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Senate Set for Housing Vote
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The Senate cleared for a final
vote housing-rescue legislation that would
create a new regulator for government-sponsored enterprises that cover
housing and offer Federal Housing Administration funds to refinance
troubled mortgages. The bill includes an ICBA-recommended $8,000
homebuyer tax credit. A federal property-tax deduction for
non-itemizers and Federal Home Loan Bank benefits for community
financial institutions are also in the legislation.
The Senate is planning a final vote for Wednesday. Upon final Senate
approval, lawmakers will have to negotiate differences
between House and Senate bills to send a final version to the
president, who has vowed to veto the measure. The two versions contain
differences on loan limits for Fannie Mae and Freddie Mac, when new
standards for the GSEs should become effective and how much time should
be allowed to transition to the new regulatory agency.
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OTS, OCC Approve Basel II
Standardized Approach
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The Office of Thrift Supervision and
the Office of the Comptroller
of the Currency approved for comment an alternative risk-based
capital framework based largely upon the Basel II Standardized
Approach. The proposal would be available to all but the largest and
most complex banks and produce risk-based capital requirements that are
more risk-sensitive than Basel I. The Federal Reserve and FDIC
previously approved the proposal, which will be available for public
comment for 90 days after it is published in the Federal Register.
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Payrolls Drop, Jobless Claims Rise
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Employers cut 62,000 jobs in
June, marking the sixth straight month of job losses, totaling 438,000
this year, according to the U.S. Department of Labor. The unemployment
rate held steady at 5.5 percent, though it was expected to drop. A
second Labor report found new
applications from jobless benefits jumped to 404,000 for the week
ending June 28. The four-week average for new claims was at the highest
level since October 2005.
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IRS: Life Insurance Premiums Don't Reduce S-Corp's AAAs
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The IRS ruled that premiums
paid by a Subchapter S corporation on an employer-owned life insurance
contract of which the S corporation is a beneficiary do not reduce its
accumulated adjustments account (AAA). Further, benefits received due
to the insured's death do not increase the S-Corps' AAA. AAAs are
accounts of S corporations and are not apportioned among shareholders.
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FDIC Releases HELOC Advisory
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The FDIC issued guidance on home-equity
lines of credit for financial institutions it supervises. Institutions
that reduce or suspend HELOCs amid falling home prices must follow
certain consumer-protection regulations, the letter said. The Truth in
Lending Act, as implemented by Regulation Z, specifies the
circumstances under which lenders may reduce or suspend HELOCs. Lenders
must also comply with fairness and discrimination regulations from
Section 5 of the Federal Trade Commission (FTC) Act, the Equal Credit
Opportunity Act and the Fair Housing Act.
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