A financial reform bill has passed the U.S. House of Representatives, representing a tentative response to the financial meltdown of 2007 and the Wall Street crisis of 2008. The bill includes provisions that require disclosure of the money at stake in some derivatives contracts, but not others. There are some changes in accounting rules, but not enough to prevent a bank from using derivatives to hide its financial condition. The measure is expected to pass the Senate toward the end of the month.
With their foot-dragging strategy, Republicans have backed themselves into a corner. Republicans in the Senate now have to choose between publicly standing up for Wall Street barely three months before an election, or grudgingly allowing for a timid reform measure that they have been stonewalling for more than a year. Any further delay would move the issue into the election season, which would raise the political stakes significantly.
A failed credit union was resolved this week. First Delta Federal Credit Union, in conservatorship since October, was merged into Shreveport Federal Credit Union. Though based in Louisiana, Shreveport Federal Credit Union already had a substantial presence in the Mississippi counties where First Delta Federal Credit Union operated.
With the holiday weekend, no new bank failures are expected tonight. Banks are preparing new financial statements for the quarter that ended June 30, and for some banks, those will tell whether the bank is financially strong enough to continue to operate through the new quarter.