Thanks to falling property prices, banks that participate in mortgage, home-equity and commercial real estate lending are still under strain and will “continue to incur losses due to ongoing weakness in real estate markets,” testified senior associate director for the Federal Reserve bank supervision division Michael Foley[1]. He made his statements yesterday before a subcommittee of the Senate Banking Committee. He encouraged banks to “take strong steps to insure that losses are recognized in a timely manner and that reserves and capital levels remain adequate.” Foley’s testimony was part of a financial supervision overhaul designed to prevent another wave of bank failures like that of 2008.
The first part of the financial supervision overhaul took the form of the Dodd-Frank bill, which was designed to implement wide-ranging reform and regulation over lending institutions. During the same series of testimonies, Sal Marranca, chairman of the Independent Community Bankers of America, warned that the excessive regulation – called “Wall Street Reform” in the bill – would actually overburden smaller banks rather than help the larger lending system. Marranca explained that “arbitrary, micromanaged and unreasonably harsh examinations…are suffocating lending” and urged the committee to pass new rules to ease regulatory pressure[2].
Do you think Dodd-Frank was a good bill to pass, or will it hurt the markets in the future?
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[1] http://www.bloomberg.com/news/2011-06-15/fed-foley-says-banks-facing-losses-from-declining-real-estate.html
[2] http://www.housingwire.com/2011/06/15/community-bankers-warn-congress-of-over-regulation
Anything that Barney Frank or Chris Dodd do will not be beneficial to the whole but to the select few who donate to their relections or to the Democratic party.
Dodd-Frank is a disaster. It is nothing more than regulation for regulation’s sake. A lame attempt to try to appear to have addressed the problem without doing anything to address the problem, just create a pile of new regulations that actually make things more difficult for banking institutions instead of actually addressing the very real abuses that created the problem to begin with. And no bones about it there were and still are very real problems. The biggest one, the reality of banks that are too big to fail, has not and will not ever be addressed perhaps until after they recreate a new set of major problems that crash the whole system all over again. Congress is incompetent, inept, and too driven by politics to ever be able to address such issues. What we need is serious set of term limits so congress will be focused on dealing with real issues, not getting reelected in perpetuity.
I Agree with Charles Ingram for the most part. The way the government is being run is a realy bad way to run business! To creat a set of rules just to create a set of rules that do nothing to correct the problem. The Problem is that the Govenment controlls the baking industry and inturne rules over Loans so when the government is tight the loans are tight. What about Aug 2 if nothing is done to correct the debt limit or debt itself what do you think is going to happen?