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Deposit Rate Limits
A proposal by the Federal Deposit Insurance Corp. to clarify deposit rate limits for sub-well-capitalized institutions. The rule would let adequately capitalized banks and thrifts taking brokered deposits pay rates based on a national average of bank and thrift rates. These rates are now capped based on rates on Treasury securities, which are uncharacteristically low. The regulation also aims to rein in banks that have used vagueness in the current rules to pay rates that are too high by more clearly defining "normal market area," which helps determine rate caps. Published in the Federal Register on Feb. 3 with comments due April 6.FHLB Capital
An interim rule by the Federal Housing Finance Agency to reform the capital classifications of the Federal Home Loan banks. Under the rule, Home Loan banks are considered "undercapitalized" if their capital is between 3% and 4% of assets, "significantly undercapitalized" with ratios between 2% and 3%, and "critically undercapitalized" if the cushion falls below 2%. Published Jan. 30. Comments due April 30.

GSE Holdings
An interim rule by the FHFA to let Fannie Mae and Freddie Mac each increase their mortgage portfolio to $850 billion by yearend. The rule also would require the government-sponsored enterprises to slash their portfolios, starting at the end of next year, until they reach $250 billion. Published Jan. 30. Comments due June 1.

Overdraft Programs
A proposal by the Federal Reserve Board to require institutions to let customers opt out of overdraft programs before charging them one-time fees on automated teller machine withdrawals or debit card transactions. Published Jan. 29. Comments due March 30.

Recent Actions

Tarp 2.0
The Treasury Department Tuesday unveiled a summary of its financial rescue program. It includes additional capital infusions to institutions under the Troubled Asset Relief Program, "stress test" requirements on banks and thrifts getting Tarp money, a "bad bank" to buy toxic assets with public and private capital, and $50 billion from Tarp for a foreclosure prevention program.Talf I
The Treasury also said Tuesday that a Tarp-backed Fed program to fund lending in the auto, credit card, and student loan markets — known as the Term Asset-Backed Securities Loan Facility — would be expanded to support commercial mortgage-backed securities.

Talf II
The Fed on Feb. 6 detailed haircuts on collateral for the Talf program. For example, it said it would take a 16% haircut on certain auto loans maturing within four to five years and a 5% charge on prime credit card loans with maturities of less than two years as well as on Small Business Administration loans with five-year terms.

Bank Failures I
Three more failures Feb. 6 brought the year's total to nine. FirstBank Financial Services in McDonough, Ga., failed with $337 million of assets; its $279 million in deposits were transferred to Regions Bank in Birmingham, Ala. County Bank in Merced, Calif., failed with $1.7 billion in assets and had its $1.3 billion in deposits transferred to Westamerica Bank in San Rafael, Calif. Alliance Bank in Culver City, Calif., failed with $1.14 billion in assets and had its $951 million in deposits transferred to California Bank and Trust in San Diego.

Fannie Refis
Fannie Mae said Feb. 6 that it would no longer require an appraisal or property inspection for certain mortgages it holds that are being refinanced. Instead, its Desktop Underwriter system will use automated models to validate property values for the loans.

Tarp IG Report
The special inspector general overseeing the Troubled Asset Relief Program said Feb. 5 that the Treasury Department needs a more comprehensive approach for valuing Tarp investments. The current approach values investments by their initial cost, but values in the volatile market have declined from the purchase price.

Underbanked Report
The FDIC in a report Feb. 5 said banks have not done enough to reach out to the unbanked and underbanked. The study said most banks know there are underserved consumers within their reach and offer basic financial literacy programs but that more than 70% of institutions in the study did not identify services to this market segment as a priority.

Executive Pay Limit
The Treasury announced on Feb. 4 that it would cap salaries at $500,000 for certain executives whose institutions get additional Tarp money. The pay cap does not apply to capital infusions that have already been granted, but banks that take money in the future either as part of a "general assistance" program or in the form of "extraordinary assistance" must adhere to the limit.

Liquidity Extension
The Fed on Feb. 3 said it would extend five liquidity programs — the Term Securities Lending Facility, the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, the Commercial Paper Funding Facility, the Money Market Investor Funding Facility, and the Primary Dealer Credit Facility — until Oct. 30. They had been slated to expire April 30.

Bank Failures II
Regulators closed three banks Jan. 30. The FDIC approved the payout of deposits at MagnetBank in Salt Lake City. All $282 million in deposits at the $292 million-asset bank were insured.

The Office of Thrift Supervision closed $360 million-asset Suburban Federal Savings Bank in Crofton, Md. Bank of Essex in Tappahannock, Va., assumed all $302 million of the failed bank's deposits. And Ocala National Bank in Ocala, Fla., failed with about $223 million of assets.

Ocala's nonbrokered deposits were transferred to CenterState Bank of Florida in Winter Haven.

Credit Union Bailout
The National Credit Union Administration announced a bailout plan Jan. 28 for the corporate credit union sector. It includes a $1 billion capital infusion for U.S. Central Federal Credit Union, the largest corporate, and a guarantee of $80 billion in uninsured deposits that regular credit unions have deposited in corporates.

New Fed Officials
Georgetown University law professor Daniel K. Tarullo was sworn in Jan. 28 as a member of the Federal Reserve Board. His term is to expire in 2022. The New York Fed on Jan. 26 named executive vice president William Dudley to succeed Treasury Secretary Geithner as president.

Deposit Balances
The FDIC on Jan. 27 completed a rule outlining how it determines an institution's deposit balance in the event of its failure. The rule requires banks and thrifts to tell sweep customers how their funds would be treated in a failure.

Fed Loan Mod Plan
The Fed said Jan. 27 that it would require loan modifications on mortgage assets held by banks that default on their discount window borrowings. The central bank will also modify loans pledged as collateral to the Fed for aid given to American International Group Inc. and Bear Stearns Cos.

Geithner Takes Office
Timothy F. Geithner was sworn in Jan. 26 as the 75th secretary of the Treasury. Mr. Geithner, the former president of the New York Fed, was confirmed despite concerns over back taxes that he had not paid while at the International Monetary Fund.

Bank Failures III
On Jan. 23, the California Department of Financial Institutions closed $803 million-asset 1st Centennial Bank in Redlands. First California Bank in Westlake Village assumed most of the failed bank's insured deposits.

Bank Failures IV
The first two bank failures of the year occurred Jan. 16. Regulators closed $431 million-asset National Bank of Commerce in Berkeley, Ill., and transferred all $402 million of its deposits to Republic Bank in Chicago. Regulators also closed the $446 million-asset Bank of Clark County in Vancouver, Wash., and transferred its nonbrokered insured deposits to Umpqua Bank in Roseburg, Ore.

GSE Loan Records
The FHFA said Jan. 15 that Fannie Mae and Freddie Mac must obtain identification numbers for the loan officer, originator, and appraiser involved in each new loan bought or guaranteed by the government-sponsored enterprises. They also must issue guidance to lenders on the requirements.

Bailout Reporting
The FDIC told state-chartered banks Jan. 14 to begin documenting how they spend Tarp funds and liquidity backed by the FDIC and the Fed.

Check Capture
The Federal Financial Institutions Examination Council issued guidelines Jan. 14 stating that banks should view their remote check-image capture facilities as a new delivery system requiring strong oversight, rather than just as a service.

Tarp for S Corps
The Treasury released a term sheet Jan. 14 for S Corps wanting to apply for government assistance under Tarp's Capital Purchase Program. The Treasury is to buy senior debt securities, with each note valued at $1,000.

MMF Expansion
On Jan. 7, the Fed said the Money Market Investor Fund Facility would be opened to portfolios besides money market funds, such as government investment pools and common trust funds.

Flexible 529s
The Treasury Department and the Internal Revenue Service ruled Jan. 7 that 529 college savings plan account owners could change their investment strategy twice in 2009. Previously, owners of 529 accounts could change their strategy once a year.

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