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Interchange Bill Slated for Markup
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The House Judiciary Committee formally announced it will
mark up on Wednesday legislation to set government
price controls on the credit and debit interchange system. The bill
will also give retailers such as Wal-Mart, through an antitrust
exemption, the ability to set up special card acceptance deals with the
largest issuers in the country, effectively discouraging consumers from
carrying a community bank debit or credit card. ICBA has been a vocal
opponent of the measure and developed a lobbying resource kit to
help community bankers urge their members of Congress to defeat the
measure.
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Bair: Banks, Federal Deposit
Insurance Strong
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FDIC Chairman Sheila Bair issued a statement Sunday to reassure
IndyMac Federal Bank FSB depositors that their total $18 billion in
federally insured deposits remain safe and accessible. Bair pointed out
that IndyMac customers had continued access to their deposits over the
weekend through their ATM and debit cards, and that the $32
billion-asset failed institution's operations will resume as usual when
its offices reopen for business today.
Reacting to "inaccurate" and "inflammatory" media
coverage on IndyMac's failure and takeover by the FDIC last week, Bair
also stressed that federally insured deposits remain safe and that the
overwhelming majority of banks remain safe and sound. IndyMac's failure
is the second largest the FDIC has handled. "No depositor has ever
lost a penny of insured deposits," she stated.
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Study Finds Value in Bank Mergers
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Increasing bank mergers may have bolstered community
banks, according to a Kansas City Federal Reserve Bank research paper.
"Understanding the Effect of the Merger Boom on Community
Banks" finds that while community banks decreased by 36 percent
from 1989 to 2006, more than half of the acquiring banks were community
banks themselves. Approximately one-quarter were acquired by large
banks.
In a BNA Daily
Report for Executives article on the study, ICBA Senior
Regulatory Counsel Chris Cole said that although mergers between
community banks can strengthen banking, bigger banks tend to acquire
larger community banks positioned in growth markets. Cole also pointed
out that one of the major reasons for community banks merging is the
increasingly high costs of regulation. Although the study indicated
that bank mergers can enhance operational efficiency, Cole said he
wished the study had explored more the disproportionate impact that
regulations such as those under the Bank Secrecy Act and the
Sarbanes-Oxley Act have on community banks and why they are finding it
necessary to merge in order to increase their operational efficiency.
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Paulson, Bernanke Testify
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Treasury Secretary Henry Paulson and Federal Reserve
Chairman Ben Bernanke will testify at the first of several planned
House Financial Services Committee hearings on financial
regulation. Policymakers will discuss regulation of investment banks
and their access to Federal Reserve loans.
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Fed Issuing HOEPA Rules Next Week
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Federal Reserve Chairman Ben Bernanke said the Fed next week will
release final rules requiring more rigorous consumer protections for
all lenders offering subprime residential mortgages. A preliminary draft released
in December under the Home Ownership Equity Protection Act (Regulation
Z) would limit specific lending practices and require certain
disclosures. The rules as previously proposed would restrict prepayment
penalties, require escrow accounts for property taxes and insurance,
and require lenders to consider the ability of borrowers to repay
mortgages from sources other than the home's value.
While supporting protections for subprime borrowers in
principle, ICBA asked the Fed to narrow the
proposed definition of loans that would be covered to avoid
unnecessarily restricting access to home financing for everyday
Americans.
In his remarks,
Bernanke also suggested Congress should give the Fed new, explicit
powers to oversee investment banks. He said the FDIC's system for
disposing of the assets of failed commercial banks could be a model for
Fed oversight.
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