Bank Regulators Testify on Wall Street Reform Act

On Thursday, Deputy Treasury Secretary Neal Wolin, Federal Reserve Chairman Ben Bernanke, and Federal Deposit Insurance Corp. Chair Sheila Bair testified before the Senate Banking Committee on implementation of the Dodd Frank Wall Street Reform Act.  The most salient piece of testimony came from Fed Chairman Bernanke who said the central bank is set to finally publish this summer tighter rules for big financial firms that pose a risk to the economy.  The new rules will likely include more stringent requirements for large banks and financial companies, including stricter standards on capital and leverage ratios.

Treasury Auctions Will Exceed Debt Limit Monday

This week, the Treasury Department auctioned $72 billion in three and ten-year notes.  When the notes are formally settled Monday, this will cause the U.S. Government to officially exceed its federal borrowing ceiling.  As of Tuesday, total debt subject to the limit was $14.274 trillion.  The Obama administration has asked Congress to raise the limit, warning that failure to act could lead the government to default by August 2nd.  The federal budget deficit widened in April, with the government spending $ 40.49 billion more than it collected.

Bipartisan Housing Reform Bill Introduced

On Thursday, two members of the House Financial Services Committee — Rep. John Campbell (R., Calif.) and Rep. Gary Peters (D., Mich) — introduced legislation to replace troubled government-seized housing giants Fannie Mae and Freddie Mac and set up as many as fifteen or twenty private firms that would buy loans, then package and sell them with explicit government guarantees.  The bill does not specify whether the new mortgage companies should hold a portfolio of mortgages the way Fannie and Freddie currently have on their books.  It also seeks to limit taxpayer liability by creating a private sector financed reserve fund to cover any losses. The fund would be capitalized by assessing a special guarantee fee to buyers of the packaged mortgage securities. It also would seek to recoup any taxpayer funds spent to bail out the firms through a special assessment levied on the firms.

FDIC Chair Announces Departure

On Monday, Chairwoman of the FDIC Sheila Bair announced she plans to step down on July 8.   Bair, a Bush administration appointee who was named FDIC chairwoman in 2006, had been openly discussing her plans to step down when her five-year term expires this summer.  Martin J. Gruenberg, the FDIC’s vice chairman, is widely expected to take over for Bair, although he would require confirmation by the Senate first.

More Information

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

Matt Jessee, Policy Advisor
matt.jessee@bryancave.com
1 314 259 2463