Banking/Financial Institutions

Democrats will eventually drop a proposed $50 billion fund and it will take another week for a financial regulatory reform bill reaches the floor, epublican Sen. Bob Corker (Tenn.) told reporters Tuesday, 

As negotiations continue on the bill, Corker, a lead negotiator and Senate Banking panel member, criticized his own party's strategy for targeting the unwinding fund as a reason to hold up the measure, saying that reaching a bipartisan agreement "isn't a heavy lift." 

Corker said he wouldn't be surprised if the bill attracted between 70 and 80 votes. 

His expectation are that Senate Democrats will file cloture by the end of the week then possibly hold a vote on Monday to proceed to consideration of the measure.

The U.S. Chamber of Commerce on Tuesday released a six-state poll showing that voters overwhelming oppose the creation of a consumer protection agency. 

By a two-to-one margin, voters in Arkansas, Nebraska, Ohio, Montana, Tennessee and Massachusetts prefer that existing agencies ensure consumer protections instead of creating a new entity.  

If a consumer protection agency is needed, nearly three-fourths of respondents want a bipartisan commission to create it and not the Federal Reserve, as proposed in financial reform legislation by Senate Banking Chairman Chris Dodd (D-Conn.).  Read more...

Voters are much more likely to support new financial regulations when they are framed as a crackdown on Wall Street, according to a new Gallup poll.

And voters trust Democrats more than Republicans by eight percentage points to carry out new financial regulations.

The Gallup poll was conducted April 17 and 18 and showed voters split roughly evenly on whether Congress should pass new financial regulations on large banks. But when the question was framed as regulating Wall Street banks, support grew significantly.

Framed as a Wall Street issue, there was a 14 percentage point margin in favor of new regulations. The poll showed 50 percent of voters in favor of new regulations and 36 percent in opposition.

Framed as regulations on big banks, the numbers were split 46 percent in favor and 43 percent in opposition. 

Democrats have pushed hard with financial overhaul legislation, and they have focused much of their attention on how the bill would clamp down on Wall Street banks in particular.

The House financial overhaul bill was titled: "Wall Street Reform and Consumer Protection Act of 2009."

Senate Banking Committee Chairman Sen. Chris Dodd (D-Conn.) refers generally to his financial legislation as the, "Wall Street Reform Bill."

The legislation would affect the entire financial industry, not just Wall Street banks.

Reid plans to move ahead with immediate consideration of the bill despite a GOP pledge to filibuster the measure.

The government so far has spent $3 trillion to stem the financial crisis, said Neil Barofsky, the Special Inspector General for the TARP.

"It's about $3 trillion -- all in, with all the various programs and support [for] the financial industry," Barofsky told lawmakers participating in a Senate Finance hearing on the bank tax.  

The figure will be updated in Treasury's quarterly report due out in July and will include all payments made by all government entities. 

Verbal sparring over a Wall Street reform bill continued in the Senate Tuesday morning as the fate of a $50 billion fund that would help failing financial firms remained a point of contention. 

Senate Democrats and Republicans wasted no time calling on one another to join the effort to move forward on a bipartisan bill and stop the bickering. 

But the rhetoric was going strong again this morning. 

In response to an April 14 letter from Republicans, Senate Majority Leader Harry Reid (D-Nev.) and Senate Banking Chairman Chris Dodd (D-Conn.) asked Republican leadership "to reconsider your approach and truly work with us on this much needed reform." 

"As you know, Democrats have been working in a bipartisan manner for months," said the letter sent Tuesday. "Any claim to the contrary at this late stage of the process seems nothing more than a transparently partisan effort to kill Wall Street reform."

Goldman Sachs, the bank recently charged by the SEC for defrauding investors, earned $3.5 billion in the first quarter of 2010. That figure is up from $1.66 billion from the same period last year. 

The bank was charged with withholding from investors material information on mortgage-backed securities the SEC claims the bank knew were designed to fail. That charge has already capture congressional attention and will likely continue to do so as lawmakers try to pass financial reform legislation. 

Britain's financial regulator said Tuesday it is opening a formal investigation into Goldman Sachs, following charges filed Friday by the Securities and Exchange Commission (SEC).

The SEC charged Goldman with defrauding investors in securities based on subprime mortgages. The Financial Services Authority (FSA), Britain's regulator, said in a short statement that it is starting its own enforcement probe.

"Following preliminary investigations the FSA has decided to commence a formal enforcement investigation into Goldman Sachs International in relation to recent SEC allegations," the regulator said.

The FSA said it would be working closely with U.S. authorities.

Senate Banking Committee Chairman Chris Dodd (D-Conn.) said this week that financial overhaul legislation pending in Congress would have prevented the types of actions that Goldman is alleged to have taken.

The Obama administration is struggling to get a hold on the housing crisis and should consider forcing reductions in homeowner payments, a government watchdog said Tuesday.

Neil Barofsky, the special inspector general over the $700 billion financial rescue package, said the foreclosure crisis has worsened since the administration announced new efforts a year ago to shore up the housing market. Barofsky said the 230,000 permanent loan modifications under the program represent only roughly 8 percent of all foreclosures in 2009.

The administration program, "risks being remembered not for catalyzing a recovery from our current housing crisis, but rather for bold announcements, modest goals, and meager results," the report said.

Barofsky said the White House should consider making principal reductions mandatory rather than voluntary.

Maine Republican Sen. Olympia Snowe thinks the Senate can reach a bipartisan agreement on a financial regulatory reform bill. 

"I think that there isn't much of a gap in disagreement on the questions," Snowe told reporters after her Monday meeting with Treasury Secretary Tim Geithner. 

Snow said she had a "very constructive and frank meeting" and it was "very encouraging." 

Sen. Susan Collins (R-Maine) had similar sentiments after her meeting today with Geithner, noting the issues of 'too big to fail' and her opposition to the $50 billion fund to help financial firms unwind if they fail. Treasury and the White House have voiced opposition to the account, calling it a 'moral hazard' that could send a signal to firms that they could get government help even if they engage in risky behavior.