Four Democratic senators are demanding new leadership at the Office of the Comptroller of the Currency after acting chief John Walsh said banks shouldn’t be burdened with capital standards that are too high.
Sen. Sherrod Brown of Ohio sent a letter to Treasury Secretary Timothy Geithner on Thursday saying Walsh’s resistance to tougher capital requirements threatens the economy, The Hill reports.
Brown joined Sens. Jack Reed of Rhode Island, Jeff Merkely of Oregon, and Carl Levin of Michigan in calling for Walsh’s removal after he said in a speech that current capital levels are “extraordinarily high” by historical standards, and any increase would stifle economic growth.
Regulators must “stick to their guns” – Sheila Bair, who steps down as head of the Federal Deposit Insurance Corp. next month, urged banking regulators to “stick to their guns” and fight industry attempts to water down Dodd-Frank reforms that are needed to prevent another financial crisis.
In a speech today at the National Press Club, Bair criticized banks for fighting higher capital requirements and said that was the kind of “short-term thinking that got us into this mess in the first place.”
If regulators fail to follow through on tough new rules for bank capital and systemically important financial institutions, “it will need to be explained that the alternative is to risk another financial crisis that could someday throw millions of people out of work and wreck our public finances,” she said.
House panel chops CFPB budget – The House Appropriations Committee voted to sharply limit the Consumer Financial Protection Bureau’s budget in fiscal 2012 and to keep the Securities and Exchange budget flat at $1.2 billion.
The Obama administration had sought an increase of $222 million for the SEC so it could hire more staff to carry out its Dodd-Frank financial reform responsibilities, according to the Wall Street Journal. The House bill would also set the consumer bureau’s budget at $200 million, much lower than the $329 million requested by the administration, and boost Congressional oversight of the agency.
The CFPB budget is only adequate “if you want the bureau to fail,” said Rosa DeLauro of Connecticut, who was among Democratic members who opposed the bill. The bill now goes to the House floor for a vote.
Tougher mortgage terms – The Obama administration is “seriously considering” the deluge of criticism about a regulatory proposal that may cause mortgage rates to rise on all but the safest home loans, said Jeffrey Goldstein, a Treasury undersecretary.
He said regulators will closely examine comment letters about the proposed “qualifed residential mortgage” rule, Dow Jones reports. The rule would require banks that package mortgages into securities to hold at least 5 percent of the credit risk — unless the mortgages carry down-payments of at least 20 percent. Critics say the proposal as written would become the de facto industry standard and exclude credit-worthy Americans from home ownership.