U.S. Senator Shelby counters on financial consumer watchdog
By Kevin Drawbaugh and Rachelle Younglai
WASHINGTON, March 1 (Reuters) – A senior Republican U.S. senator has made at least two counter-offers to Democrats on creating a new government watchdog for financial consumers, Reuters learned on Monday from aides and documents.
Senator Richard Shelby proposed making the watchdog a division of the Federal Deposit Insurance Corp, with some rule-writing power and a director who is appointed by the president and confirmed by the Senate, documents showed.
Shelby, the top Republican on the Senate Banking Committee, also has proposed setting up a three-member consumer protection council, said a congressional aide.
Both offers show that negotiations between Shelby and Senator Christopher Dodd, the committee’s Democratic chairman, on a bipartisan financial regulation reform bill are in full swing, but still have some ground to cover.
After marathon talks over the weekend, lawmakers remained snagged on how much rule-writing power the new watchdog should have, no matter where it is located within the government.
“We are at the start of a political dance between Dodd and Shelby. We expect more draft language — and more headlines — throughout the week,” said financial services policy analyst Jaret Seiberg at investment advisory firm Concept Capital.
Bank of England, U.S. FDIC to work closely on banks in distress
LONDON, Jan 22 (Reuters) – The Bank of England said on Friday it had signed an agreement with the U.S. Federal Deposit Insurance Corporation to work more closely when resolving distressed banks with operations in the U.S. and the UK.
U.S. FDIC’s Bair urges banks to take losses on commercial loans
By Karey Wutkowski
WASHINGTON, Jan 20 (Reuters) – A top regulator on Wednesday told banks to stop dragging their feet and recognize losses on commercial real estate loans, a sector that is due to deteriorate in the coming quarters and drive bank failures.
Sheila Bair, chairman of the Federal Deposit Insurance Corp, said banks should try to modify troubled commercial real estate (CRE) loans, but must recognize losses if such a workout does not maximize value.
“The losses need to be recognized,” Bair stressed to a conference of the Commercial Mortgage Securities Association.
Bair, an activist regulator, has been hailed for her early warnings on the dangers of subprime lending and securitizations.
She said on Wednesday that she expects the rates of noncurrent CRE loans to continue to rise “in the coming quarters,” and reiterated her belief that the troubles in the sector will increasingly be a driver of bank failures this year.
Bair said failed banks with high concentrations of CRE may be difficult to sell as a whole bank, meaning the FDIC may save more institutions through securitizations.
Top regulators to face U.S. financial crisis panel
By Kevin Drawbaugh
WASHINGTON, Jan 14 (Reuters) – Senior U.S. regulators, including outspoken Federal Deposit Insurance Corp Chairman Sheila Bair, will tell their side of the story on Thursday to a commission examining the origins of the 2008 financial crisis.
The 10-member panel, in its first public hearing, heard a tale of misjudgments and regret from top Wall Street bankers on Wednesday, but did not get an outright apology or any new explanations for the debacle that shook world markets.
Four of Wall Street’s top bankers acknowledged taking on too much risk and having choked on their own financial cooking in the subprime mortgage market, but they defended their pay packages and the huge size of their businesses.
The Financial Crisis Inquiry Commission, created by Congress and charged with issuing a report by Dec. 15, will get a different view of matters from Bair and Securities and Exchange Commission Chairman Mary Schapiro.
Both are the leaders of agencies that were deeply involved in the run-up to the crisis that peaked in late 2008 after the collapse of former investment banking giant Lehman Brothers.
Bair made waves this week with an FDIC proposal to tie banker pay to deposit insurance fees. The idea, opposed by other bank regulators, calls for banks with risky compensation schemes to pay higher levels of deposit insurance premiums.
Special bankruptcy court for banks mulled in U.S. Senate
By Rachelle Younglai
WASHINGTON, Jan 11 (Reuters) – Key U.S. senators are considering the creation of a special bankruptcy court for troubled financial services firms, a person familiar with the plans said on Monday.
Senate Banking Committee members are trying to toughen up parts of a draft bill that overhauls how the financial system is supervised. The draft, introduced by Senate Banking Committee Chairman Christopher Dodd, would create a system to unwind troubled financial firms.
But members of the committee want a more specific and tougher regime to deal with troubled financial firms after the federal government used billions of dollars in taxpayer funds to prop up firms like Bank of America.
Members are discussing a two-stage process that would create a preferential option for bankruptcy followed by a regulator-managed resolution if bankruptcy fails, the person said. The source requested anonymity because the draft is in flux and has not been made public.
Dodd’s proposal would give the Federal Deposit Insurance Corp the authority to dismantle large troubled financial services firms. The FDIC would be able to guarantee debts of firms in receivership.
Some committee members want to craft stricter laws to make sure that the first option for a troubled firm is bankruptcy, the source said. Members also want a system to ensure that counterparties, creditors and shareholders share in the loss if the firm fails, said another person familiar with the plan.
REUTERS SUMMIT-Key banker sees cost of U.S. bank failures rising
By Karey Wutkowski NEW YORK, Nov 16 (Reuters) – The cost of U.S. bank failures will continue to rise sharply and will likely exceed the government’s current expectations, a leading investment banking executive said on Monday.
James Dunne, senior managing principal of Sandler O’Neill, said he believes up to 1,000 banks will fail during the current crisis and the total bill will surpass the government’s latest projection of $100 billion.
U.S. banks to prepay fees to cover failure costs
By Karey Wutkowski WASHINGTON, Nov 12 (Reuters) – U.S. banks will prepay three years of industry fees to give the government about $45 billion in cash to handle the rising tide of bank failures, under a rule finalized by the Federal Deposit Insurance Corp on Thursday.
Sen Dodd seeks more muscle in US financial reforms
By Kevin Drawbaugh WASHINGTON, Nov 10 (Reuters) – Pushing for tougher changes in U.S. financial regulations, the Senate’s top banking legislator on Tuesday proposed a new super-cop to police banks, a systemic risk agency and strong consumer protections. (more…)
US FDIC to meet Nov. 12 to finalize bank fee plan
WASHINGTON, Nov 6 (Reuters) – U.S. regulators will meet Nov. 12 to finalize their proposal to have banks prepay three years of industry assessments, which would give the government cash to handle the rising tide of bank failures.
Obama administration praises early Senate financial bill
By Karey Wutkowski WASHINGTON, Nov 3 (Reuters) – The chairman of the Senate Banking Committee is poised to release a draft bill on financial regulatory reform that meets many of President Barack Obama’s core goals, but it is unclear if it will gain any Republican support, an administration official said on Tuesday.
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