biggest bank, Hugo Banziger of Deutsche Bank, said Basel II did not need replacing.
"There is absolutely no reason why that should be replaced... Basel II is a very good platform. Minor things need to be adjusted and other things need to be developed," Banziger told a Bank of France panel discussion.
REFINEMENTS
European Central Bank Governing Council Members Christian Noyer and Nout Wellink said in a Bank of France report on regulation that planned refinements to Basel II would lead to improvements.
"Blaming Basel II is certainly short-sighted. If we should blame something, we should blame Basel I," Noyer said.
"I am not taking from what (Geithner) said that it is against Basel II. I think the problems he raises are to a large extent addressed now by the Basel Committee."
British Finance Minister, Alistair Darling told Reuters in an interview he agreed with the United States that, across the world, banks needed to strengthen their capital position.
"Inevitably, different countries have different emphases. It's very important that people recognise that the capital positions of banks have to be strengthened. It's important that we see all of these proposals as a whole."
Canada's Finance Minister, Jim Flaherty, also offered broad support for Geithner's proposal.
"Certainly we have common cause with the U.S. With respect to capitalization requirements. Without being immodest, these kinds of recommendations have the world converging toward the Canadian position," Flaherty told reporters.
But Nout Wellink, who is also chairman of the Basel Committee on Banking Supervision which drafted the Basel II rules, said in the Bank of France report that changes to Basel II would make markets safer.
"Taken together, the recent and planned initiatives of the Basel Committee will promote a more robust banking sector and limit the risk that weaknesses in banks amplify shocks between the financial and real sectors," Wellink said.
Noyer said more changes were needed to address the root causes of risks to financial stability, such as monitoring of system wide risks from banks. But there was still no widely accepted method to measure such risk "if this risk is able to be captured", he said.
Click on [G20] for more from the meeting.
(Additional reporting by Louise Egan, Sumeet Desai and Matt Faloon, editing by Patrick Graham)
((Reuters messaging: huw.jones.reuters.com@reuters.net; + 44 207 542 3326; huw.jones@thomsonreuters.com))
Keywords: ECB BASEL/
Friday, 04 September 2009 21:37:25RTRS [nL4728085 ] {C}ENDS
from Financial Regulatory Forum:
Madoff case may bring new whistleblower bounties
By Ross Kerber
BOSTON, Sept 3 (Reuters) - U.S. government rewards for whistleblowers: $102 million for exposing Pfizer Inc's improper drug marketing tactics, zero for warning about Bernard Madoff's global scam.
The gaping discrepancy arises from federal rules on paying whistleblowers in different industries, and top securities regulators think it's time for a change.
"We have sought legislation to enable us to compensate whistleblowers for providing substantial evidence of wrongdoing," U.S. Securities and Exchange Commission Chair Mary Schapiro said in a statement on Wednesday.
So far the SEC -- which had brushed off Harry Markopolos' warnings about Madoff's firm for years -- has paid out only about $150,000 in the past few years for tips on insider trading. Meanwhile, tipsters on wrongdoing by drug companies reap estimated rewards of more than $250 million a year from the agency.
Former Pfizer sales rep John Kopchinski stands to collect more than $51.5 million out of a $102 million total payout after winning a whistleblower lawsuit against the world's largest drugmaker.
Schapiro's statement came after she released a scathing internal report condemning the agency for fumbling years of warnings about Madoff. In March he pleaded guilty to running a $65 billion global Ponzi scheme.
Markopolos -- now a Massachusetts fraud investigator but formerly an executive at Rampart Investment Management, a rival firm to Madoff's -- once hoped to cash in for reporting the fraud. But would-be whistleblowers find it doesn't pay, their attorneys say.
"The rewards are just not there," said Boston lawyer Suzanne Durrell.
Financial wrongdoing laws like the Sarbanes-Oxley Act of 2002 were written to protect insiders from retaliation, not to pay outsiders for tips.
Things could change with fresh lessons on how tipsters should have helped the SEC.
A downside is that rewards could spawn bogus tips.
"When people blow the whistle for money, there's a tendency to bring out of the woodwork people who make false allegations to enrich themselves," said Michael Perlis, an SEC enforcement official in the 1970s.
Some of the best-known insiders in financial fraud cases weren't classic whistleblowers. One-time Enron Corp Vice President Sherron Watkins warned Chairman Ken Lay of accounting problems but never went to outsiders.
Even those who speak out can get zip. Complaints from former call-center employee Peter Scannell led Putnam Investments to pay $194 million in fines over trading practices. But in 2006 a state court turned down Scannell's suit seeking a share of the recovery, on technical grounds.
Philadelphia attorney Brian Kenney said an improved reward structure would benefit people like Markopolos.
"The guy did go through a lot, so I'd like to see him compensated in some way," said Kenney, one of several attorneys for plaintiffs in the Pfizer case who have worked with Markopolos.
Markopolos didn't return messages for this article. But he should reap from the Madoff affair in another way: his book, "Army of One: The Untold Story of the Harry Markopolos Investigation," will be published next month.
(Reporting by Ross Kerber; Editing by Richard Chang)
((Ross.Kerber@ThomsonReuters.com; +1-617-856-4341; Ross.Kerber.Reuters.com@Reuters.net)) Keywords: WHISTLEBLOWERS/REWARDS
Keywords: WHISTLEBLOWERS/REWARDS
Friday, 04 September 2009 01:07:55RTRS [nN03117833] {C}ENDS
from Financial Regulatory Forum:
US Treasury proposes int’l capital accord for banks
By Karey Wutkowski
WASHINGTON, Sept 3 (Reuters) - The U.S. Treasury Department on Thursday proposed tough international standards on capital and liquidity at banks, saying new rules are needed to reduce the risk of another global financial crisis.
The standards call for higher capital levels at all banks and even more stringent requirements for banks that could pose a threat to overall financial stability. They also call for a simple constraint on leverage for all banks, as well as strict but flexible liquidity regulations.
The proposal will be a key topic of discussion at the meeting of the Group of 20 rich and developing economies in London, which begins on Friday, starting a process eventually to supplant the Basel II standards with a broader-based effort.
The U.S. Treasury said a comprehensive new international agreement should be reached by the end of 2010 and that countries should implement the standards by the end of 2012.
"Capital requirements have long been and will remain a principal regulatory tool used by supervisors to promote the safety and stability of the banking system," the proposal says.
U.S. Treasury Secretary Timothy Geithner said on Wednesday that a stronger capital accord was a critical part of making the world financial system more stable by limiting the risk of large institutions failing.
"We're going to be outlining a framework of principles to begin a discussion -- not to reach agreement on -- but to discuss a framework of principles on a new international capital accord that will put in place, once the crisis is behind us, a more conservative framework of constraints on leverage in the financial sector across the major globally active financial institutions," he told a news conference.
Geithner said the accord would be developed under the auspices of the Financial Stability Board, an international body that was recently expanded to include major emerging economies such as China, India and Brazil.
The Treasury said in its 14-page proposal that capital and liquidity rules need to be as uniform as possible across countries, and that they should be structured so as not to allow the re-emergence of an under-regulated financial sector outside of the banking system.
But it did not prescribe specific capital or leverage ratios.
The proposal highlighted the gaps in existing regulations that let major financial firms around the world do business with low capital buffers, excessive amounts of leverage and unstable, short-term funding sources.
The framework comes almost a year after U.S. investment bank Lehman Brothers filed for bankruptcy, sending shockwaves through the global financial system and freezing credit markets.
Many of the institutions that have failed or have been subjected to government bailouts over the past year have met regulatory standards for being well-capitalized, but have suffered severe liquidity problems.
The Treasury's framework said new global rules should put greater emphasis on higher quality forms of capital, not just on levels of capital.
It also said the rules used to measure risks embedded in banks' books must be improved so that risk-based capital requirements are more accurate.
In the United States, officials are already working to rejig capital requirements. The Treasury has set a deadline of Dec. 31, 2009 for a working group to produce a report that reassesses existing regulatory capital rules for banks.
The Treasury said it was aware of the balance global regulators need to strike with the new rules.
"Stricter capital requirements generally will reduce the amount of financial intermediation and may limit credit availability," the proposal said. (Reporting by Karey Wutkowski; Editing by Gary Crosse and Dan Grebler) ((E-mail: karey.wutkowski@thomsonreuters.com; +1-202-898-8374)) ((Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com
* BridgeStation: view story .134 For more information on Top News: http://topnews.reuters.com)) Keywords: FINANCIAL TREASURY/CAPITAL
Thursday, 03 September 2009 22:49:01RTRS [nN03126032] {C}ENDS
