Fed Is Meeting To Discuss Economy, Acts On BHCs

President Barack Obama is facing increasing public frustration with the government's economic rescue plans.

He expressed anger Monday that taxpayer funds intended to bail out a massive insurance company could end up in executives' pockets.

The president instructed his treasury secretary, Timothy Geithner, to see if it is possible to block the American International Group's plans to pay its executives $165 million in bonuses.

Some information for this report was provided by AP and Reuters. By VOA News

The Federal Reserve Board on Tuesday announced the adoption of a final rule that delays until March 31, 2011, the effective date of new limits on the inclusion of trust preferred securities and other restricted core capital elements in tier 1 capital of bank holding companies (BHCs). This action is being taken in light of continued stress in financial markets and the efforts of BHCs to increase their overall capital levels.

These new limits were scheduled to take effect on March 31, 2009, pursuant to a final rule adopted by the Board on March 10, 2005 (70 Federal Register 11827). The delay will further the Board's efforts, as well as the efforts of the other Federal banking agencies and the U.S. Department of the Treasury, to respond to the current financial situation.

As explained in further detail in the final rule, as a result of delaying implementation of the new limits and until the new effective date in 2011, all BHCs may include cumulative perpetual preferred stock and trust preferred securities in tier 1 capital up to 25 percent of total core capital elements.

The Board's final rule is attached.

Attachment (23 KB PDF)