|
The Week in Review highlights this week's important legal
and regulatory developments affecting the financial industry.
Featured in this week's edition:
Testimony on Financial
Regulatory Reform
On October 29, Treasury Secretary Geithner
testified before the House Financial Services Committee
that an effective set of financial
regulatory reforms should
have five key elements and, further, that Chairman Frank's
bill meets these criteria. The five key elements are: (i)
orderly resolution of failing financial institutions, (ii) no
open-bank assistance to failing financial institutions, (iii)
protecting taxpayers from losses, (iv) limiting the Fed's and
the FDIC's emergency authorities, and (v) stronger constraints
on size and leverage. HFSC
Financial Stability Bill Discussion Draft. Geithner
Testimony.
On October 29, FDIC Chairman Bair
testified before the House Financial Services Committee about
the proposed changes to the financial
regulatory system and
highlighted the need for: (i) improved resolution authority
for the FDIC, (ii) improved supervision and regulation of
financial institutions, and (iii) a Financial Services
Oversight Council. Bair
Testimony.
On October 29, Fed Governor Tarullo testified before
the House Financial Services Committee on financial
regulatory reform in connection with proposals
raised in Chairman Frank's bill. In his testimony,
Governor Tarullo focused on: (i) consolidated supervision of
systemically important financial institutions, (ii) systemic
risk oversight for financial firms, (iii) an improved
resolution process that would allow financial firms to fail
without posing risks to the broader financial system or the
economy, (iv) centralized payment, clearing, and settlement
arrangements, and (v) improvements to the securitization
process, including capital requirements and risk
retention. HFSC
Financial Stability Bill Discussion Draft. Tarullo
Testimony.
| top
HAMP FAQs
On October 28, Treasury released revised FAQs
for the Home Affordable Modification
Program and indicated that the FDIC guidance on
accounting treatment of principal forbearance
under HAMP applies such that, except in certain circumstances,
the amount of forborne principal should be treated as a
realized loss. HAMP
FAQs.
| top
Executive Compensation Testimony
On October 28, Kenneth R. Feinberg,
Special Master for TARP Executive
Compensation, responded to three questions posed by
the House Committee on Oversight and Government Reform: (i)
what criteria were used to evaluate employee compensation at
the seven companies that received exceptional government
assistance (AIG, Bank of America, Citigroup, Chrysler,
Chrysler Financial, General Motors, and GMAC), (ii) what
proposals had been received by the companies and what actions
were taken with those proposals, and (iii) what are
the recommendations for oversight of TARP recipient
employee compensation in the future. In his responses,
Mr. Feinberg explained that he modified the
proposals of six of the seven companies in order to satisfy
the "Public Interest Standard" as a precondition to their
approval, and that this review of compensation should not go
beyond the current list of seven companies. Treasury
Release.
| top
SEC Speech on Investor Confidence
On October 27, SEC Chairman Schapiro spoke to the
SIFMA Annual Conference regarding restoring investor
confidence in the markets. Chairman
Schapiro discussed the initiatives the SEC has undertaken
in the past nine months, including a robust rulemaking
campaign, and proposed that legislative action be taken to
regulate the ABS market through an 'ABS Act' that would
be specifically tailored and directed at
securitizations. SEC
Speech.
| top
ISDA Asia CDS Changes
On October 29, ISDA announced
market practice changes, effective following
the December 20 roll, to the trading convention for CDS in
Asia, including the adoption of standard
coupons and full first coupons. ISDA
Release.
| top
Rating Agency Criteria and Methodology
Updates
On October 26, S&P
released its methodology regarding new types of
hybrid instruments (sometimes known as
'contingent capital') which
convert from debt to equity upon the occurrence of a trigger
and are being developed to qualify as regulatory
capital. S&P
Release.
On October 26, Fitch released a report updating its
approach for rating municipal
bonds backed by pools of loans and/or
leases where all or some of the borrowers are
corporations and other non-municipal entities. Fitch
Release. Fitch
Report.
Note: Free registration is required for all rating
agency releases and reports.
| top
| 
