Banking/Financial Institutions

A trio of Republican senators are pressing lawmakers to tie student loan interest rates to U.S. Treasuries. 

Sens. Tom Coburn (Okla.), Richard Burr (N.C.), and Lamar Alexander (Tenn.) introduced legislation on Tuesday that would provide a permanent solution to the interest rate issue by requiring that all new loans be tied to the U.S. Treasury 10-year borrowing rate, which stands at 1.75 percent, plus 3 percentage points. 

"Moving to a market-driven approach will benefit both borrowers and taxpayers in the long-term,” Coburn said.  

“Temporary fixes require annual patching and do nothing to solve the real problem," he said. 

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Several Democratic senators are taking aim at interest rates and fees on a broad range of consumer loans. 

Senate Majority Whip Dick Durbin (D-Ill.) along with several other lawmakers, introduced a bill on Tuesday that would create an interest rate and fee cap of 36 percent for all consumer credit transactions, in an effort to end rates that can skyrocket up to 300 percent.  

"As we climb out of the worst recession in a generation, many working families continue to struggle," Durbin said. 

"For some, payday lenders offer a quick way to make ends meet, but often with devastating consequences."

A bipartisan group of senators is pressing bank regulators to hurry up and finish a rule that would tighten restrictions on the nation's biggest banks.

The group is the latest to join a growing push from Capitol Hill for regulators to take a stronger stance against the lingering issue of "too big to fail." The senators putting pressure on bank watchdogs span the political spectrum, and include Sens. Sherrod Brown (D-Ohio), Elizabeth Warren (D-Mass.), Bob Corker (R-Tenn.), David Vitter (R-La.) and Susan Collins (R-Maine). 

In the letter sent Monday, the lawmakers urged regulators to move "deliberately and expeditiously" to finalize rules requiring banks to hold more capital as cushion against losses, as well as ensure that shareholders and creditors would bear the brunt of a bank's collapse instead of the American taxpayer.

A new government watchdog report has found that the Treasury Department's Small Business Lending Fund struggled to do much actual lending to small businesses.

Treasury and banking regulators implementing the underwhelming program pointed fingers at each other when it came to whether banks participating in the program had the capacity to make loans, according to a new report from the Special Inspector General for the Troubled Asset Relief Program (SIGTARP).

The report also found that the Treasury misspent funds by giving them to bailed out community banks, which in turn used the government dollars to pay off their bailouts and exit from government support, rather than increasing their lending to the business community. Banks with under $10 billion in assets were eligible to participate in the fund.

Two dozen banks that fell under TARP and participated in the program did not increase their business lending at all, while the remaining TARP banks increased lending by $1.13 for each lending fund dollar received. By comparison, banks that received lending support under the program that fell outside of TARP were significantly more active, lending $3.45 for each lending fund dollar received.

About a dozen banks will start making billions in payments to homeowners next week as part of a settlement over shoddy foreclosure practices. 

About 4.2 million borrowers are expected to receive about $3.6 billion — payments ranging from $300 to $125,000 — from 11 mortgage servicers starting April 12 as part of a January agreement reached by the Office of the Comptroller of the Currency and the Federal Reserve Board.

The agreement provides cash payments to borrowers whose homes were in any stage of the foreclosure process in 2009 or 2010 and whose mortgages were serviced by Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank and Wells Fargo.

Sen. Bernie Sanders (I-Vt.) and Rep. Brad Sherman (D-Calif.) are pushing legislation that would force financial regulators to break up the nation's biggest banks.

The pair argued Tuesday that the Dodd-Frank financial reform law lacks the necessary tools to address the problem of "too big to fail" and only through a legislative demand from Congress could the issue be put to bed.

"What we need is a congressional mandate for anything quite this big," Sherman said.

"Dodd-Frank gives us some tripwires. The goal is that we don't want to be caught with our pants down so to speak," added Sanders. "I don't think that anyone seriously believes that Dodd-Frank has the tools to do what Congressman Sherman and I have suggested."

The Senate, by unanimous consent, approved former federal prosecutor Mary Jo White to head the Wall Street watchdog.

President Obama will offer a budget this week that is expected to include $600 billion in new tax hikes and calls for entitlement cuts.

The long-delayed White House budget will arrive on Capitol Hill months late — and after the House and Senate approved their own budget blueprints.

Treasury Secretary Jack Lew will testify at hearings on Thursday with the House Ways and Means and the Senate Finance committees. He may also get some questions about his two-day swing through Europe, where he is set to discuss the EU financial crisis.

Jeff Zients, the acting director of the Office of Management and Budget (OMB), will testify Thursday before the Senate Budget panel on the president’s proposal. The House Budget Committee will also explore the president’s proposal with Zients on Thursday.

The conservative Club for Growth is urging lawmakers to oppose President Obama's nominee to lead the Export-Import Bank. 

The group said Thursday it will key-vote the nomination of Fred Hochberg, who was recently renominated to serve a second four-year term at the bank with the aim of achieving the Obama administration's goal to double exports by 2015. 

Club for Growth's Andy Roth, vice president of government affairs, argues that Hochberg's nomination should be opposed "until a real plan is implemented for reducing the Bank's authority with the ultimate goal of ending its charter completely."

He said the bank's increase in funding authority as part of a reauthorization bill that cleared by Congress last year "means its ability to distort the free market by handing out huge discounted loans and loan guarantees to special interests has only grown in size."

The Consumer Financial Protection Bureau (CFPB) announced Thursday it had fined four mortgage insurers $15.4 million for doling out illegal kickbacks to mortgage lenders in exchange for business.

The enforcement action from the consumer watchdog tackles a practice it says was "common practice" in the years before the financial crisis, and the institutions fined were "key players" in the kickback scheme.

“Illegal kickbacks distort markets and can inflate the financial burden of homeownership for consumers,” said CFPB Director Richard Cordray. “We believe these mortgage insurance companies funneled millions of dollars to mortgage lenders for well over a decade. The orders announced today put an end to these types of arrangements and require these insurers to pay more than $15 million in penalties for violating the law.”