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Agencies Approve Basel II Standardized Approach
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Both the Federal Reserve Board
and the FDIC Board approved for
comment yesterday an alternative risk-based capital framework based
largely upon the Standardized Approach set forth in the Basel II
Framework. The proposed Standardized Approach capital framework would
be available to all banks except the largest and most complex banks
that are subject to the Basel II Advanced Approach. The proposal is
intended to produce risk-based capital requirements that are more
risk-sensitive than Basel I, the current risk-based capital rules.
Under the proposal, there will be 16 different risk-weight categories,
including six for mortgages based on loan-to-value ratios, and there
will be a charge for a bank's operational risk. The proposed rule
will be available for public comment for 90 days after it is published
in the Federal Register.
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House Clears Bank Relief, Cuts Credit Union Measures
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The House of Representatives cleared legislation that
combines both bank and thrift regulatory relief that ICBA strongly
supports with significantly scaled-back credit union provisions. Passing
the chamber on a voice vote, H.R. 6312 would, among
other provisions, eliminate annual consumer privacy notices for
financial institutions that do not share customer information with
third parties; increase the commercial lending authority for federal
savings associations; and allow banks to pay interest on business
checking accounts.
The bill's
credit union provisions would prevent the NCUA from adding whole cities
and high-wealth areas to a credit union's charter because of nearby
low-income communities. The bill also would require credit unions to
establish a brick-and-mortar presence in an underserved area in two
years or lose the authorization to serve the area. It would require
annual reports from the NCUA on how many residents of
"underserved" areas that credit unions are actually serving.
Because House
Financial Services Committee Chairman Barney Frank (D-Mass.) considered
community banking concerns by scaling back the credit union provisions,
ICBA is not opposing the bill. The Senate has not acted on comparable
bank-thrift regulatory relief or credit union provisions.
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DOJ, FTC: Interchange Bill Would Be Anticompetitive
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House legislation that ICBA is vigorously opposing that
would create a government panel to decide disputes between merchants
and banks over credit and debit card interchange fees could harm
consumers and would likely violate antitrust laws, according to separate
letters from the U.S. Justice Department and the Federal Trade
Commission. The DOJ and FTC expressed concerns over an antitrust
exemption in the legislation that would
allow seperate merchant groups to negotiate interchange rates
separately. Their letters echo ICBA's message in speaking on how the
pending Senate and House legislation would damage the free market
payments system that community banks and their retail and small
business customers rely on.
ICBA has
developed a comprehensive lobbying tool kit to help
community bankers voice their opposition to legislation in both
chambers of Congress that would impose government regulation, rather
than the free market, on how interchange rates are set.
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Existing Home Sales Rise in May
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Sales of existing homes rose 2 percent in May, according to the
National Association of Realtors. It was just the second increase in 10
months. Meanwhile, median home prices continued to slide, to $208,600,
down 6.3 percent from a year ago. Sales increases were highest in the
Midwest and Northeast, and fell in the South.
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Paulson to Address Fed Reform
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Treasury Secretary Henry Paulson will expand on plans to
increase the Federal Reserve's role in financial markets at a Wednesday
speech. Paulson said he will address using the Fed as a
"macro-stability regulator to look across the entire financial
system."
Following the
Fed's $29 billion emergency loan to facilitate the Bear Stearns sale to
JPMorgan Chase, Paulson has said the United States needs to reexamine
its financial regulatory system and implement clear procedures for
regulators addressing failing investment banks.
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