2 amendments cleared in mark-up Wednesday

Nov. 19, 2009 – The House Financial Services Committee yesterday approved two key amendments to H.R. 3996, including one that eases the risk-retention requirements for institutions selling mortgage loans on the secondary market.

The amendment, proposed by Rep. Walt Minnick, D-Idaho, and clarified in a later revision, eases the bill’s requirement that lenders retain at least 10 percent of the risk on such loans. In some case, it takes the risk-retention requirement down to zero.

The panel also cleared an amendment by Rep. Paul Kanjorski, D-Pa., that would allow federal regulators to take over and dismantle certain large firms whose failure would threaten the U.S. economy.

Committee Chairman Barney Frank, D-Mass., has said such a provision would be included in the final committee print.

H.R. 3996 originally provided for the wind-down by FDIC of large, failing non-bank financial firms. Kanjorski’s amendment, approved on a vote of 38-29, allows the dismantling of financial firms that are so large, interconnected or risky that their collapse would put the entire economy at risk.

This would be allowed even if the firms in question appear to be well-capitalized and healthy, he said.

NAFCU is still pressing for adoption of an amendment by Rep. Brad Sherman, D-Calif., that would exclude all credit unions from requirements for funding the Systemic Resolution Fund, which would pay for such activities.

Currently, the FDIC would be able to assess fees on financial companies with more than $10 billion in assets, a range that captures the three largest credit unions, including Navy FCU and Pentagon FCU. The NAFCU-backed Sherman amendment would raise that to more than $75 billion.

A 30-group coalition of military and veterans groups, as well as NCUA Chairman Debbie Matz, is also pressing lawmakers ensure credit unions are not assessed fees to pay for the wind-down of the for-profit firms.

Frank said Tuesday that the House is unlikely to vote on a single financial regulatory reform package before the second week of December. The committee is working to complete several bills that are meant to be considered as a single package on the House floor.

The committee resumes mark-up today at 9 a.m.