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House Financial Services subcommittee considers seven bills

Bill PoseyA House Financial Services subcommittee will meet on Thursday to vote on a bill that stops regulators from assigning performing loans to non-accrual status for banking regulatory purposes.

The subcommittee is also meeting on Tuesday to consider five bills that are related to the banking industry. These pieces of legislation include a bill that would redefine Dodd-Frank’s definition of swap execution facility, a bill that would exempt inter-affiliate swaps from certain Dodd-Frank regulations and a bill that would ensure pension plans could use swaps for hedging risk, according to ABA.com.

Other bills being considered by the subcommittee on Tuesday include a repeal of a Dodd-Frank provision prohibiting any federal bailout of swap dealers or participants and a bill that would improve the Securities and Exchange Commission’s consideration of costs and benefits of its regulations and orders.

The House Financial Services Capital Markets Subcommittee has already heard testimony from banking experts on Rep. Bill Posey’s (R-Fla.) bill, called the Common Sense Economic Recovery Act of 2011, including statements from the American Bankers Association.

While the ABA does not support the bill as drafted, it said it is an attempt to respond to serious problems affecting banks’ ability to serve their customers and benefit the economy, ABA.com reports.

Non-accrual loans typically occur when the payment of interest and principal has lapsed or when it is not expected which results in high probability that the borrower will default.

“Congressman Posey is rightfully concerned about how regulatory rules are being applied to classifying ‘troubled’ loans,” the ABA’s testimony read. “In some instances, the application of the rules represents overkill and results in the need for banks to raise capital in situations that may be unwarranted.”

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