U.S. banks are taking a closer look at their own internal risk controls and trying to figure out how to prevent the kind of huge trading losses that French-based Societe Generale recently disclosed, according to John Dugan, Comptroller of the Currency. Dugan spoke at the annual Reuters Regulation Summit.

John Dugan, U.S. Comptroller of the Currency, says American banks have “learned the hard way” that they must do their own due diligence and not rely solely on credit rating agency information about securities. Dugan, whose office regulates most of the largest U.S. banks, spoke at the annual Reuters Regulation Summit.

Democratic Sen. Charles Schumer of New York says the recent billion-dollar U.S. investments by sovereign wealth funds are generally positive for American business, but each must be considered on a case-by-case basis. At the annual Reuters Regulation Summit, Schumer said he believed that sovereign funds in the Middle East generally have more “purely economic” interests than those in China or Russia. 

The leaders of the U.S. Securities and Exchange Commission weren’t always so closely identified with their political party, Commissioner Paul Atkins said. He told the Reuters Regulation Summit that it’s a fairly new phenomenon for the commissioners to wear their party affiliations on their sleeves. Three Republicans are currently at the helm of the investor protection agency after the two Democrats left in recent months to return to the private sector.

Democratic Sen. Charles Schumer of New York told the Reuters Regulation Summit he was confident that two Senate bills would soon be combined in an attempt to force China to revalue its yuan currency. Separate bills have been proposed by members of the Senate Banking Committee and by members of the Senate Finance Committee. Schumer sits on both panels.

Schumer is among the U.S. lawmakers who contend that the yuan is 30 percent to 40 percent undervalued, giving Chinese manufacturers a pricing advantage over U.S. companies.

Reuters asked Federal Deposit Insurance Corp Chairman Sheila Bair what’s her biggest fear. She said a big bank failure, but hastened to add she believes the likelihood is very remote.

The U.S. Securities and Exchange Commission, which is one of several federal agencies looking into the subprime mortgage meltdown, plans to carefully define any problems related to credit rating agencies’ role in the crisis, according to Erik Sirri, director of the SEC’s trading and markets division. The agency might propose new rules for credit rating agencies on rating performance, or revisit disclosure issues related to the underwriting process, he told the Reuters Regulation Summit.
 

U.S. FDIC Chairman Sheila Bair says delays by loan servicers to modify subprime mortgages could give a boost to federal legislation that would provide relief through bankruptcy law changes.