The Federal Financial Forum

From: NYT

WASHINGTON — Financial companies that are not banks but have more than $50 billion in assets and $20 billion in debt could be regulated by the Federal Reserve and required to meet tougher standards, according to a proposed rule issued Tuesday by the nation’s top financial regulatory board.

The Financial Stability Oversight Council voted unanimously to seek public comment on a proposed rule that laid out the standards by which insurance companies, hedge funds, asset managers and the like could fall under stricter regulation.

Editor’s Note:  Debit card interchange price controls are resulting in a transfer of wealth from consumers to retailers.  Proposals to extend price controls to credit card interchange should be treated with great caution.

From: The Hill

Retailers won that battle when the Federal Reserve stepped in with new rules that limit the fees that banks can charge for debit card transactions. 

Katherine Lugar, executive vice president of public affairs for the Retail Industry Leaders Association, said her trade group plans to be just as active lobbying against the credit card interchange fees, which retail lobbyists say generate about $30 billion per year for banks and card providers.

From: CreditNewsOnline.com

The Laredo, Texas-based International Bancshares Corp. announced on Friday that it will shutter 55 grocery store branches and lay off approximately 500 people in response to the Durbin Amendment, which will cap what banks can charge merchants for debit card transactions.

“Government many times passes regulations that end up hurting the very people they were intended to help,” International Bancshares Corp. chairman and CEO Dennis Nixon said. “This appears to be one of those cases.

By Dave Clarke and Jonathan Spicer

(Reuters) – Regulators hashing out the details of a new ban on proprietary trading are wrestling with internal disagreements over how much leeway to give banks when it comes to their ability to hedge risk, according to people familiar with the negotiations.

The ban is known as the Volcker rule, named after former Federal Reserve Chairman Paul Volcker. It will prohibit banks from trading for their own profit in securities, derivatives and certain other financial instruments, and ban their investing in or sponsoring hedge funds or private equity funds.

Editor’s Note:  The statement below correctly emphasizes the importance of the SEC “allocating sufficient staffing resources to pursue reasonable cost-benefit analysis.”  A distinguished commentor on regulatory review recently discussed the process, extending over five administrations and involving the development of a cadre of trained analyists, necessary to bring centralized regulatory review to fruition.

From: American Enterprise Institute for Public Policy Research