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Financial Services Update – December 10, 2010

Senate to Vote on Tax Package Monday; House Passage Remains Uncertain

On Thursday, the Senate unveiled final details of its $858 Billion 10-year tax bill and will vote on the procedural motion to pass the bill Monday.  However, it is unclear whether the House can pass the bill in its current form.  Below is a summary of the provisions.  Click here for a copy of the entire bill.

Fannie and Freddie in Negotiations on Write Downs

Reports this week indicate that Fannie Mae and Freddie Mac are in negotiations with the Federal Housing Finance Agency (FHFA) on a plan to write down so-called “underwater loans” on their balance sheets. The Obama administration wants the firms to join a program run by the Federal Housing Administration that allows banks and other creditors, which agree to write down mortgages, to essentially hand off the reduced loans to the FHA. Unlike most loan-modification efforts, the FHA program is open only to borrowers who aren’t behind on their payments. Starting in October, banks were able to receive additional subsidies if they first write down loan balances for borrowers owing at least 15% more than their home’s current value.

House Financial Services Committee Announces New Members

On Thursday, the House Financial Services Committee announced the following leadership for the 112th Congress:

Rep. Spencer Bachus, Chairman

Rep. Jeb Hensarling, Vice Chairman, Financial Services Committee

Rep. Judy Biggert, Chairman, Insurance, Housing and Community Opportunity
Jurisdiction: Insurance generally, housing, urban development, and the Department of Housing and Urban Development.

Rep. Shelley Moore Capito, Chairwoman, Financial Institutions Subcommittee and Consumer Credit
Jurisdiction: Banks and banking, depository institutions, federal deposit insurance, and safety and soundness.

Rep. Scott Garrett, Chairman, Capital Markets and Government-Sponsored Enterprises Subcommittee
Jurisdiction: Capital markets, securities, and government sponsored enterprises.

Rep. Ron Paul, Chairman, Domestic Monetary Policy Subcommittee
Jurisdiction: Domestic monetary policy, currency, precious metals, valuation of the dollar, economic stabilization, defense production, commodity prices, financial aid to commerce and industry.

Rep. Gary Miller, Chairman, International Monetary Policy Subcommittee
Jurisdiction: International monetary policy, international finance and banking, international financial and monetary organizations, including the IMF and World Bank, and the promotion of international trade in financial services.

Rep. Randy Neugebauer, Chairman, Oversight and Investigations Subcommittee
Jurisdiction: Oversight of all matters within the jurisdiction of the full Committee.

While not yet formally announced, the expected new members on the committee are:

Rep. Blaine Luetkemeyer (R-MO), Rep. Lynn Westmoreland (R-GA), Nan Hayworth (R-NY), Rep. Michael Grimm (R-NY), Rep. Robert Hurt (R-VA), Rep. Steve Stivers (R-OH), Rep. Bob Dold (R-TX), Rep. Bill Huezienga (R-MI), Rep. Michael Fitzpatrick (R-PA), Rep. Steve Pearce (R-NM), Rep. Quico Canseco (R-TX), Rep. Sean Duffy (R-WI), Rep. Randy Hultgren (R-IL)

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Financial Services Update

Financial Services Update

October 16, 2010

Authored by: Matt Jessee

Bernanke Indicates New Fed Actions

Speaking Friday, Federal Reserve Bank Chairman Ben Bernanke indicated the central bank would take new actions to fight the high rate of unemployment.  The Fed’s most likely next move will be to resume large purchases of government debt to lower long-term interest rates but weaken the dollar.  Bernanke argued that by making credit even cheaper it will encourage businesses and consumers to borrow and spend which would eventually lower unemployment.  Bernanke’s comments suggest that the Federal Open Market Committee, which sets monetary policy, is likely to take new steps at its next meeting taking place November 2nd through 3rd.  Bernanke also indicated the Fed intends to keep short-term interest rates at nearly zero for even longer than the markets now expect.

Former Countrywide Executives Agree to Settlement with the SEC

On Friday, in a settlement with the SEC over charges of misleading shareholders, former Countrywide Financial CEO Angelo Mozilo agreed to repay $45 million in ill-gotten profits and $22.5 million in civil penalties, former president David Sambol agree to repay $5 million in ill-gotten profits and $520,000 in civil penalties, and former CFO Eric Sieracki agree to pay $130,000 in civil penalties.  Mozilo and the others were scheduled to face trial on the charges next week.  The civil complaint also accused Mozilo of acting on his inside knowledge of the company’s precarious state when he sold shares between November 2006 and October 2007 ahead of its collapse, reaping more than $139 million.  Under the agreement, the three men did not admit wrongdoing.

Federal Regulators Order Lenders to Correct Foreclosure Errors

In response to recent media reports that lenders may have used fraudulent paperwork or “robosigners” to evict struggling borrowers, on Wednesday, the Federal Housing Finance Agency (FHFA), which was established during the financial crisis to regulate Fannie Mae and Freddie Mac, released a policy statement telling lenders to make sure that documents used as part of the foreclosure process were properly reviewed and signed.  On Tuesday, Sen. Robert Menendez (D-NJ) sent letters to three banks, JP MorganChase, Bank of America and Ally Financial, which have halted foreclosures in 23 states, after evidence surfaced that their employees or outside lawyers signed documents without reading them.  Sen. Al Franken (D-MN) joined Menendez in requesting that Congress’ investigative arm, the Government Accountability Office, examine whether federal regulators overlooked problems at mortgage companies.

More Information

If you have questions regarding any of these issues, please contact:

Matt Jessee, Policy Advisor
1 314 259 2463

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