Financial Regulatory Forum

BREAKINGVIEWS-Is Obama losing control of U.S. financial reform?

– The authors is a Reuters Breakingviews columnists. The opinions expressed are his own –

By James Pethokoukis

WASHINGTON, May 3 (Reuters Breakingviews) – Is President Barack Obama losing control of financial reform? It is starting to seem that way. With the bill nearing its finale in the U.S Senate, Democratic legislators — and even some Republicans — seem to be scrambling to out-regulate each other while the White House keeps mum. The Obama administration defied its liberal base on nationalizing the banks last year and breaking them up this year. But as controversial amendments, such as those on derivatives, continue to emerge, it may be time to pipe up.

Of course, Team Obama would understandably prefer to lie low. It doesn’t want to backtrack entirely from the populist, get-tough-on-the-banks line. Arguing forcefully on behalf of letting banks keep their derivatives businesses, in particular, would risk message mismatch. That’s especially true after the Securities and Exchange Commission filed a lawsuit against Goldman Sachs over its involvement in a derivatives deal.

Such a hands-off political strategy might have worked if Republicans and Democrats on the Senate Banking Committee had agreed to a bipartisan bill capable of quick passage. But they didn’t, leaving room for the impaired legislation to drift and pick up lots of ill-considered amendments now that it is before the full chamber.

Obama needs to prevent this from happening. Lucky for him, he’s been given some political cover by Sheila Bair, head of the Federal Deposit Insurance Corp. There may be no financial official respected more on both sides of the aisle in Congress, than Bair.

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.

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.

US FDIC floats plan to tie bank pay to fee levels

By Karey Wutkowski

WASHINGTON, Jan 12 (Reuters) – U.S. banks whose compensation plans encourage risk-taking would have to pay more for deposit insurance under a proposal floated by the Federal Deposit Insurance Corp on Tuesday.

The proposal is very preliminary and was contentious even among the members of the FDIC board, which is made up of regulators for different-sized financial firms. The board voted 3-2 to seek public comment on the proposal.

The plan would reward pay structures that tie banker pay to long-term performance and include “clawback” provisions to recoup payments.

U.S. industry sharpens attack on financial reforms

By Karey Wutkowski and Kevin Drawbaugh

WASHINGTON, Dec 8 (Reuters) – U.S. industry is freshening its attack on financial reform, pledging more cash to defeat a new consumer agency and raising concerns over a provision that could force secured creditors to shoulder losses.

The U.S. Chamber of Commerce on Tuesday unveiled a new radio and television advertising campaign that portrays the proposed Consumer Financial Protection Agency as a threat to small business and economic growth.

The push comes just one day before the full U.S. House of Representatives is scheduled to start debating a massive legislative package that would overhaul financial regulation.

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.

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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.

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US Rep Frank wants big banks to prepay resolution fund – aide

U.S. Representative Barney Frank (D-MA), Chairman of the House Financial Services Committee, listens to a reporter's question during the Reuters Global Financial Regulation Summit in Washington, April 28, 2009.  REUTERS/Jonathan Ernst (UNITED STATES POLITICS BUSINESS HEADSHOT)   WASHINGTON, Oct 30 (Reuters) – U.S. Representative Barney Frank has changed his position and supports requiring large financial firms to make payments into a fund for unwinding troubled competitors before the money is needed, an aide said on Friday.

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Obama readies tougher ‘too big to fail’ strategy

U.S. President Barack Obama (R) attends a fundraiser for U.S. Senator Chris Dodd (D-CT) in Stamford, Connecticut, October 23, 2009.  REUTERS/Jason Reed   (UNITED STATES POLITICS)   By Kevin Drawbaugh
WASHINGTON, Oct 26 (Reuters) – The Obama administration within days will move to get tougher with large financial firms that are in trouble by urging Congress to let the government seize control, wipe out shareholders, boot management and restructure debts, an administration official said on Monday.

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Reuters Summit-U.S. FDIC seeks bailout ban, risk fees

Chairman of the Federal Deposit Insurance Corporation (FDIC) Sheila Bair speaks with reporters during the 2009 Reuters Washington Summit in Washington October 21, 2009.  REUTERS/Jonathan Ernst    (UNITED STATES POLITICS BUSINESS) By Karey Wutkowski
WASHINGTON, Oct 21 (Reuters) – Congress should eliminate any possibility of temporary bailouts in draft legislation that would give the government power to break up troubled, systemic financial firms, a top U.S. bank regulator said on Wednesday.

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