From the WSJ: Obama Proposes New Bank Regulations
The White House wants commercial banks that take deposits from customers to be barred from investing on behalf of the bank itself—what’s known as proprietary trading—and said the administration will seek new limits on the size and concentration of financial institutions.
… Banks shielded from risk through federal-deposit insurance, or aided in financial crises by low-interest loans from the Federal Reserve Board, would no longer be allowed to engage in trading unrelated to their customers’ interests, one senior administration official said.
Under the proposed rule, commercial banks would be prohibited from owning, investing in or advising hedge funds or private equity firms. Bank regulators would not be simply given the discretion to enforce such rules. They would be required to do so.
…
Administration officials said they also want to toughen an existing cap on bank market share. Since 1994, no bank can have more than 10% of the nation’s insured deposits. The Obama administration wants that cap to include non-insured deposits and other assets.

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The FDIC seized 3 more banks, raising the totaled number of failed U.S banks in 2010 to 4. FDIC Chairman Sheila Bair has said in the current banking crisis, failures will peak in 2010.

According to the FDIC bank failures from 2009 to 2013 is expected to cost $100 billion. Small(regional) banks are failing due to the loan losses from the credit boom. Many losses are result of the collapsed commercial real estate projects.

Brief Rundown;
Bank                                                                             Assets                              Deposits
Barnes Banking Company (Utah)                        $827.8 million             $786.5 million
Town Community Bank and Trust (Illinois)     $69.6 million                $67.4 million
St. Stephen State Bank (Minnesota)                    $24.7 million                $23.4 million
Horizon Bank (Washington)                                $1.3 billion                    $1.1 billion

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Horizon Bank in Washington State was the first bank to fail in 2010 kicking off the year with what is predicted to be the peak of small bank failures. The Federal Deposit Insurance Corp (FDIC) said Horizon Bank had about $1.3 billion in total assets and $1.1 billion in total deposits as Sept. 30. Horizon’s failure is projected to cost the FDIC insurance fund $539.1 million. Washington Federal Savings and Loan Association has agreed to purchase Horizon Bank and will assume all deposits.

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Press Release, AP Business Writer Stephen Bernard: Citigroup loses $7.8B in 4Q
“Citigroup Inc. became the latest bank to take a cautious view of consumers’ credit problems, reporting a $7.77 billion fourth-quarter loss due to failed loans and the costs of repaying $20 billion in government bailout money.”
“The bank’s loss after accounting for payment of preferred dividends came to almost $7.77 billion, or 33 cents per share. That compared with a loss of $18.16 billion, or $3.40 a share, a year earlier. In the third quarter of 2009, it lost $3.24 billion after paying dividends. The latest results were in line with analysts’ expectations, according to Thomson Reuters.”
“….But paying the government back also frees Citigroup of restrictions on how much it can pay its employees.”
“Gerspach said average compensation per employee, which includes salary, benefits and bonuses, in 2009 was about $90,000, about 1 percent lower than in 2008. In total, Citigroup spent $25 billion on compensation costs in 2009, down 20 percent from the year before. The average compensation per employee did not decline as fast because of the job cuts.”

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The International Monetary Fund (IMF) chief Dominique Strauss-Kahn said that the global recovery is occurring faster and stronger than expected as China and other Asian economies lead the way. However, cautioned that a surge in money to emerging markets could result in asset bubbles.

Strauss-Kahn suggested Monday that the IMF would likely raise its 2010 global growth previously projected at 3.1%, factoring in to account that China, India and other Asian economies growth rates were returning to their pre-crisis growth rates. On the other hand advanced economies such as the U.S. and Japan remained “sluggish”.

The IMF doesn’t foresee a “double-dip,” or second recession, though risks remain, Strauss-Kahn said. He acknowledge that hundreds of billions in stimulus spending by world governments avoided another great depression, but what now concerns the chief is the exit strategy from the policies created by stimulus.

“Now we have to fix the consequences of the policy that has been put in place to fight against the crisis,” he said. “Finding the right time to implement exit policies is really a difficult one.”

“If you exit too late, you waste resources,” he said. “If you exit too early, you have a risk of going back into recession.”

Strauss-Kahn believes many lessons were learned from the financial crisis and one being that supervision must be increase rather than more regulations. “You may have the best regulations in the world, but if it’s not supervised correctly, it’s no use.”

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On Monday Citigroup the last big bank reached a deal with U.S. regulators to exit the government’s bailout program, thus terminating their “loss-sharing agreement.” The loss-sharing agreement accounts for approximately $250 billion of troubled real estate and credit card assets. The termination for this agreement will now hold Citigroup responsible for loss or gains.

Brief Rundown;

Citi is to repay $20 billion in TARP Trust Preferred Securities with money from private investors.

Citi will raise $17 billion by selling stock.

Citi will issue $7.2 billion in other capital by the first quarter of 2010.

The U.S. government owns 34% of Citigroup and will begin selling its stake starting with its first sale of $5 billion worth of shares in the coming weeks.

With Citigroup’s announcement today, it seems that the financial markets are recovering faster than anticipated.

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