Specific procedures shall be drafted jointly by the

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Unformatted text preview: bad loans purchased from state-owned banks. Specific procedures shall be drafted jointly by the Ministry of Finance and the State Administration of Taxation. Financial asset management companies shall be exempt from administrative charges such registration fees at the administration of industry and commerce. Article 29: Financial asset management companies shall submit financial and statistical reports as well as other related materials in accordance with the requirements of the PBOC, the Ministry of Finance, the CSRC and other related departments. Article 30: Financial asset management companies shall accept the auditing supervision of auditing authorities according to law. Financial asset management companies shall invite certified public accountants authorized by the Ministry of Finance to conduct annual audits of their financial status, and submit the auditing report to the supervisory and administrative departments. Chapter VI: Termination and Liquidation Article 31: At the termination of a financial asset management company, the Ministry of Finance shall organize a team to conduct the liquidation. Article 32: For the financial losses incurred during the handling of the bad loans by the financial asset management companies, the Ministry of Finance shall propose a solution to be executed at the approval of the State Council. Chapter VII: Supplementary Provisions Article 33: Financial asset management companies violating financial laws and administrative regulations shall be penalized by the PBOC in accordance with the "Procedures on the Punishment of Unlawful Financial Practices" and related laws. Those breaking other laws and administrative regulations shall be penalized by the relevant departments according to law. Those whose activities constitute a crime shall face criminal responsibility. Article 34: The Regulations shall take effect as of the date of promulgation. Appendix II: Case Study-The Resolution Trust Corporation (RTC) and S&L Crisis in U.S. In the 80's U.S. Savings and Loans had been released from the bonds of regulated interest rates, and given new powers to make commercial and consumer loans beyond the boundaries of their traditional mortgage lending functions. These powers gave them to ability to compete with banks and money market funds for deposits, and make higher yielding loans in order to offer higher yields on deposits. The problem was that many of them were small, relatively unsophisticated financial services companies, with little experience in the types of lending they had undertaken. When the market took a dive, the lack of experience, overly aggressive lending policies, and fraudulent use of depositor funds were exposed. The U.S. taxpayers, via the Resolution Trust Corporation (RTC), funded the bailout. The RTC was created in 1989, through the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA), which created the RTC to 1. Manage and resolve the affairs of failed institutions, 2. Maximize the return...
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This document was uploaded on 03/12/2014.

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