News


03.09.16
NAR's 2016 Home Buyer and Seller Generational Trends

"Even if an urban setting is where [Millennials] would like to buy their first home, the need for more space at an affordable price ...[is] pushing their search further out."

03.09.16
The Blockchain Revolution


"We are today in a phase [with blockchain] that is analogous to the early phase of the evolution of the Internet."

03.08.16
America Lost a Great Lady

Nancy Reagan spent the last 15 years of her life protecting her husband's legacy. 

 

03.08.16
CFPB Accepts Marketplace Lender Complaints
"If you consider a marketplace lender as one of your options when shopping for a loan, keep in mind that marketplace lending is a young industry and does not have the same history of government supervision and oversight as banks or credit unions," wrote the CFPB. 
 
03.07.16
The Rise and Fall of American Growth


“The fostering of innovation is a not a promising avenue for government innovation, as the American innovation machine operates healthily on its own.”

03.06.16
The Broken Regulatory System
03.06.16
The Impact of Widening Spreads on Liquidity
03.06.16
Resolving Puerto Rico’s Fiscal Failures
03.06.16
Uneasy Calm Gives Way to Turbulence
03.06.16
Global Debt Continues to Rise
03.06.16
A Tale of Two Markets
03.04.16
What Happens If NIPR Fails to Stimulate Economic Growth?


“If negative interest rates fail to generate acceptable nominal growth, then …helicopter money may be employed,” wrote Janus Capital’s Bill Gross. “How that could equitably be distributed nationally or worldwide I have no idea, but the opinion columns are mentioning it more and more often, and on Twitter, the ‘Likes’ are increasing in numbers. Can any/all of these policy alternatives save the ‘system’?"

03.03.16
Living in a Highly Volatile World

William (Bill) Rhodes, Citigroup’s former senior international officer and senior vice chairman of Citigroup and Citibank.

03.03.16
Moody's Changes the Outlook for China's Government Bond Rating to Negative

On March 2, Moody’s downgraded China’s Aa3 government bond rating from stable to negative and affirmed the Aa3 rating. The key drivers of Moody’s outlook revision were based upon (i) the weakening of fiscal metrics; (ii) the falling reserve buffers due to capital outflows; and (iii) the uncertainties about China’s capacity to implement reforms. China's reserve buffers remain sizeable, giving Chinese authorities time to implement some reforms and gradually address imbalances in the economy.  

03.02.16
So Many Huge Unknowns


"TBTF is the critical issue back then and now. There's nothing in Dodd Frank ... which actually addresses this issue."

03.01.16
Shared Services in the Financial Services Industry
03.01.16
Projected Wealth vs. Population by 2030

By 2030, China and India are projected to comprise 43% of the global GDP, while the U.S.’s percentage will decline from 22% to 20%.

 

03.01.16
A Closer Look at Global Crises
03.01.16
Macroeconomic Transformation to the Platform Economy
03.01.16
Lessons from Ending Too Big to Fail
03.01.16
The Risks Facing European Banks
03.01.16
GE's Digital Industrial Transformation

“What is unique in this cycle is the difficult relationship between business and government, the worst I have ever seen,” wrote GE CEO Immelt. “Technology, productivity and globalization have been the driving forces during my business career. In business, if you don’t lead these changes, you get fired; in politics, if you don’t fight them, you can’t get elected. …We now live in a world where the most promising growth policy is ‘negative interest rates.’ In the U.S., 2015 was the 10th consecutive year when GDP growth failed to reach 3%, a rate that used to be considered our entitlement.”

02.29.16
America’s Economic Magic Remains Alive and Well

“…[M]any Americans now believe that their children will not live as well as they themselves do,” wrote Warren Buffet in his Letter to Shareholders. “That view is dead wrong: The babies being born in America today are the luckiest crop in history. American GDP per capita is now about $56,000…— six times the amount in 1930… For 240 years it’s been a terrible mistake to bet against America... America’s golden goose of commerce and innovation will continue to lay more and larger eggs. America’s social security promises will be honored... And, yes, America’s kids will live far better than their parents did.”

 

02.28.16
Puerto Rico's Course Forward

The next few months will be critical to determining Puerto Rico’s future with large debt service payments due in May and July and Congressional action unlikely. 

 
02.26.16
Are Central Banks in Crisis?


“Policymakers must prepare for a new 'New Normal' in which policy becomes more uncomfortable, more unconventional or both,” wrote Financial Times’ Martin Wolf.

02.25.16
Key Legal Developments in the Financial Services Industry

In 2015, the consumer financial services industry continued to face increasing pressure, from regulators and government enforcement activity, and ever-more creative litigation tactics.

02.25.16
The European Banking System’s Slow Evolving Crisis

“The [European] banks have a rising level of nonperforming loans, their overall profitability is under pressure ...and there’s no loan growth,” said  Ken Buckfire, president of Miller Buckfire. “So they have no profitability drivers on the loan side and they’re under increasing pressure because their basic assets are declining. …The central banks, especially the domestic central banks, will find a way to recapitalize those banks through the kind of bailouts that we saw in the United States, like AIG for example. …The banks and the financial system will survive, which is the [central banks'] mission..."

02.24.16
Unleashing the Life-Enhancing Genius of Entrepreneurs

“The currently low share of new and young firms in the economy is a combination of a 30-year secular decline and a particularly strong cyclical downturn following the Great Recession …[which] have implications for the aggregate economy and …employment in years to come.” 

02.24.16
The Inflection Point

“We are near an inflection point with regard to globalization and monetary policy,” wrote Alhambra's Joe Calhoun. “The desire to gain a competitive trade advantage through currency devaluation will persist but its effectiveness ...will not. …[A]ll countries [will] continue to rely on monetary policy as their primary economic growth policy. ...This shift in the impact of monetary policy will also have political implications. …Add in anti-trade and anti-immigrant policies and you have a recipe for about as toxic an economic stew... [V]oters are angry and voting with their hearts not their minds. The inflection point is near.”

02.23.16
America’s Housing Crisis

Chapman University Press, 2015.

02.23.16
Mortgage Delinquencies Increase by 167,000, up 6.6% in January


The national delinquency rate for mortgages was up 6.6%, driving the 30-day delinquency rate to 5.09% in January, according to Black Knight Financial Services. Concurrently, the mortgage prepayment rate fell 29% percent to its lowest level since February 2014, while foreclosure sales (completions) were up nearly 16% following holiday moratoriums. Active foreclosure inventory continued to decline, down 26%, according to Black Knight.

02.22.16
"Vote to Leave the EU,” says London’s Mayor

“A vote to Remain [in the EU] will be taken in Brussels as a green light for more federalism, and for the erosion of democracy.”

 

02.22.16
The European Union's Uncertain Future

“The migrant crisis and pending UK referendum are weakening EU integration,” wrote Fitch Ratings’ James McCormack. “Europe is facing a confluence of serious political challenges that put at risk the region’s continued integration as envisaged in the various treaties that govern the EU. Although many of the challenges of the economic crisis are still evident, a clear—and understandable—shift in policy priorities has taken place. Political and security matters that have come to the fore are proving at least as challenging as the fiscal and economic issues that preceded them.”

02.21.16
California Supreme Court Decision May Have Broad Ramifications for Mortgage Industry

On February 18, the California Supreme Court held in Yvanova v. New Century Mortgage Corp, that borrowers have standing to challenge an allegedly void assignment of a note and deed of trust in an action for wrongful foreclosure.

 

02.21.16
The Passing of a Legal Giant: Antonin Scalia
02.21.16
The Market’s Perfect Storm
02.21.16
TBTF Banks and Need for Fundamental Reform of Dodd Frank
02.21.16
Central Banking Goes Negative
02.19.16
What Will Monetary Policy 3 Look Like?


“Most likely, as risk premiums increase, central banks will increasingly ease via more negative interest rates and more QE, and these moves will have a beneficial effect,” wrote Bridgewater's Ray Dalio.

02.19.16
The Challenges and Risks of a Protracted Conservatorship for Fannie and Freddie

“[I believe]…some of the challenges and risks we are managing are escalating and will continue to do so the longer the Enterprises remain in conservatorship,” said FHFA Director Watt. 

02.18.16
Banks Hire Former CIA Agents to Ramp Up Their Compliance Efforts

“This big brother atmosphere isn’t great…”
 

02.18.16
One-Third of Oil Companies Could Go Bankrupt in 2016

Approximately 175 oil companies with more than $150 billion in debt are most at risk of bankruptcy, according to a Deloitte report. 

 

02.17.16
Why Lower Gasoline Prices Are Not Stimulating Economy

"The bottom line is that whatever stimuli the lower prices of gasoline are giving us are getting swallowed by darker forces."

02.17.16
End Too Big to Fail “Once and for All”

“The biggest banks are still too big to fail and continue to pose a significant risk to our economy,” said Neel Kashkari, president of the Minneapolis Federal Reserve. “Now is the right time for Congress to consider going further than Dodd-Frank with bold, transformational solutions to solve this problem once and for all.” He likened the banking sector to a nuclear reactor meltdown. “The cost to society of letting a reactor melt down is astronomical. Given that cost, governments will do whatever they can to stabilize the reactor before they lose control.”

02.16.16
The Disruption Report

Investors have already labeled this period “The Great Reset.” Why?

1. There wasn’t a single IPO in January for the first time since September 2011.

2. As the public market has slashed the value of tech companies like LinkedIn and Tableau almost in half, their private counterparts look oversize.

3. The industry is facing death (or at least pain) by a thousand cuts. Startups everywhere are laying off people, jettisoning businesses, and firing CEOs. Some of its biggest innovators have admitted breaking the rules, and suddenly things aren’t looking too rosy.

Biz Carson

Business Insider

February 13, 2016

 

Venture capitalist Jim Breyer says there is “blood in the water,” and we are entering a 90-10 situation for the unicorn class of startups with billion-dollar valuations in which 90% of the startups will be repriced or die and 10% will make it.

 

Jay Yarow

Business Insider

January 21, 2016

 

Historically in [Silicon] Valley, the mantra has been: Grow at any cost. Get bigger, get bigger, get bigger. The mantra has gone to: Cash flow, let’s be profitable, let’s make sure we are earning money and we’ve got a very sustainable business model. And it’s actually a positive thing. I think what this is going to do is it’s going to force companies to think more and more about bottom line and revenue creation and profitability than growth, growth, growth.

Gary Cohn

Goldman Sachs Chief Operating Officer

February 10, 2016

02.16.16
NIRP: The New Abnormal

Negative rates are becoming the "new abnormal" in a shaky world economy. 

02.16.16
ECB "Won't Hesitate To Act" As Global Conditions Deteriorate
02.15.16
Will a Large Devaluation of the Yuan Occur in 2016?
02.15.16
China's "Political Phase"


How long can China's capital outflows continue?

02.14.16
This Is What America Can Do

“Is American manufacturing dead?” asked SAP’s Bernd Leukert. “Has the good ‘ol US of A become a land full of paper shufflers and burger-flippers? These questions continue to haunt many different industries and businesses in this age of outsourcing.”

Companies like Harley-Davidson illustrate how to cling to old school manufacturing values, while using a state-of-the art manufacturing process that’s highly flexible and efficient. This is what America can do.

02.14.16
The Biggest Reason to Fear Economic Trouble in China
02.14.16
The Fourth Industrial Revolution and Real Estate
02.14.16
What More Can Central Banks Do?
02.14.16
The Coming Cashless Society
02.12.16
GSE Reform: Something Old, Something New and Something Borrowed

A utility-like model could be implemented largely through powers already granted in HERA. 

02.12.16
How Likely Is A China Bank Crisis?

China is a $34 trillion ticking time bomb, which could trigger losses more than four times that suffered by the U.S. in the financial crisis.

02.11.16
Move to a Cashless Society?


"We should move quickly to a cashless economy so we could introduce negative rates well below 1%," said a policymaker at Davos.

02.10.16
Compliance Risks in Marketplace Lending

K&L GATES....Peer to Peer/Online Lending.

02.10.16
From ZIPR to NIRP?

"It appears that NIRP is becoming the main policy tool for a number of major central banks as they battle falling inflation, rising currencies and economic weakness," wrote Charles Schwab’s Jeffrey Kleintop. "The effectiveness of slightly negative interest rates is far from assured, and increasingly negative interest rates may not just weigh more heavily on the stock market, but on drivers of economic growth as well." Action Economics’ Kim Rupert added, “Things would have to get truly desperate to go to negative rates. …Jeopardizing the money markets would be too dramatic an effect for the Fed to consider going in that direction."

02.09.16
The Evolution of Modular Financial Services

A combination of forces is driving the shift to a modular industry. Distribution will become dominated by digital “platforms” that can steer demand to any supplier, allowing new product providers to proliferate.

 

02.09.16
The CFPB's UDAAP Enforcement Actions in 205

The CFPB has defined its sweeping authority to prohibit unfair, deceptive, and abusive acts or practices (UDAAP) primarily through enforcement actions, along with a few agency-issued supervisory findings and guidance bulletins, according to Morrison & Foerster, LLP. In 2015, almost 80% of the CFPB’s enforcement actions included at least one UDAAP claim, a slight increase over the prior year (72%).  Of the 70 individual unfair, deceptive or abusive claims alleged by the Bureau in 2015, more than half of them were “deceptive” claims, while eight were “abusive” claims.  

02.08.16
The Making of Two Americas

“Following our current path, we can expect our society—particularly in deep blue states—to move ever more towards a kind of feudalism where only a few own property while everyone else devolves into rent serfs.”

02.08.16
World Economy Seems Trapped in “Death Spiral”
02.08.16
Oil Market Decline May Prick Global Debt Bubble
02.08.16
The Banking Industry’s Two Lost Decades
02.08.16
$100 Trillion Up in Smoke
02.08.16
So This Is What “Full Employment” Look Like?
02.08.16
Productivity Is the Missing Ingredient.
02.08.16
Outing the CFPB

“Newly uncovered internal memos reveal the Obama administration knowingly exaggerated charges of racial discrimination in probes of Ally Bank and other defendants in the $900 billion car-lending business as part of a ‘racial justice’ campaign that’s looking more like a massive government extortion and shakedown operation,” wrote Paul Sperry in the New York Post. “So far, Obama’s [CFPB] has reached more than $220 million in settlements with several auto lenders since the agency launched its anti-discrimination crusade against the industry in 2013. Several other banks are under active investigation.”

02.05.16
Test
02.05.16

“A vote for the UK to exit from the EU is an event that would increase uncertainty, weigh on the UK outlook and raise concerns of foreign investors – potentially interrupting the flow of capital to the UK, sending the pound much lower,” wrote Goldman Sachs analysts. “We argue that, if the UK voted to leave the EU, the UK’s current account deficit would still be a source of vulnerability despite some recent improvement. An abrupt and total interruption to incoming capital flows in response to a ‘Brexit’ could see the pound decline by as much as 15-20%.”

       

02.05.16

“The next stop? That would be negative interest rates according to the dangerous theorists running the world economy.”

02.04.16
Increasingly Addled?

“…[O]ur finance-based global economy is transitioning due to the impotence of monetary policy which has always, and is now increasingly focused on the elixir of low/negative interest rates.” 

02.04.16
Pros and Cons for Negative Interest Rates

“These policies are cosmetically clever—substantively they are poison.”

02.03.16
Biggest Danger Is Bank Bashing

“The link between growth in money supply and nominal GDP is unambiguous and overwhelming.”

02.03.16
The Big Player Problem Lurks Everywhere

“State capitalism—a model in which governments pick winners and use capitalist tools such as listing [state-owned enterprises] on stock markets—is on the rise,” wrote Cato Institute Senior Fellow Steve Hanke. “With state capitalism, the visible hand of the State replaces Adam Smith’s invisible hand of the markets. State capitalism runs the gamut from public-private partnerships to SOEs, and highlights the relevance of the Big Player problem. …[T]he Big Player problem lurks everywhere.”

02.01.16
Global Market Turmoil Could Hit U.S. Growth

“The world is an uncertain place ....all monetary policy makers can really be sure of is what will happen is often different from what [is expected]"

02.01.16
Rigged Justice

“[P]unishment for breaking the law is little more than a cost of doing business.”

 

02.01.16
U.S. Fiscal Imbalance Over Time


“The U.S. fiscal imbalance… is large and growing,” wrote Jeffrey Miron. “And with politicians proposing large new expenditures, little is being done to rectify the country’s fiscal health. Although some policymakers argue that fiscal meltdowns have never happened in U.S. history and that therefore ‘this time is no different,’ the reality is that the nation’s fiscal situation has been deteriorating since the mid-1960s, is far worse than ever before, and could lead to a fiscal crisis if no major spending adjustments occur in the next few decades.”

01.31.16

"The world is on fire" 

"...[T]he Federal Reserve is no longer in control of its own destiny. Ask Fed officials would they have liked to move the Dow by over 300 points after a statement is issued in which they do nohting at all.  The answer is no and yet they did, becuase they are not able to communicate and maintain a clear policy message because they've become hostage to the rest of the world.

It's not thier fault.  They've been pushed into a role that they don't really want.  But think of it htis way - a month earlier, they had told us that they expect four [rate] hikes - now, we get one or two.  A month earlier, they had told us there is a certain balance of risk in the economy.  Now, they're telling us they can't even comment on the balance of risk.  I think the Fed is as confused as anybody else because we're living on the midst of massive changes in liquidity, in volatility, and the gobal economy."

 

Mohammed El-Erian

Allianz Chief Economic Advisor

January 28, 2016

 

 

 

 

 

 

 

01.29.16
Is a Recession Likely?

With oil prices tumbling, stock prices falling and bonds rising, the word recession is getting tossed around quite a bit.

01.28.16
The Only Game in Town

Our current economic path is coming to an end. 

 

01.27.16
Is Marketplace Lending the Final Frontier?

It’s too soon to tell whether marketplace lending is the next Uber or just another flash in the pan. 

01.27.16
Puerto Rico Needs a Financial Control Board

“The government of Puerto Rico is broke,” wrote AEI’s Alex Pollock. “…[I]t has accumulated about $71 billion in debt which cannot be paid as agreed ...[and has] an estimated $44 billion of virtually unfunded public employee pension liability, giving a total debt problem of at least $115 billion. This dwarfs in size the bankruptcy of the City of Detroit... What to do? The …first required step is very clear: Congress should promptly create an Emergency Financial Control Board to assume oversight and control of the financial operations of the government of Puerto Rico.”

 

01.26.16
The Future of Jobs

“...[W]e are at the beginning of a Fourth Industrial Revolution. Developments in genetics, artificial intelligence, robotics, nanotechnology, 3D printing and biotechnology, to name just a few, are all building on and amplifying one another,” wrote World Economic Forum’s Klaus Schwab and Richard Samans. “This will lay the foundation for a revolution more comprehensive and all-encompassing than anything we have ever seen. …While the impending change holds great promise, the patterns of consumption, production and employment created by it also pose major challenges requiring proactive adaptation by corporations, governments and individuals.”

01.25.16
Race for Currency Depreciation Is “Not Appropriate”

Maybe we can square the circle,” said Jean Claude Trichet, former ECB president.  

01.24.16
The Transformation of Finance
01.24.16
The Growth Illusion
01.24.16
Next Steps for Iran and the World
01.24.16
The Uber of Snowplows?
“[Plowz & Mowz] is truly the only on-demand snow plowing app on the market today,” said founder Willis Mahoney.  
 
01.24.16
Europe at a Tipping Point

World Economic Forum 

01.22.16
Washington Regulatory Round-Up (01/22/16)
01.22.16
Mortgage Rates Tumble to Three Month Low

"The 30-year mortgage rate dropped 11 basis points to 3.81%, the lowest rate in three months," said Freddie Mac's Sean Becketti.

01.22.16
Central Banks Are Running Out of Ammunition in a Deflationary World


“QE has saved the world from deflation—from the Great Depression,” said George Soros. 

01.21.16
Central Banks Need to Consider Negative Interest Rates

Harvard University Professor Kenneth Rogoff discusses the idea of negative interest rates used by central banks and the ability to fight inflation.

01.21.16
The Decreased Effectiveness of Monetary Policy

Monetary policy is “pushing on a string.”

01.20.16
CBO’s Budget and Economic Outlook for 2016 to 2026



In 2016, the federal budget deficit will increase, relative to the size of the economy, for the first time since 2009, according to the CBO estimates. 

01.19.16
Digital Dividends

The digital revolution’s “analog complements—the regulations that promote entry and competition, the skills to enable workers to access and then leverage the new economy, and the institutions that are accountable ot citizens—have not kept pace.”

 

01.19.16
$30 Oil Just Doesn’t Cut It!


“…[W]e can clearly see that no companies are able to cover all cash outflows at current oil prices,” wrote National Bank Financial’s analysts.

01.18.16
"Massive" Supply Disruption to Lift Oil Prices Over Time


We’ve had a fundamental shift in the operating regime for oil production. 

01.18.16
What Exposure do the Banks Have in the Energy Sector?

“[J]unk yields just surpassed the all time highs set just after the Lehman bankruptcy.”

01.17.16
The Top Global Risks for 2016
01.17.16
Oil’s Negative Feedback Loop
01.17.16
Is This the Beginning of the End of the Credit Cycle?
01.15.16
Washington Regulatory Round-Up (1/15/16)
01.15.16
CFPB Construction Loan “Fact Sheet” Falls Far Short of Necessary Guidance

“The CFPB has issued what it calls a “fact sheet” regarding the disclosure of construction-to-permanent loans under the TILA/RESPA Integrated Disclosure (TRID) rule…,” wrote Ballard Sphar’s Richard Andreano. “The fact sheet falls far short of the detailed guidance sought by the mortgage industry. …The failure of the CFPB to provide written guidance on other aspects of the TRID rule has significantly contributed to the confusion and uncertainty in the industry regarding TRID rule requirements.” 

 

01.15.16
Will Quicken’s Rocket Mortgage Take Over the Mortgage Industry

Quicken’s Rocket Loan qualifies a loan in less than 10 minutes.

 

01.14.16
Living in a Perilous World


“I believe those who look back on the events of our day will find that we are living through historic times, the magnitude and consequences of which we cannot even begin to appreciate,” said Representative Mac Thornberry (R-TX), chairman of the House Committee on Armed Services. “…[T]he stakes involved are enormously high. No one can take the place of the United States of America as the primary force for good in the world, yet history also teaches us that no power has prevented its eventual, sometimes sudden, decline.”

01.13.16
2016 Is Not Looking All that Great

"This is a capital-preservation market, not a money-making environment. I think we're going to take out the September low of the S&P500."

01.13.16
2016 Is Not Looking All that Great

"This is a capital-preservation market, not a money-making environment", said DoubleLine's Jeffrey Gundlach. "I think we're going to take out the September low of the S&P500."

01.13.16
The Economic Trends on a County Level

01.12.16
New Era for Oil

Crude oil is trading at a 12-year low as Morgan Stanley predicts Brent may tumble to $20 a barrel.

 

01.11.16
On the Verge of a Currency War?

Keep your eye on crude and WTI. If it breaks $32, hold on to your hat.

01.11.16
Structural Disequilibrium Is Affecting the Entire Globe
01.11.16
The New Volatility Paradigm
01.11.16
It’s Up to Central Banks to Save the Day
01.11.16
GAO’s Assessment of the Impact of Dodd Frank Regulations
01.11.16
CFPB’s FY2015 Report to Congress
01.11.16
The Top Risks for 2016

01.09.16
Test
01.08.16
Washington Regulatory Round-Up (01/08/16)
01.08.16
The Revolution in Banking.

Ther rise of state-directed capitalism through regulation is reshaing the industry and dictating business models.

01.08.16
Back to the Future in Banking

The big banks are government-sponsored entites," said Kroll Bond Rating Agency's Strategist Chris Whalen. 

01.07.16
The Fractious Middle East

Yale University Senior Fellow Stephen Roach discusses the turmoil in the Middle East.

01.07.16
Delivering on the GSEs' Promise of Risk-Sharing
01.06.16
China Must Dramatically Devalue Its Currency

"Given our views on credit contraction in Asia, and in China in particular, let's say they are going to go through a banking loss cycle like we went through during the Great Financial Crisis, there's one thing that is going to happen: China is going to have to dramatically devalue its currency,” said hedge fund manager Kyle Bass. “…If [their] labor arbitrage is gone, and the banking system has expanded 400% in 7 years without a nonperforming loan cycle, my view is we are going to see a non-performing loan cycle."

01.06.16
The Fed Has "No Ammo Left"

"The Fed ...front-loaded an enormous rally market rally in order to create a wealth effect... and an uncomfortable digestive period is likely now."

01.05.16
The Political Dance in Puerto Rico

In the Territories of the U.S., Congress has the entire dominion and sovereignty, national and local, Federal and state, and has full legislative power over all subjects...

01.05.16
Currencies Tell the Story

Sweden's Riksbank will "instantly intervene on the foreign exchange market if necessary …to safeguard the rise in inflation."

 

01.04.16
Arthur Brooks: The Conservative Heart
01.04.16
The Best Performing Cities Where Jobs Are Created and Sustained
01.04.16
Sectarian War in the Middle East
01.04.16
Puerto Rico’s Pending Debt Default
01.04.16
The Top Ten Most Ridiculous Lawsuits of 2015
01.04.16
Monetary Policy, Financial Stability, and the Zero Lower Bound

“Could negative interest rates be a policy response ...the Federal Reserve could ...employ in a future crisis?” asked Fed Vice Chair Stanley Fischer. “One possible concern ...is the potential for destabilizing effects in money markets… Another concern is whether the complex and interconnected infrastructure supporting securities transactions in the U.S. financial system could readily adapt to a world of negative interest rates. …[T]hese... transitional problems ...might be sufficient to make a move to negative rates difficult to implement on short notice.”

01.04.16
Housing Outlook for 2016

CSpan interview with Lawrence Yun, National Association's Chief Economist and Senior Vice President

01.01.16
Washington Regulatory Round-Up (01/01/16)
12.31.15
The GSE Report

GLOBAL SLOWDOWN?

We see an extension of the business cycle as crucial for further gains in risk assets. With valuations no longer cheap and corporate profit margins under pressure in many markets, economic growth is needed to boost revenues. We expect little or no price appreciation in fixed income and only muted gains for most equity markets in 2016.

China’s economic deceleration and shift to a consumer-driven economy are putting the brakes on the global business cycle. Both are part of a natural evolution but pose structural challenges to emerging markets (EMs) and commodity producers. We expect China to muddle through. Risks, including a yuan devaluation, are rising — but we do not see them coming to a head in 2016.

The knock-on effects of movements in oil prices and the U.S. dollar are critical. Falling oil prices have dragged down long-term inflation expectations. This is puzzling and brings into question the credibility of central bank inflation targets. The dollar’s rise has led to some tighteningin financial conditions. Further gains would intensify pressure on U.S. profits, commodity prices and EM currencies.

12.31.15
A Closer Look at Bank Regulation



Fed Governor Daniel Tarullo discusses bank regulation.

12.30.15
Housing Market Outlook

We’ll see a pretty big housing boom in the next five years because of the huge lag we had from 2007 to 2013. 

12.30.15
CFPB to Relax TRID Enforcement Actions

“We recognize that the mortgage industry needs to make significant systems and operation changes to adjust to the new requirements...,” wrote the CFPB. “…As with any change of this scale, despite the best efforts, there inevitable will be inadvertent errors in the early days. ...[T]he Bureau and the other regulators have made clear that [our] initial examination for compliance with the new rule will be sensitive to the progress industry has made. …All of the regulators have indicated that their examinations for compliance in the first few months of implementing the new rule will be corrective... rather than punitive.

12.29.15
TRID FAQs

Everything you need to know about TRID compliance, according to JPMorgan Chase. 

12.29.15
The Bills Are Coming Due in Puerto Rico

On January 4, Puerto Rico must pay about $1 billion to creditors, including $332 million in general obligation bonds. "It will be very, very hard, very difficult to find a way to do that payment," said Puerto Rico governor Alejandro Garcia Padilla. "We're out of cash." Experts say Puerto Rico will likely miss a payment on its general obligation debt at some point in the near future. "It's hard to say whether that happens January 1 or July 1 [of 2016], we definitely see that on the horizon," said Moody’s analyst Ted Hampton.

12.28.15
How Low Can Oil Go in 2016?

“There is an element of a cartel, which is no longer working—which is putting a good deal of pressure with any producer anywhere in the world…”

12.28.15
The CFPB: A Five-Year Retrospective

"We find that the CFPB as a regulatory policy conflicts with other government regulatory policies designed to encourage home ownership and access to financial products among the poor," wrote Robert E. Krainer, finance professor at the University of Wisconsin-Madison. "One possible solution to this contradiction in conflicting government policies is to carry out the social goal of housing for the poor within a government-sponsored enterprise much like the Federal Farm Credit System."

12.27.15

“[W]e cannot ignore the reality of a poor global growth trajectory, dogged by crashing commodity prices, a slowdown in China and new traumas in the speculative high-yield and emerging markets.”

12.27.15
Celebrate Me Home.

Please join us in celebrating veterans home with a smooth transition to everyday life. Veterans need the best available assistance and resources we can provide. Go to http://www.DAV.org to see how DAV, Disabled American Veterans, provides a lifetime of support for veterans and learn how you can support their homecoming, too. Thank you!

12.25.15
Washington Regulatory Round-Up (12/25/15)
12.24.15
Christmas Lights- Thank You Troops and Veterans!
12.24.15
I'll Be Home for Christmas

   
                               ...If only in my dreams.

12.23.15
U.S. Dollar Is the Linchpin for 2016

David Kelly, J.P. Morgan Funds, and David Blitzer, S&P Dow Jones Indices, share their economic outlook for 2016

12.23.15
The Internet of Things Impact on Banking
12.23.15
The Disruption of Banking
12.23.15
Approaching the 'Uber Moment' in Financial Services
12.23.15
Modernizing Labor Laws in the Online Gig Economy
12.23.15
The 3rd Platform Innovation Accelerators
12.23.15
Diverging Central Bank Monetary Policy

12.22.15
The Effect of Rising Rates on the Banking Industry

“The banking industry is not built for near-zero interest rates and so …is especially a steeper yield curve,” said Thomas Michaud, KBW President & CEO. 

12.22.15
The Fed Conducts the First Reverse Repo after Rate Hike


“[The Fed’s reverse repo] worked as hoped for—as planned,” said former Dallas Fed president Richard Fisher. “…As you know, the total cap has been expanded capped at $2 trillion. Your number of $4 trillion of liquidity in the system—I actually personally believe that number is almost twice that, but we’ll see.  …This first day was a very important thing. …Now we’ll see how it goes forward.”

 

12.21.15
The Disruption Report

Silicon Valley is coming.

By 2020, there will be 80 billion connected devices worldwide. Imagine what more devices and more access will do for businesses and lives, closing the gap for the developing world and opening up new markets to new people. We’ll become even more dependent on them as our context-rich, vital virtual assistants, performing tasks we never could.

Uber and AirBnB are old-news disruptors, soon to be usurped by Apple’s ad blocking tools, 3D printing democratizing manufacturing (think microfactories), Hololens’ augmented reality device, collaborative work tools like Slack, and of course Amazon’s drone delivery. Key to making all of this work are our devices, they make IoT and Big Data possible.

 

12.21.15
What President Trump Could Teach Congress about Executive Unilateralism


"[U]nder the [Administrative State] system that is now emerging, the public is growing more and more frustrated," said Senator Sasse (R-NE). “They think that most of us [in Congress] will be reelected no matter what, and they think that the executive agencies that daily substitute rulemaking for legislating will promulgate whatever rules they want, no matter what, and that the people have no control.”

12.20.15
OCC's Mortgage Metrics for Q3 2015

On June 30, 1.9 million modifications were active with 71.2% current, 23.6% delinquent and 5.2% on process of foreclosure.

12.18.15
Growth Outlook for 2016


12.17.15
Fannie Mae CEO Discusses GSE Reform

  Timothy Mayopoulos, Fannie Mae CEO, 

 

12.17.15
Fed Rate Hike Ends 7 Years of Crisis-Era Monetary Policy


12.16.15
The U.S. Is the Glue in the Middle East

Boots on the ground are necessary and rebuilding trust in the Middle East is key, according to Army Chief of Staff Ray Odierno.

 

12.16.15
Things Aren’t that Great

“Things aren’t that great and the economy isn’t booming by any means,” said Jack Welch. “There were lots of excesses [with free money]. ...What happened with these low rates?  People either built capacity – China did in crazy fashion—or they bought back stock… And so you have these excesses. …So you have all this free money, people didn’t know what to do with it… and there’s not enough growth. …People are trying to keep cutting costs--that’s the only way they’re getting EPS up. …All this free money put money into the system, put behavior into the system. You asked if this forebodes a difficult time—I wouldn’t bet against it, I wouldn’t be against it." 

12.15.15
The Outlook for Federal Reserve Policy

The U.S. economy lumbers along, …expand­ing in the growth channel centered around 2%—its home since 2010.

 

12.15.15
More Bond Fund Liquidations Are on the Way


“What we’re seeing right now is the consequence of the Dodd Frank legislation and all the macro prudential policy, which is restricting the ability of the banks and the brokers to take on these [market] positions,” said Scott Minerd, Guggenheim Partners’ Chief Information Officer. “And so when you go to try to sell something, …it’s hard to find a bid.”

12.14.15
The General Illiquidity Moment

 

“It’s a general illiquidity moment, where the mutual funds and ETFs are looking forward to the next seven to fourteen days as we approach year end and building liquidity even in high quality assets.” 

 

 

 

12.14.15
We Are at War with Militant Islam
12.14.15
ISIL/Da'esh and “Non-Conventional” Weapons of Terror

EPRS | European Parliamentary Research Service

Author: Beatrix Immenkamp
Members' Research Service
PE 572.806 

12.14.15
The Eurozone’s Open Gates
12.14.15
Illicit Financial Flows from Developing Countries

From 2004 to 2013, an average of 83.4% of illicit financial outflows were due to the fraudulent misinvoicing of trade, a form of trade-based money laundering. 

12.14.15
14 Americans Killed in San Bernardino Terrorist Attack
12.14.15
ISIS’s “Meeting at Dabiq”
12.14.15
Climate Deal Is a "Breakaway Agreement"


"People expect somewhere in the vicinity of $50 trillion to be spent over the course of the next 30, 40 years [on clean, renewalbe energy],” said Secretary of State John Kerry. “That is going to be an enormous transformation of our economy and all to the better because it will reduce our dependency on foreign fuel, it will increase our security, it will provide for our environment, cleaner air, healthier, healthier people. They're just all kinds of pluses. And in the end it's going to be a job creator."

12.11.15
Washington Regulatory Round-Up (12/11/15)
12.11.15
The World Is Repressed by Central Banks
12.11.15
We Are at War with Militant Islam

“There is hope,” wrote Investor Business Daily’s Andrew Malcolm. “There is [Senator] Ben Sasse. …He's a 43-year-old freshman GOP senator from Nebraska, a historian and father of three home-schooled children. …Watch Ben Sasse in the video [here]. He's not running for anything. He voices precisely what so many of us have been thinking and fearing and, occasionally, hoping. Many in Washington will not like what he says. Good! He's a fellow American, simply laying out in clear, unvarnished candor the facts of where we as a nation are. In danger, serious long-term danger.” 

12.10.15
The Banking Industry's Utility Model


12.09.15
The Fed Is on the “Knife's Edge”

"We had a 50-50 [rate rise] setup at the short-end [of the bond market] a few weeks ago, and now it's up to around 70%, which I think is right on the knife's edge."

12.09.15
A Ban That Will Only Help Class Action Lawyers

“The CFPB purports to provide a basis for overturning this longstanding consensus support for arbitration,” wrote Mercatus Center’s Jason Johnston and Todd Zywicki. “Contrary to Bureau Director Richard Cordray's assessment, however, the CFPB's work is not ‘the most rigorous and comprehensive study of consumer finance arbitration ever undertaken.’ The [CFPB’s] study is riddled with methodological flaws and does not provide evidence supporting a ban on mandatory arbitration. Instead, the study shows that arbitration works for consumers." 

 

 

12.09.15
The Federal Government Owns 33% of America

The federal government owns 640 million acres—33% of the United States’ 2.27 billion acres. 

12.08.15
ISIS Has Reach that al-Qaeda Never Had


ISIS is a “far more serious” threat than al Qaeda, according to former CIA Acting Director John McLaughlin. ISIS has five things that al Qaeda doesn’t have, including (i) territory that allows them to claim a caliphate; (iii) financial resources totaling an estimated $500 million to $1 billion; (iii) access to 4,500 western fighters, who move freely throughout the world; (iv) a powerful caliphate narrative; and (v) social media reach—“the engine on which they ride.”

12.07.15
ISIS’s Campaign for Europe

ISIS will also continue to use its global network to inspire and possibly resource terror attacks in other Western countries, including the United States.

 

12.07.15
Strengthening Economic Prosperity in the U.S. Housing
12.07.15
Multifamily and Single Family Market
12.07.15
Housing, Urbanization, and Demographics
12.07.15
The Political Realities of Banking and Housing Policy
12.07.15
Single-Family Financing and Credit Accessibility: Is the Status Quo All Right?
12.07.15
Protecting the Homeland from Terrorism

“…[T]he tentacles of ISIS now are not only in Europe but also in the United States of America,” said Rep. Michael McCaul (R-TX), chairman of the House Homeland Security Committee. “…I wanted to tell the truth to the American people about what the threat really is and what the threat itself is, and that's radical Islamist terrorism.  It does exist in the United States. We didn't see this one coming. There were no warning signs or flags. And we need to do a better job identifying the signs of radicalization from within the United States.”

12.06.15
We Live in a Deflationary World

"If we're in a technologically driven deflationary market, I think you'll see it last longer than people think. And that's why I think you'll see rates stay low for a long period of time,"

12.04.15
Washington Regulatory Round-Up (12/04/15)
12.04.15
De-Risking Fannie Mae and Freddie Mac
 

The Mortgage Bankers Association urges FHFA to require Fannie and Freddie "to move a meaningful extent of their mortgage credit risk to up-front transactions." 

12.04.15
Puerto Rico’s Clawback Cometh


“…[T]he Puerto Rico Government Development Bank …made a $355 million Dec. 1 debt service payment from money that it did not have on its balance sheet,” wrote Cumberland Advisors’ analysts. “The governor, by executive order, authorized the clawback of revenues from other issuing entities to meet certain Commonwealth-guaranteed debt-service obligations. This starts a moral equivalency argument over who should get the funds that are available to make payments to this or that issuing entity within the Commonwealth.”
 

12.03.15
Could the ECB’s Balance Sheet Grow Too Big?


By 2017, the balance sheet of EBC could reach 14% of the global Eurozone GPD.

12.02.15
Is Peer-to-Peer Lending the Future of Banking?

 

12.01.15
HUD’s Financial Records Are Impossible To Audit
The IG's audit report found "nine material weaknesses, eight significant deficiencies in internal controls, and six instances of noncompliance with applicable laws and regulations."
 
12.01.15
Complex Factors Impacting the Economy

“France’s economic growth remains anemic, the unemployed and many Muslims are disaffected, and [the] far-right National Front is likely to do well in the upcoming regional elections,” wrote economist Nouriel Roubini. “In Brussels, which [is] semi-deserted and in lockdown, owing to the risk of terrorist attacks, the [EU] institutions have yet to devise a unified strategy to manage the influx of migrants and refugees, much less address the instability and violence in the EU’s immediate neighborhood. …[I]n London, there is concern about negative financial and economic spillover effects from the monetary union."

11.30.15
Disrupting Delivery Services: Amazon Drones

The Amazon Drone has a 15 mile range and uses "sense and avoid" technology to detect and avoid obstacles on the ground and in the air.

11.30.15
Why Rates Must Go Up

 

11.29.15
Is this the Mortgage Industry’s iPhone Moment?
11.29.15
Paris Terrorist Attacks: The Game Changer
11.29.15
It’s Time to Reassess the U.S. Strategy in the Middle East
11.29.15
Puerto Rico's Next Move
11.29.15
Obama Administration’s Sweeping Regulatory Agenda
11.29.15
CFPB’s Rulemaking Agenda for Fall 2015
11.27.15
Washington Regulatory Round-Up (11/27/15)
11.25.15
Quicken Loans Launches Revolutionary End-to-End Online Product "Rocket Mortgage"

Quicken empowers homebuyers and homeowners to control and customize entire mortgage process, from application to closing, all online at unprecedented speed 

11.25.15
GSE Report, November, 2015

11.25.15
Can the Credit Default Swap Market be Salvaged?

“Despite significant changes in the regulation of [CDS], …there remain a number of defects in the market structure of OTC credit derivatives, flaws which arguably intensified the impact of the 2008 financial crisis and disadvantage both borrowers and investors,” wrote Kroll Bond Rating Agency's Chris Whalen. “These defects in market structure limit competition, make it difficult for investors to understand the risks taken by large universal banks, create the potential for the manipulation of borrower credit spreads, and even affect the recognition of when default events occur under CDS contracts.”

11.24.15
Putin: Downed Plane to Have Serious Consequences

11.23.15
How the Payments Industry Is Being Disrupted

While the payments industry is expected to keep growing at a healthy rate, powerful disruptive forces will begin to reshape the global landscape

11.23.15
ISIS Annual Report
11.23.15
The Debate of Our Time

Excerpts from the Real Time with Bill Maher 

11.23.15
NCRC: Recap and Reform Fannie and Freddie

We urge the Obama Administration to recapitalize Fannie Mae and Freddie Mac, institute a capital restoration plan, and end their conservatorship during their remaining months in office. 

 

11.23.15
Charlie Rose Show
11.23.15
How ISIS Makes Its Money
11.23.15
A Closer Look at the Evolution of ISIS
11.23.15
ISIS Is a Clear and Present Danger

"This has gone on too long now,” said Senator Dianne Feinstein (D-CA) on CBS' Face the Nation. “And it has not gotten better. It's gotten worse. There may be some land held by ISIL in Iraq and Syria that's been taken back. But for all of that there's much more they have gained in other countries. …I don't think the [administration’s] approach is sufficient to do the job…I'm concerned that we don't have the time—and we don't have years. We need to be aggressive now. …And we're not crying wolf. There's good reason for this. And people are dying all over the world.”

 

11.20.15
Washington Regulatory Round-Up (11/20/15)
11.20.15
Mortgage and Small Business Lending in Baltimore

“At the heart of this report is the role of race in Baltimore ….[where] majority black neighborhoods are consistently excluded from lending activity.”

11.20.15
Threats of Terror Attacks Are Increasing


11.19.15
Federal Reserve Almost Certain To Raise Rates In December

“Some [FOMC] participants thought that the conditions for beginning the policy normalization process had already been met,” according to the Committee minutes. “Most participants anticipated that ...conditions could well be met by the time of the next meeting. Nonetheless, they emphasized that the actual decision would depend on the implications for the medium-term economic outlook of the data received over the upcoming intermeeting period." The participants largely agreed that the pace of rate increases would be gradual.

11.18.15
Requiem for QE

 Ultimately, QE did little good and likely sowed the seeds for future economic problems. 

11.18.15
A Strategy to Defeat ISIS Is the Ultimate Solution

“What happened in Paris is pure evil. …It’s clear that this was an act of war, and that the world needs American leadership.”

11.18.15
The Fallout of Terrorism on the EU and Banking

11.17.15
Combating Terrorism and Foreign Fighter Travel

More than 250 individuals from the U.S.have joined or attempted to fight with extremists in the conflict zone.

 

11.16.15
ISIL Is on the March

"I have never been more concerned. I read the intelligence faithfully. ISIL is not contained. ISIL is expanding. They've just put out a video saying it is their intent to attack this country."

11.16.15
China’s Yuan Will Join IMF’s Currency Basket

The United States supported the IMF staff’s recommendation to bestow reserve-currency status on China’s yuan (or renminbi) by adding the currency to the SDR basket. "We intend to support the renminbi's inclusion in the Special Drawing Rights basket provided the currency meets the International Monetary Fund's existing criteria," said the U.S.Treasury Department. "We will review the IMF's paper in that light." The IMF board is expected to approve the IMF staff's  recommendation at its November 30 meeting.

11.15.15
ISIS Goes Global with Paris Terror Attacks

ISIS is a much bigger threat than we’ve ever faced from Al Qaeda. 

11.15.15
Innovation and Investment Over a Century

DealBook Conferecne 2015.

11.15.15
The Future of Finance
11.15.15
The Debate Is Now Bigger than the Rate Rise
11.15.15
The New, New Bank
11.15.15
How Will It All End?
11.13.15
Washington Regulatory Round Up (11/13/15)
11.13.15
The Stay-At-Home Millenials

11.12.15
GDP By Metropolitan Area

A closer look at America's Economic Output

11.12.15
The Fed’s Truncated Interest Rate Cycle?

“We’re back to this divergence theme,” said  BlackRock's Jeff Rosenberg  “…Clearly Europe is moving in the opposite to the Fed,  that’s pushing additional pressure upwards on the dollar.”
 

11.12.15
The Effects of Central Bank Intervention

11.10.15
Freedom Isn’t Free



In memory of those who made the ultimate sacrifice...

"We WILL always remember. We will always be proud. We will always be prepared, so we may always be free." 

President Ronald Reagan
June 6, 1984

 

11.09.15
Test Bloomberg

11.09.15
Tackling the Generational Crises We Face


“The growth of the administrative state, the fourth branch of government, is increasingly hollowing out the Article I branch, the legislature — and many in Congress have been complicit in this hollowing out of our own powers,” said Senator Ben Sasse (R-NE). “So would anything really be lost if we doubled-down on Woodrow Wilson’s impulses and inclinations toward administrative efficiency by removing much of the clunky-ness of legislative process?”

11.09.15
David Lawrence Canfield 1920-2008
11.09.15
Charles A. Jones. Aviator in the U.S. Marines
11.09.15
Lt. Stewart Canfield
11.09.15
The Long Gray Line

“Your guidepost stands out like a tenfold beacon in the night: Duty, Honor, Country.”

General Douglas MacArthur
May 12, 1962

11.08.15
Economic Sleepwalking?

"The 2008 financial crisis didn't come from nowhere. It came, in my opinion, from the socialization of credit risk and from the manipulation of prices."

 

11.06.15
Washington Regulatory Round-Up (11/6/15)
11.05.15
Brexit?
11.05.15
Living at the Zero Bound

“When our modern financial system can no longer find profitable outlets for the credit it creates, it ... slow[s] and begin[s] to inhibit economic and profit growth in the overall economy."

 

11.04.15
Monetary Policy Borrows from the Future

ZIPR creates "a misallocation of resources,” said Stanley Druckenmiller"The chickens will come home to roost.”

11.04.15
Living at the Zero Bound

“When our modern financial system can no longer find profitable outlets for the credit it creates, it has a tendency to slow and begin to inhibit economic and profit growth in the overall economy,” wrote Janus Capital’s Bill Gross.

11.04.15
S&P Places Eight U.S. Banks on CreditWatch with Negative Implications

 JPMorgan Chase, Bank of America and Citigroup are among eight large U.S. banks.

11.03.15
Revolutionary Changes in Banking


Five years ago, we did not have a mobile offering,” said Wells Fargo’s John Stumpf. “Today, over half of our customers are mobile and—not only are they mobile—it’s the number one predominate channel. If we weren’t in the mobile business, we would be out of business. So that happened in five years. Our industry hasn’t changed that much in the last 500 years. Today, we have to be real time, digitized, using data, mobile and have to provide intelligent solutions to people on the go. It [has] changed so rapidly.”
 

11.02.15
Central Banks Cannot Be the Only Game in Town

We are heading toward the T-junction.  The road we are on is going to end. We cannot rely on central banks.

11.02.15
The Battle to Own Your Digital Wallet Is On


Chase Pay app, created in a new partnership between JPMorgan Chase and MCX, will be available by mid-2016 for use for in-store, online and in-app purchases. 

 

 
11.02.15
Nasdaq Unveils Blockchain-Enabled Platform Linq

“NASDAQ can now clear and settle trades on the exchange in ten minutes or less,” wrote Chris Skinner on Financial Services Club Blog. “Most exchanges clear and settle in days. How can NASDAQ do this in minutes? On the blockchain of course. Working with Chain, ...NASDAQ has created a clearing and settlement system that can process private market trades in ten minutes. What does this mean for the DTCC, Euroclear, TARGET2 and the other CCP and CSD systems? …[T]he DTCC might survive for a while but, long-term, blockchain will fundamentally alter financial structures."

11.01.15
AEI’s 4th Annual International Conference on Housing Risk
11.01.15
AEI’s 4th Annual International Conference on Housing Risk (Day 2)
11.01.15
AEI’s 4th Annual International Conference on Housing Presentations
11.01.15
Regulation Strangulation
11.01.15
Ready for the New Economy?
11.01.15
The October GSE Report

Between 1950 and 2000, the U.S. economy grew at an average annual rate of 3.7%. It was a growth rate strong enough to build and sustain the world’s largest middle class. By 2000,median household income in America stood at $57,730 in 2014 dollars—an all-time high. But starting in 2001, U.S. economic growth shrank to an average annual rate of 1.9%. In only two of the last 14 years has growth exceeded 3% and not once since 2005. This is the longest period of prolonged slow growth in at least a century. By 2014, median household income stood at $53,900—a 5.9% decline from the peak.

10.30.15
Washington Regulatory Round-Up (10/30/15)
10.30.15
The Global Growth Picture

Ebrahim Rahbari, Citigroup global markets economist, discusses the outlook for global economic growth. 

10.30.15
Civil Rights Coalition Calls for Reform and Release of Fannie and Freddie

“[I]n order to ensure the best path forward for increasing homeownership in the communities we represent, we believe it is vital to initiate serious discussions about unwinding the conservatorship and allowing Fannie and Freddie to begin rebuilding their capital,” wrote the The Leadership Conference on Civil and Human Rights. “Both agencies have become profitable, and could remain so while still giving the taxpayers a large return on the government’s investment. ...Fannie and Freddie can be fixed; discarding them in entirety would be a colossal mistake."

 

10.29.15
Is There Still a Chance for a 2015 Rate Hike?

“The Fed is definitely not helping [the market’s anxiety],” said Louis Crandall, Wrightson Iap chief economist. “The key point here is that the amount of anxiety that they’re inducing about this is wholly disproportionate to the economic impact of a quarter point move. That in fact, getting that quarter point move out of the way—and the first move really is important, because it reaffirms to the market that the Fed can move someday. It takes out the tail notion that you’ll never get a Fed move.”

10.28.15
Millennials and the Housing Market

A Virtual Town Meeting wth HUD Secretary, Julian Castro

10.28.15
The Middle East's Impact on Monetary Policy

“Low oil prices have kept inflation down, allowing the Fed to continue stalling on a normalization of U.S. interest rates,” wrote EurPacific Capital’s John Browne. “A rise in oil prices likely would result in increased inflation [and] would remove a crucial public excuse, enabling the Fed to justify zero interest rates. …A higher oil price leading to inflation may provide such pressure if not to the Fed directly, then to international bond markets. A market-triggered interest rate increase likely would do damage to the credibility of the Fed, the international monetary system and to the current [inflated] prices of financial assets…”

10.27.15
The State of the Housing Market
10.27.15
Do Healthy Families Affect the Wealth of States?

“[E]conomists across the ideological spectrum have paid little attention to the links between household family structure and the macroeconomic outcomes of nations, states, and societies,” according to a new AEI Report. “This is a major oversight because, as this report shows, shifts in marriage and family structure are important factors in states’ economic performance, including their economic growth, economic mobility, child poverty, and median family income.”

10.26.15
HOLY HMDA!

“[A]mong the 25 new [HMDA] data requirements are the (1) applicant/borrower’s age; (2) total loan costs or total points and fees; (3) origination charges; (4) discount points; (5) interest rate; (6) prepayment penalty term; (7) applicant/borrower’s debt-to-income ratio; (8) loan-to-value ratio; (9) introductory rate period; (10) non-amortizing features; (11) applicant/borrower’s credit score; (12) property value; (13) application channel; (14) NMLSR ID of the originator; and (15) name and result of the automated underwriting system used,” wrote Morrison & Foerster LLP. “...[T]he final rule ...modifies the collection of data related to the ethnicity and race of the ...applicant.”

10.25.15
The Next Wave of Computing

“Some form” of artificial intelligence will power the next revolution in computing.

10.25.15
The Global Impact of 5G and Mobile Payments
10.25.15
The Future of Mobile Payments

“We’re in the bottom of the first, …so there’s a lot we don’t know.”

 

10.25.15
Real-Times Payments
10.25.15
The Future of Retailing
10.25.15
GSEs Release Revised Framework for Origination Defects and Remedies

"[T]he language of the new Framework is ambiguous enough that one may have to rely on the GSEs’ apparent spirit of good intentions rather than the precision of their language to take total comfort in the changes." 

10.25.15
Roadmap to Financial and Housing Market Stabilization Plans Update (10-25-15)

The European Commission announced that the European Program for Employment and Social Innovation and six microfinance institutions are signing guarantee agreements.  The European Commission will contribute €17 million to the guarantees, which is expected to result in microloans worth €237 million through 2020.

 

10.23.15
Washington Regulatory Round-Up (10/23/15)
10.23.15
ECB's Draghi Hints at Additional Stimulus in 2015

Mario Draghi, the president of the European Central Bank, signaled he is prepared to cut interest rates and step up quantitative easing to stave off the risk of a renewed economic slump in the Eurozone. “They think [Draghi] is committed, said UBS Art Cashin. “If he’s committed, it’s going to be much harder for the Fed to move [rates up]. So all in all, everyone is feeling pretty good about things …For now, there is joy in Mudville, Mr. Draghi brought it in today.”

10.22.15
Regulation Strangulation

"We punish the whole for the actions of a few with these rules and disenfranchise self-employed borrowers."

10.22.15
The Is Economy Is Fragmented

"The economy is economically strong, but it’s regional. The biggest risk to the U.S. economy is what’s happening outside the U.S."

 

 

10.21.15
How to Reform Fannie Mae and Freddie Mac?

"The 2012 amendment to the GSEs’ conservatorship financing, which sweeps all the GSEs’ income to Treasury, has only increased the risks to the GSEs, to affordable housing and to the probability they will again require Treasury support," wrote Graham Fisher's Josh Rosner. "By building capital they would avoid future draws against Treasury -- that is the purpose of retaining capital. If Treasury truly has concerns about the prospects of the GSEs drawing on the Treasury lines then they should amend the terms to calculate the “sweep” on an annual rather than quarterly basis."

 

 

10.20.15
What Will the Fed Do in a Recession with an Empty Tool Box?

“Returns have been pushed down… because we have been systematically subsidizing borrowers at the expense of savers,” said Wilbur Ross. 

10.20.15
Roadmap to CFPB Reform

This is a very detailed Roadmap that tracks all of the legislative initiatives that are pending in the U.S. Congress.

As you will see, there is shortage of ideas to both reform the new consumer protection agency, as well alter the laws that it administers.

This is a Working Document, so it will be updated from time-to-time as additional legislation is introduced and considered.

Since this is a lengthy document, the cover page has instructions on how to navigate this Roadmap.  There is also a Table of Contents that we hope will be useful to you, as well.

 

 

10.20.15
Global Deflation Signaled by Negative Rates

“There are structural drivers of deflation—not just in Europe but everywhere."

10.20.15
FHFA's Initiatives for the GSEs' Credit Risk Transfers

"As part of our next steps, we want to refine and further standardize the Enterprises' debt, reinsurance and upfront offerings," said Federal Housing Finance Agency Director Mel Watt. "This will help broaden liquidity. We will continue to work with the Enterprises on other innovative transaction types, such as credit-linked notes. We will also aggressively continue our work to analyze, assess, and define upfront credit risk transfers. We are committed to engaging stakeholders as part of this process."

 

10.19.15
The Disruption Report

"Silicon Valley is coming." Jamie Dimon,Letter to JP Morgan Chase shareholders April 8, 2015.

 

 

 

10.19.15
Innovation in Payments

“Blockchain technology is presenting a very rare opportunity to address current payment constraints,” wrote BNY Mellon. "And were the challenges of making blockchain technology a tangible concept overcome, banks and fintech companies could radically transform global payments. …[B]y leveraging such technology to make cross-border payments immediate, cost-effective, completely transparent and risk free from a regulatory perspective, payments will become truly revolutionized. Blockchain technology has the potential to unleash this new payments world…”

10.18.15
Ginnie Mae’s Game Changers Summit
10.18.15
Ginnie Mae’s Summit: Economic Outlook
10.18.15
Ginnie Mae’s Summit: Mortgage Servicing Rights
10.18.15
Ginnie Mae’s Summit: Balancing Risk and Mission
10.18.15
Ginnie Mae’s Summit: New Issuer Roundtable
10.16.15
Washington Regulatory Round-Up (10/16/15)
10.16.15
Big Transition Ahead for Banks?


“As things continue to globalize, which they will, and as emerging markets continue to grow, which they will, that business is going to remain strong and growing …for the foreseeable future,” said former Citigroup Chairman Richard Parsons. “But the real issue is the convention banking. It’s very tough to be in that business in a zero interest rate environment. …It’s tough when you can’t get a fixed margin—what you lend at in terms of what you’re taking in—in a zero environment.”

10.15.15
A Closer Look at Negative Homeowners' Equity
10.15.15
Monetary Policy
10.15.15
Monetary Policy
10.15.15
Doing Business In Europe
10.15.15
Zoning
10.15.15
Losing Hope for Rate Liftoff in 2015

“The concern here is not so much that we’ve slipped into a recession, but that this recovery—this takeoff—is still around stall speed,” said UBS’s Art Cashin. “We haven’t gotten a trajectory to take us up. So people are concerned that you get the wrong bump in the road and you might accidently slip back toward a recession. …The Fed pretty much has painted itself into a corner. It’s missed its opportunity [to raise rates]. …I think [the FOMC is] beginning to lose out on the hope of doing anything this year.” 

10.14.15
Better Money Habits Millennial Report

Short-term good habits are not translating to long term stability.

10.14.15
Running a Global Company in an Era of Slow Growth and Volatility

“The world’s just so doggone different today than it was 10, 15, or 20 years ago,” said GE’s Jeff Immelt. “I would say no matter what you’re running, you control fewer things. And so you need to be more resilient. Jack [Welch] was a great CEO, but he really controlled his world. It was a centralized kind of command-and-control company. Those days are over. I’m in the risk-management business. Governments are more active. The world is more difficult. You’re not in the control business today, you’re in the risk-reward business.”

10.13.15
Does the Fed Lack Backbone?

 “To stay here [ZIPR] would a mistake of historical proportions.”

10.13.15
Bank Enforcement
10.13.15
Affordable Housing
10.12.15
IMF Calls for U.S. to Give China More Voting Power
10.12.15
A U.S. Recession Just Got a Little More Likely
10.12.15
The Gradual Death of Community Banks
10.12.15
The Economic Implications of Negative Rates
10.12.15
The Single Digit World
10.12.15
Living in a Deflationary World
10.12.15
The VW “Fuel Spill”

The emission scandal may pose “an existence-threatening crisis for the company,” said VW AG’s designated chairman Hans Dieter Poetsch. 

10.11.15
Roadmap to Financial and Housing Market Stabilization Plans

This is the October 11, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • The Small Business Lending Fund released its October 2015 quarterly report showing that as of June 30, 2015, participants had increased their small business lending by $14.8 billion over a $30.0 billion baseline, a $625 million decrease over the prior quarter, largely due to participants leaving the program.

 

 

 

10.09.15
Washington Regulatory Round-Up (10/09/15)
10.09.15
T. Boone Pickens’ Legacy Call on Oil

Crude to climb to $70?

 

 

10.08.15
Digital Enrollment
10.08.15
Housing Finance Reform: Opportunities and Obstacles of Risk Sharing

“It’s going be awhile [before GSE reform is passed]—it’s not going to happen in the next year and four months,” said Senator Bob Corker (R-TN)

10.08.15
De-suburbanization of America

“I think as a nation—particularly as it relates to housing—we’re going through a pretty serious change in the definition of what’s appropriate and what works,” said Sam Zell, chairman of Equity Group Investments. “I would call it a de-suburbanization of America. …Today, particularly with the deferral of marriage, the demographics are changing [and] the cities are becoming much more urbanized. Here we are in the eighth year of the recovery, we’re still building only 50% of the houses that we’ve built on average for the last 50 years.”

10.07.15
Social Media
10.07.15
Securitization – Risk Weights and Risk Retention
10.07.15
The Fed's Long Term Play

Richard Fisher, Former Dallas Fed CEO and Barry Sternlicht, Starwood Capital CEO weigh-in.

10.07.15
The Global Economy Is Slowing Down

Global real GDP grew 3.4% in 2014 and is forecast to grow only 3.1% this year, according to the IMF. Growth is expected to rebound to 3.6% in 2016. “Despite considerable differences in country-specific outlooks, the new forecasts mark down expected near-term growth marginally but nearly across the board,” said Maurice Obstfeld, the IMF Economic Counsellor and Director of the Research Department.. “Moreover, downside risks to the world economy appear more pronounced than they did just a few months ago.”

 

10.06.15
Deferring IPOs
10.05.15
QE Infinity?

“We’re looking at the QE infinity scenario, where central bankers are going to own more and more of capital markets.

10.05.15
What’s Behind the Labor Market’s Slow Down?
10.05.15
U.S. Economy Still the Envy of the World
10.05.15
S&P Should Be Trading At Half Of Its Value?
10.05.15
Is the Economy Weaker than We Fear?
10.05.15
Third-quarter Growth Not Even Worthy of “1-Handle”
10.05.15
The Financial Crisis and It's Aftermath
Should somebody have gone to jail? "Yeah, I think so," said Ben Bernanke.
10.05.15
Student Debt and Homeownership

"The low homeownership rate among Millennials is still something of a puzzle—it cannot be explained solely by the increase in student loan debt,” said Sean Becketti, Freddie Mac’s chief economist. “However student debt plays a role—higher balances are associated with a lower probability of homeownership at every level of college and graduate education. ...[R]ecent data has confirmed that not all student debt is created equal. …Moreover, a change just this month in [FHA] policy will make it more difficult for some student loan borrowers to qualify for a mortgage."

10.04.15
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the October 4, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • On September 29, 2015, Treasury, the Education Department, and the CFPB announced joint student loan servicing principles.  They call for: 
    • Consistent requirements for timely service, payment processing, servicing transfers, information requests, error resolution, and disclosure of borrower repayment options and benefits.
    • Information servicers provide should be accurate and actionable.

o   Servicers should be accountable.

o   Private and federal loan servicing information should be public regarding loan origination, loan terms and conditions, borrower characteristics, portfolio composition, delinquency and default, payment plan enrollment, utilization of forbearance and deferment, the administration of borrower benefits and protections, and the handling borrower complaints. 

  • OCC released its Mortgage Metrics report for the second quarter of 2015, showing:
    • 93.8% of mortgages included in the report were current and performing at the end of the quarter, compared with 92.9% a year earlier. The percentage of mortgages that were 30 to 59 days past due was 2.2% of the portfolio, a 7.9% decrease from a year earlier. Seriously delinquent mortgages—60 or more days past due or held by bankrupt borrowers whose payments are 30 days or more past due—made up 2.6% of the portfolio—a 16.0% decrease from a year earlier.  Mortgage performance declined slightly from the previous quarter, consistent with observed seasonal trends.
    • Foreclosure activity among the reporting servicers also declined from a year ago.  The number of mortgages in the process of foreclosure at the end of the second quarter of 2015 was 299,500, a decrease of 23.5% from a year earlier. The percentage of mortgages within this portfolio that were in the process of foreclosure at the end of the second quarter of 2015 was 1.4%.  Servicers initiated 70,728 new foreclosures during the quarter, a decrease of 11.3% from a year earlier.  The number of completed foreclosures decreased 23.4% from a year earlier to 37,275.  Improved economic conditions and foreclosure prevention assistance contributed to the decline in foreclosure activity.
    • Servicers implemented 179,382 home retention actions during the quarter—including modifications, trial-period plans, and shorter-term payment plans.  More than 86% of modifications made during the second quarter of 2015 reduced monthly principal and interest payments; 52.0% of modifications reduced payments by 20% or more.  Modifications reduced payments by $245 per month on average.
    • Servicers implemented 3,747,455 modifications from January 1, 2008, through March 31, 2015.  Of these modifications, 52% were active at the end of the second quarter of 2015, and 48% had exited the portfolio through payment in full, involuntary liquidation, or transfer to a non-reporting servicer.  Of the 1,943,467 active modifications at the end of the second quarter of 2015, 71.7% were current and performing, 22.8% were delinquent, and 5.4% were in the process of foreclosure.
    •  
  • FHFA released its Foreclosure Prevention report for the second quarter of 2015, showing:
    • The GSEs helped 3.541 million troubled homeowners helped during the GSE conservatorships.
    • The REO inventory of Fannie Mae and Freddie Mac declined 14% during the second quarter to 86,515, marking the first time REO inventory has been below 100,000 since 2009.
    • The number of 60+ day delinquent loans declined another 6% during the quarter.
    • Approximately 31% of all permanent loan modifications in the second quarter helped to reduce homeowners’ monthly payments by over 30%.
    • The serious delinquency rate of Fannie Mae and Freddie Mac loans fell to 1.6% at the end of the second quarter.

 

  • The SSBCI released a report for the quarter ending June 30, 2015. Congress enacted this program in 2010. The report shows:
    • Through June 30, 2015, states drew $1,175,906,190.  Of this total, $1,081,082,235 was from original SSBCI allocations and $94,823,955 was from recycled SSBCI funds.  Recycled funds are funds from program income, interest earned, or principal repayments.
    • As of June 30, 2015, $1,261,421,194 out of $1,456,685,731 or 87% of total allocated funds was disbursed to the states.
    • SSBCI will sunset in 2017.  The President’s 2016 budget proposes to extend the program with $1.5 billion in funding.
  • On September 30, 2015, the European Commission proposed securitization legislation to require 5% risk retention, institutional investor due diligence, and originator disclosure requirements.

 

 

 

 
10.02.15
Washington Regulatory Round-Up (10/02/15)
10.02.15
Emerging Markets "Completely Unhinged"
10.01.15
Lower Productivity Growth in the New Normal?

09.30.15
TRID Readiness

The banking industry is less than a week away from compliance deadlines for rules that completely change all residential mortgage origination disclosures and the systems which generate and track them.

09.30.15
CHLA Releases Action Plan for Housing Finance Reform

The banking industry is less than a week away from compliance deadlines for rules that completely change all residential mortgage origination disclosures and the systems which generate and track them.

09.30.15
September GSE Report

"I think the world economy is bearing the brunt of the third wave of deflation in a decade. The first wave of deflation was the U.S. financial crisis of ’08’-09. The second wave of deflation was the Eurozone crisis of ’11-’12. This is the third wave, and its very much-centered around emerging markets. And, we’re seeing both a price shock, in terms of commodities, and we are also seeing a volume shock. I think the volume shocks are coming thru in the PMIs. We are probably quite close to a manufacturing recession in the world. And, we're seeing it work through cyclical components of the stock market. The one thing I’m not worried about is inflation."

Dominic Rossi

Global CIO of Fidelity Worldwide Investment

September 22, 2015

 

Developing Asia is expected to continue to be the largest contributing region to global growth despite the moderation, but there are a number of headwinds in play such as currency pressures, and worries about capital outflows. In order to be resilient to international interest rate fluctuations and other financial shocks, it is important to implement macro prudential regulations that, for some countries, may entail some capital flow management such as limiting reliance on foreign currency borrowing.

Shang-Jin Wei

ADB Chief Economist

September 22, 2015

 

In my view the global EM FX storm is not over. As we are just in the eye of the storm some market participants might have falsely thought that some days of lower volatility and EM relief are leading us “to a sustained EM FX rally”. But the storm is not over yet and will reintensify over the next couple of weeks with significant volatility and major declines for high yielding EM FX. The Brazilian Real, Chilean Peso, South African Rand and Turkish Lira will suffer most in this environment.

Bernd Berg

Societe Generale Strategist

September 22, 2015

09.30.15
The Future of Digitization


"As you move from 1,000 devices when Cisco was founded to 14 billion today to 500 billion in 15 years, this will transform every company," said John Chambers, Cisco's executive chairman. "More than 40% of the companies that you deal with and follow in the market won't exist in a meaningful way in 10 years. The CEOs know that. Every company is going to go digital. ...As every company goes digital, it means you will become a technology company first..."

09.29.15
Federal Reserve Board G-SIB Surcharge
09.29.15
Danger Ahead

In a 15-minute video, billionaire investor activist Carl Icahn outlines his concerns about U.S. Federal Reserve, warning about the unintended consequences of ultra low interest rates on the economy and financial markets. Icahn discusses the dangers of low rates causing asset bubbles, herding behavior in the stock market, the unintended consequences of financial engineering, fake earnings reported by companies, too high corporate taxes and lack of leadership in Washington. "God knows where this is going, he said. “It's very dangerous and could be disastrous."

09.28.15
The CSBS Finalizes Model Framework for Virtual Currencies

The Final Framework includes a definition of “Virtual Currency,” a general policy statement, a statement of covered and excluded activities, and a set of nine regulatory requirements. 

 
09.28.15
Should the USPS Be Sold to Save It?

“That future should begin with a decision to break the [Postal Service] into two separate entities,” wrote Brookings’ Elaine Kamarck. “One organization should be a public sector organization with the sole mission of delivering on the universal mandate… The other organization should be privatized... This new organization should be allowed to compete with similar organizations in the private sector if and only if the subsidy issue can be worked out so that the new competitor does not have an enormous and distorting market advantage and if it is managed by people with private sector experience."

09.27.15
Cyberwar: The New Art of War

TechRepublic, Steve Ranger

09.27.15
Analysis of the Treasury Takeover of Fannie Mae

Prepared by forensic accounting professor Dr. G. Stevenson Smith, Adam Spittler and Mike Ciklin

09.27.15
DIY Credit Securitization for Marketplace Lending
09.27.15
The Internet Is the Key Driver of Social and Economic Progress
09.27.15
Startup Story: Lending Club
09.27.15
The Future of Fin Tech
09.25.15
Washington Regulatory Round Up (9/25/15)
09.25.15
Dodd-Frank Act Rulemakings, Studies, and Reports Update

Attached please find an updated Roadmap to the Dodd-Frank Act Rulemakings, Studies, and Reports.

  • The CFPB announced it released a Settlement Cost Booklet in Spanish.
  • The CFPB finalized an amendment to its definitions of small creditor and rural and underserved areas, for purposes of exemptions from mortgage rules.
  • The CFTC proposed to amend its definition of “material terms” for purposes of swap portfolio reconciliation.
  • The SEC finalized a rule to remove credit rating references from its rule 2a-7, the principal rule that governs money market funds.

 

Regards, 

Canfield Press

 

09.25.15
The Social and Behavioral Sciences Team Annual Report for 2015
09.25.15
The Lingering Effects of the Great Recession


“The fragility [of the global balance sheet] is just that we’ve come through a horrific crisis and we’re still stuck to a large extent with the debt that was piled on both before and after the crisis,” said Yale University Senior Lecturer Stephen Roach. “The world has yet to come to terms with this debt one way or another. Central banks are finessing that problem by subsidizing the cost of that debt servicing costs through zero interest rates.”

09.23.15
The Monetary Roach Hotel?

"They are in a monetary roach hotel, and they will never be able to raise rates back up."

09.23.15
Planning for the Next Recession

“The FOMC gets too much attention,” said Robert Schiller. “This idea of whether they raise now or in December was over [reported]. …We should thank [the central banks] for averting a depression in 2008. On the other hand, we’re still suffering. I think some kind of fiscal stimulus would be appropriate. We’re in this funny situation of a weak economy and high asset prices. …There’s an old idea...called the Public Works, [that was used] to plan ahead for the next recession. The problem is it’s hard to do physical stimulus because you can’t start these projects instantly. You have to have a plan for it. One name for it is an Infrastructure Bank.”

09.22.15
U.S. Rental Trends 2015-2025
09.22.15
Securitization Webinar
09.22.15
A Housing Market Update


“Housing is local, but credit is national,” said Johnathan Miller, president and CEO of Miller Samuel. “…It really is creating this disconnect between what the consumer needs and what actually can be built. [Policy can change this] only if it targeted for economic fundamentals like better employment, wage growth and household formation. Aside from that, we really are seeing the results of policy that has been set—the low rate policy that has created the distorting in the housing market.”

09.21.15
Roadmap to Financial and Housing Market Stabilization Plans Update

Attached please find the September 21, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

o   From 2012 through mid-2015, the GSEs invested $146 million in CSS.  The company currently relies on GSE resources, including employees.  CSS plans to convert the employees to CSS employees and to stand up its own corporate functions, in the first half of 2016.  CSS will continue to purchase certain services from the GSEs.

  • The CSP has five modules:
    • Module 1:  Data Acceptance.  Upon receipt of a securitization request, the Data Acceptance module will endeavor to validate it.  The GSE will have an opportunity to correct any errors.
    • Module 2:  Issuance Support.  After validation, the Issuance Support module will send data on the security to the NY Fed or DTCC, who will register the security in its system and broadcast summary information to market participants, typically two days before the security will be issued.
    • Module 3:  Master Servicing Operations.  Completion of Module 3 and decisions on its use have been deferred until after the GSEs begin issuing Single Securities.  The GSEs will continue to validate all loan-level data submitted by servicers, and sending validated loan-level data to CSS for the use of the Bond Administration module.  Deferring the implementation of the Master Servicing Operations module reduces the scope of the CSP initiative in the near term so that CSS and the GSEs can focus on preparing for the issuance of Single Securities.  The GSEs and FHFA will later determine if and when the module will be used.
    • Module 4:  Bond Administration.  This module will calculate pool factors for first-level securities and bond factors for second- and third-level securities and release the factors to the market.  For third-level securities, the module will use industry-standard software to track and forecast multi-class payments.  Each quarter and each year the module will perform appropriate tax reporting to investors and the IRS.
    • Module 5:  Disclosure.  The Disclosure Module will produce loan- and security-level disclosures before the issuance of a security, and monthly throughout the life of the security.  Data files will be released for use by data vendors.
  • FHFA anticipates a 2016 announcement of initial use of Release 1, by which Freddie Mac will use the Data Acceptance, Issuance Support, and Bond Administration modules to perform activities related to its current single-class, fixed-rate PCs and Giant PCs.  Release 1 will require the CSP to support data processing for approximately nine million mortgage loans, 500,000 pools, and 250,000 securities.  Release 2 will allow both GSEs to use those same modules to perform activities related their current fixed-rate securities, both single- and multi-class; to issue Single Securities, including commingled re-securitizations; and to perform activities related to the underlying loans.  Release 2 will also allow Fannie Mae to use the CSP to issue and administer mortgage securities backed by ARM loans.
  • Today, neither GSE can issue second- or third- level mortgage securities backed by commingled first-, second-, or third-level securities issued by both GSEs.  That capability is critical to achieving the Single Security initiative’s objective of enhancing the liquidity of the secondary mortgage market.  A first-level mortgage security is collateralized by a single pool of mortgage loans with one class of investors.  A second-level security is collateralized by previously issued first- or second-class securities, with one class of investors.  A third-level mortgage security is a multi-class security collateralized by a group of previously issued first-, second-, or third-level securities.
  • The software design principles include:
    • Open architecture, so the GSEs and CSP users will be able to integrate their IT platforms and exchange data with the CSP using MISMO and other industry data standards.  
    • Functional modularity, so that modules can be modified, configured, or replaced, or that new functionality can be added to a module, with reduced impact on any of the other modules or on the CSP as a whole.
    • Scalability, so the CSP will be capable of performing well at steadily increasing volumes.
    • Data transparency to allow changes in the data on individual loans and securities to be traced throughout the securitization lifecycle.
    • Event automation and straight-through processing, by which defined events trigger further data processing by a separate part of the software that can be called upon when needed.
  • In a second quarter MHA Report, Treasury projects step increases for HAMP modifications:
    • 83% of HAMP Tier 1 homeowners will experience an interest rate increase after five years.
    • The first interest rate increase went into effect in Q3 2014 for the earliest group of HAMP modifications, who will begin to experience their second interest rate step-ups beginning in Q3 2015.
    • Through June 2015, approximately 200,000 homeowners have experienced an interest rate step-up.  Based on early results, the rate increase does not appear to have an impact on the performance of these modifications.  The percentage of modifications disqualifying in the month following the reset remains consistent with the months leading up to the reset, at less than or equal to 1%.
    • The majority of HAMP homeowners will experience two to three interest rate increases.
    • Homeowners who received a modification in 2009-2011 are more likely to experience three to four increases than homeowners who received a modification in 2012-2013, most of whom will experience two increases.
    • The median amount of the first monthly payment increase is $94, and the median monthly payment increase after the final interest rate increase is $210.

 

Regards, 

Canfield Press

 

 

09.21.15
FHFA”s Update on the Common Securitization Platform
09.21.15
What Is the Impact of the QM and QRM Regs?
09.21.15
JPMorgan Chase’s Dimon Meets the Press

: “America has the best hand ever dealt right now—ever…” 

09.21.15
What is the Future of Fannie Mae and Freddie Mac?
09.21.15
Redrawing the Map in the Information Age

"Cultural battles are the power battles of the Information Age,” Manuel Castells. “They are primarily fought in and by the media, but the media are not the power-holders. Power, as the capacity to impose behavior, lies in the networks of information exchange and symbol manipulation, which relate social actors, institutions, and cultural movements, through icons, spokespersons, and intellectual and cultural amplifiers. …Culture as the source of power, and power as the source of capital, underlie the new social hierarchy of the Information Age."

09.18.15
Regulatory Round-Up (9/18/15)
09.18.15
Pushing a String?


“I don’t care whether they raise 25 basis points,” said Ray Dalio, founder of Bridgewater Associates. “What scares me, or what worries me, is what the next downturn in the economy looks like, with asset prices where they are and a lesser ability of central banks to ease monetary policy." Dalio predicts that returns across asset classes will range from 3% to 4% over the next decade, making it much harder for central banks’ asset purchases to have a big effect on the market. 

09.17.15
The Fed's Dovish Pause
09.17.15
Dodd-Frank Act Rulemakings, Studies, and Reports Update

Attached please find an updated Roadmap to the Dodd-Frank Act Rulemakings, Studies, and Reports.

  • The CFTC proposed clarifying amendments to its rules on swap data recordkeeping and reporting requirements for cleared swaps.
  • The SEC proposed a rule requiring security-based swap data repositories to make data available to certain regulators and other authorities, and would set forth a conditional exemption from the statutory indemnification requirement associated with that regulatory access provision.
  • The SEC released its final pay ratio disclosure rule.
  • The SEC proposed a rule by which a security-based swap entity can apply to the SEC for an order permitting an associated person who is subject to a statutory disqualification to effect or be involved in effecting security-based swaps on behalf of the entity.

Regards, 

Canfield Press

 

09.17.15
What Is the Future for Fannie Mae and Freddie Mac?

Columbia Global Reports.  

09.17.15
Digital Currency Firms Worry About New CSBS Licensing Model

“We’re gratified that CSBS wants to take an apple-to-apples approach when it comes to digital currency companies and traditional money transmitters,” wrote Coin Center’s Peter Van Valkenburgh. “We’re happy they do not intend for states to regulate the oranges of this highly innovative space… But, and this is a large and unfortunate but, we are disappointed that the specific language of the model framework...—while broadly promising to follow the sensible approach for which we’ve advocated—contradicts its own stated intentions.

09.16.15
Federal Reserve Forum
09.16.15
The U.S. Economic Outlook

CoreLogic's outlook for U.S. economic growth in September 2015.

09.15.15
U.S. Rate Rise Could Trigger Global Debt Crisis

Wild market volatility and capital outflows from China are warning signs that the massive build-up in credit is coming back to haunt, according to BIS chief economist Claudio Borio. “This is also a world in which interest rates have been extraordinarily low for exceptionally long and in which financial markets have worryingly come to depend on central banks’ every word and deed, in turn complicating the needed policy normalization,” said Borlo. “It is unrealistic and dangerous to expect that monetary policy can cure all the global economy’s ills.”

 

 

 

09.14.15
The Market’s Codependency on the Federal Reserve

Mohamed El-Erian, Allianz Chief Economic Adviser.

09.14.15
Saudi Arabia and the Game of Dominoes
09.14.15
Fed’s Liftoff Decision Is A Close Call
09.14.15
Could Oil Fall to $20?
09.14.15
The New Global Competition for Corporate Profits
09.14.15
What Will Happen If China’s Bubble Bursts?
09.14.15
Never Forget

09.13.15
Where Is The Private-Label Mortgage Market?
09.11.15
Washington Regulatory Round-Up (9/11/15)
09.11.15
Today's Changing Homebuyer

 
“[T]he U.S. home buyer has become quite diversified, including a rising number of foreign born and far more DINK (double income, no kids) and single female home buyers than ever before,” wrote John Burns, president of John Burns Real Estate Consulting. “Urban homes and homes closer to work have appreciated much faster... High-LTV programs have played a huge role in the housing recovery.” 

09.10.15
Q2 2015 Review & Outlook for Banking Industry

Kroll Bond Rating Agency.

09.10.15
AG Lynch Is Determined to Vigorously Enforce the Fair Housing Act

“I am ...determined ...to vigorously enforce the Fair Housing Act with every tool at my disposal—including challenges based on unfair and unacceptable discriminatory effects, particularly now that the Supreme Court has vindicated our position that the Fair Housing Act encompasses disparate impact claims,” said AG Lynch. “...I am proud to support the HUD’s new rule on Affirmatively Furthering Fair Housing, which is a crucial step toward ending historic patterns of segregation and removing disparities based on race, color, religion, sex, familial status...”

09.09.15
China's Broken Model

In fact, any emerging market trying to defend its currency (admittedly not a lot of those right now) must do the same. 

09.09.15
ZIPR’s Serious Deflationary Impact on the Economy

“The market’s fixation with the FOMC and what it will or will not do with interest rates has been a distraction from the central issues of excessive debt and flat to no income growth, the enduring legacy from the 2008 crisis,” wrote Chris Whalen, Senior Managing Director for Kroll Bond Rating Agency. “We believe that weak growth and excessive debt levels will continue to cause volatility in credit markets that are operating under a number of structural constraints, many of them the result of new regulations and capital requirements.” 

09.08.15
FHA Pushing 580 Scores

NATIONAL REAL ESTATE.

09.08.15
Five Channels Of Contagion From China's Hard Landing


09.07.15
Quantitative Tightening: QE's Evil Twin

Euro Pacific Capital Weekly Commentary 

Peter Schiff

September 4, 2015

09.06.15
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the September 6, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • GAO released a report on Treasury implementation of GAO’s TARP recommendations. The report states that Treasury has implemented most of the recommendations, but needs to take more action on four partially implemented recommendations related to the Making Home Affordable (MHA) program. The recommendations call for Treasury to issue guidance and monitor servicer compliance on working with borrowers with limited English proficiency.  Treasury issued applicable guidance and obtained the policies of the larger MHA servicers, but has not assessed the implementation of those policies at the servicers.  Treasury has not taken steps to implement three recommendations, including one directed at CPP and two at MHA.  For example, in July 2015, GAO recommended that Treasury establish a standard process to better ensure that changes to TARP-funded MHA programs are based on comprehensive benefit-cost analyses.  Treasury told GAO they would consider these recommendations at the time the recommendations were made.

 

  • The Federal Reserve and OCC announced their approval for Bank of America to begin using the advanced approaches capital framework starting in the fourth quarter of 2015.  Approval requires a bank to conduct a satisfactory trial run of the framework and comply for at least four consecutive quarters.  Banking organization who use the advanced approaches framework must meet the minimum risk-based capital ratios under both the advanced approaches and the generally applicable risk-based capital frameworks.

 

 

 

09.06.15
Making Anything You Want with a 3D Printer
09.06.15
Holograms: Changing the World You See
09.06.15
The Self-Driving Cars Will Change Our World
09.06.15
The Urban Internet of Things.
09.06.15
IBM’s Watson Is Ready to Help Everyone
09.04.15
Washington Regulatory Round-Up (9/04/15)
09.04.15
Much Ado About Millennials
09.04.15
Understanding the Evolving Cryptocurrency Market

09.03.15
How Plunging Oil Prices Affect Currencies

09.02.15
Risks to U.S. Economic Growth

The Miliken Institute, September 2015

09.02.15
What Was the Fed Talking About at Jackson Hole?
09.02.15
HUD’s Proposal to Terminate FHA Insurance Policies Could Have Chilling Effect on FHA Lending


“HUD’s reform is to provide servicers with more accrued interest if they do not foreclose fast enough, unless, of course, HUD invalidates the whole insurance policy—the loss of both principal and interest—by virtue of HUD’s subjective definition of unreasonable delays,” wrote K&L Gates’ Krista Cooley and Kathryn Baugher. “Few servicers think that is progress.”

09.01.15
Homebuilders Call New Labor Law Ruling Crippling

The National Labor Relations Board’s ruling on joint employer status could put builders on the hook for everything from labor violations to union negotiations with subcontractors. “This ruling—if it’s applied to small businesses and the home building sector—really shows no understanding of 80% of the marketplace,” said Jerry Howard, President of the National Association of Homebuilders. “It’s just impossible to comply with and use the same business model that has been working successful for 200 years.”

09.01.15
WEF's Global Competitiveness Report

09.01.15
FHA's Proposed Servicing Rules Need More Thought

The changes that the FHA has proposed both raise the cost and increase the uncertainty of servicing delinquent FHA loans, and thus may ultimately affect access to credit. 

08.31.15
Unintended Consequences of Easy Money
08.31.15
U.S. Inflation Developments

Remarks by Stanley Fischer, Vice Chairman of Federal Reserve's Board of Governors

08.31.15
A Closer Look at Rate Liftoff
08.31.15
The Pulse of American Growth
08.31.15
Is China in the Midst of a Hard Landing?
08.31.15
Currency Pegs Axed as Crude Oil Falls
08.31.15
Reforming the Housing Finance System

"The GSEs, the way they operated pre-conservatorship, created their own failure," said MBA president Dave Stevens. "I ran [Freddie's] single-family business for almost a decade; I saw the special sweetheart deals being done for institutions that could bring large market share into the GSEs. I saw the activities in the portfolio, where they were buying the AAAs on the subprime market, and buying lots of Alt-A product because it was rich. ...And ultimately, that's what really led to the failure of the housing system, and Freddie and Fannie played a very large role in that."

08.28.15
May You Live in Interesting Times
08.28.15
The Fed Still Matters


“The last couple of days for me the biggest takeaway is that the Fed still matters,” said David Woo, head of rates and foreign-exchange policy at Bank of America Merrill Lynch. “There’s no question if it hadn’t been for [NY Fed President William] Dudley, I don’t think you would had such a violent bounce back in equities across the board. The market, already besieged by China slow down, simply cannot have the Fed raising rates. So, I think from that point it’s a dramatic relief.”

08.27.15
The Great “Dollar” Imbalance

“...[T] the great “dollar” imbalance is clearly far from settled,” wrote Alhambra Investment Partners’  Jeffrey Snider. “In fact, the greater the volatility the more likely that wholesale supply shrinkage will accelerate, as that monetary math constraint is self-reinforcing absent exogenous interjection. That is the problem with all these perceptions about central banks riding to the rescue, particularly the PBOC this week which is exuding only more desperation, as central banks do not possess the tools for, or even sufficient awareness of, these wholesale dynamics.”

08.26.15
China’s Biggest Constraint

“The impossible trinity is the biggest constraint that China faces right now. Meaning, China can no longer have their cake and eat it too.” 

08.26.15
The Fed's Next Big Move: Ease via UE

BusinessInsider.com
Julya La Roche
August 25, 2015

 

08.26.15
The Paradigm Change: No Circuit Breaker in Emerging Markets

“To have that sort of decline at the end [of the day] is really sort of worrisome about the functioning of the market, said Allianz’s Mohamed El-Erian. “The problem is there are no circuit breakers. Why? Because the disruption is coming from elsewhere. The volatility, the economic shock is coming not from Europe and the U.S., where you could have confidence in the ECB and the Fed to act as circuit breakers. But, it’s coming from the emerging world and that means that the market has to regain its own footing. …I’m a little bit worried about what’s ahead after today’s ugly close.”

08.25.15
When the Fed Runs Out of Tools, You Repeat It One More Time

“The emerging markets and their currency are borderline frightening,” said USB’s Art Cashin, “We look like we did in ‘97 in several cases. I go back to my old argument. The IMF and World Bank told [the Fed] no [don’t raise rates]. If they went ahead and something like this resulted, they would lose creditability. People would say, ‘Hey you were warned. Why did you go ahead and do it anyway. So it’s a scary move for them.” So what do they do if this starts to destabilize the U.S. economy? “QE4,” replied Cashin.

08.24.15
Market Is Repricing Slower Growth and Less Effective Monetary Policies

As the end of the day loomed, chatter of QE4 (hope) and PBOC RRR Cut (hope) managed to ramp stocks...

08.24.15
Dislocations, Classic Overshoots and Heightened Risk Aversion
08.24.15
The U.S. Stock Selloff Is Not Over
08.24.15
The Return of the 1990s and Flight to Safety
08.24.15
Don’t Misdial. …The Strange Story of How Your Smartphone Became An Autodialer
08.24.15
A Global Sell-Off

“We’re in a very illiquid environment at the end of August,” said Michael Holland, chairman at Holland & Co. “There’s no doubt that panic begets panic in this market. We had Black Friday and we certainly have Black Monday morning starting for us. It’s a psychological thing. …It’s pervasive …it’s everywhere.” Mohamed El-Erian, chief economic advisor for Allianz, said the selloff will continue. "[Stock prices have] been inflated well beyond fundamentals by central bank policies, so in order to bring people back in you've got to overshoot the fundamentals on the down side to induce people back in," said El-Erian.

08.24.15
Every Central Banker for Himself
08.23.15
Roadmap to Financial and Housing Market Stabilization Plans

This is the August 23, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • The European Commission announced it has signed a memorandum of understanding with Greece for a new stability support program involving up to €86 billion in loans to Greece over three years, in exchange for the Greek government’s implementation of reforms.
08.21.15
Washington Regulatory Round-Up (8/21/15)
08.21.15
The Fed Must be Mindful of Risks It’s Creating

“There’s a tradeoff between financial stability and inflation targeting,” said Stephen Roach, a senior fellow at Yale. 

 

08.21.15
Greek Lessons for a Healthy Euro


08.20.15
The Fed Fuels Uncertainty

08.19.15
The Disruption Report

“In The Future of Financial Services” the Economic World Forum and Deloitte Consulting LLP identified six basic functions of financial services and eleven clusters of innovation that are exerting pressure on the industry’s traditional business models.

08.19.15
A Forensic Analysis of the Bailout of Fannie Mae and Freddie Mac

Adam"Spittler"CPA,"MS"

Mike"Ciklin"JD,"MBA,"MRE" " 

08.19.15
Have Long-term Interest Rates Reached a Lower Equilibrium?

“Long-term interest rates in the [U.S.] have been falling since the early 1980s and have reached historically low levels,” wrote CEA’s Maurice Obstfeld and Linda Tesar. “But does this experience indicate that the level of long-term interest rates has shifted to a lower long-run equilibrium? ...While there is no definitive answer to the question, most explanations for currently low long-term interest rates suggest that in the long run, they will remain lower relative to those that prevailed before the financial crisis.”

 

08.18.15
Fundamental Truths


08.17.15
A Closer Look at the Liquidity of Global Financial Markets
08.17.15
The Yuan’s Wild Ride


“Is this a sign that [the Chinese] authorities don’t know how to grow the economy?” asked Steve Forbes. “They’ve piled on a lot of debt — especially since 2008. They had the stock market bubble. They had a property bubble. Now they’re going to adjust the currency. Is it stalling and they don’t know what to do? …Is this regime now going to be able to make real free market reforms, continue to the liberalize the economy…?”

 

08.17.15
The Era of Living Services
08.17.15
Riding the Wave: Shale 2.0
08.17.15
The Mortgage Industry: Ripe for Disruption
08.17.15
The Energy Revolution: Shale 2.0
08.17.15
The End of the Auto Industry as We Know It?
08.16.15
The Crisis Is Spreading: China, Australia, Brazil, Canada, Sweden

"...[G]overnments all around the world have borrowed too much money and the weight of these debts are choking economic growth. And to make matters worse – these very same governments and their central banks have implemented various plans that have only made matters worse."

 
08.14.15
Washington Regulatory Round-Up (8/14/15)
08.14.15
A New Take on RESPA’s Section 8(c)(2) Safe Harbor by CFPB
08.14.15
The Chinese Dilemma

“China has crossed a Rubicon in terms of its foreign exchange management, “ said George Magnus, a senior independent economic advisor to UBS Group. “Some of this is about the liberalization program… because of their desire to be admitted to [IMF’s] Special Drawing Rights. A lot of it has to do with policy easing because of what’s going on in the domestic economy. …[China’s] new policy of fixing the currency every day based on the basis of last night’s close—actually potentially—can invite a cycle of depreciation which may not be welcome.”  

08.14.15
A New Take on RESPA’s Section 8(c)(2) Safe Harbor by CFPB

“Grab a flotation device—the final decision recently issued by Director Richard Cordray of the Consumer Financial Protection Bureau in the administrative enforcement proceedings against PHH Corp. has rocked the boat for the real estate settlement services industry…”

08.13.15
Yuan Devaluation Is Necessary Step for China


“The moves that we’ve seen today [in the yuan] are not actually major compared to what most emerging market currencies have seen—so that’s why I think there are probably more on the way.” 

08.12.15
The Ultimate Disruption in the Finance System

"[Blockchain] technology …has the ability to conduct and verify transactions via an immutable, time-stamped record …[and poses] immense implications for the banking sector," said BBVA Compass chief economist Nathaniel Karp. "We're talking about a massive overhaul of the banking industry's processes and a significant reduction in costs. …The key question is not how, but when the disruption will become far-reaching. Blockchain technology could reshape the financial industry well beyond the payments system; it has the potential to change the face of modern finance."

08.11.15
U.S. Is Near Full Employment


“The interesting situation in which we are is that employment has been rising pretty fast relative to previous performance and yet inflation is very low,” said Stanley Fischer, vice chairman of the Federal Reserve. “And the concern about the situation is not to move before we see inflation as well as employment returning to more normal levels. …Not everything is rosy and the Fed still has a lot of data to parse over the next five weeks before the next Fed meeting. I don’t think they’ve made up their minds. It is going to be a game-day decision in some sense.”

08.10.15
The Automation Effect
08.10.15
The Pending Bond Market Bubble

Alan Greenspan, who served as Fed chairman between 1987 and 2006, told Bloomberg: "I think we have a pending bond market bubble.

08.10.15
Order from Chaos: How Big Data Will Change the World
08.10.15
What’s at Stake for the Gig Economy in Uber Lawsuit
08.10.15
A Closer Look at 3D Printing
08.10.15
The Complex Story of American Debt

Mortgage holders today are carrying more non-mortgage debt than at any point in the past 10 years, with an average of $25,000 per borrower.

08.10.15
The Commodity Crash Is "a Canary In The Coal Mine for the Global Economy"

“This drop in oil prices [and] drop industrial metal prices ...is not good,” said Stephen Schork, editor of The Schork Report. “It's a canary in the coal mine that something is not right in the global economy." While consumers are saving money at the gas pump, the savings are going to “big government health care,” says Schork. “…People ...think this pullback at the pump is somehow good. No. It's a zero sum game because, yes, those dollars are being spent elsewhere… We're just moving the pieces around on the chessboard. We're not creating economic growth.”

08.07.15
Washington Regulatory Round-Up (8/07/15)
08.07.15

Today, $59.7 trillion of government debt is outstanding, according to the IMF. The U.S., which constitutes 23.3% of the world economy, accounts for 29.1% of world debt, while Japan makes up only 6.18% of total economic production, but 19.99% of global debt. China, the world’s second largest economy accounts for 13.9% of production, has only 6.25% of world debt. The European continent, excluding Russia, holds over 26% of total world debt. Collectively, the debt of the United States, Japan, and Europe accounts for 75% of total global debt.

08.06.15
Atlanta Fed Projects 1% GDP Growth for Q3 2015
08.06.15
Leveraging Technology to Empower Mortgage Consumers at Closing
08.06.15
Is GPA-Based Lending "Profiling"?


“Tradition lenders that rely exclusively on a person’s credit history don’t have any way to figure out how risky or not risky a person with a short credit history is,” said Paul Gu, co-founder of Upstart co-founder. “…What we’ve found is that there are signals like your GPA or what your studied that actually tell us whether you’re likely to pay us back—that are not just credit history variables—and so we can lend to more people at lower rates.”

08.05.15
The Obama Administration's Unprecedented Clean Power Rule

“If you can convert the [EPA]—which is an environmental regulator into a central energy planning authority—that spells bad news for the next few decades,” said WV AG Patrick Morrisey. “It’s really a massive and radical power grab—and I think it’s important for people to focus on that whether you’re in a coal state or not… Even if you’re not in a coal state, it seems to me that the math is clear. If you move more coal fired power plants off-line from base line, you have to build new non-coal-fired power plants. This isn’t fuzzy math. It’s not free and ultimately it’s going to cost American consumers a lot of money.”

08.04.15
What Is the Impact of Raising the Minimum Wage?
08.04.15
Calls Growing to Recapitalize Fannie Mae and Freddie Mac

 “Fannie and Freddie, by charter, have a legal obligation to serve underserved communities, and the longer they remain vulnerable to dissolution, without a viable alternative, the harder it will be for deserving Americans to [have] the American Dream,” wrote Reverend Al Sharpton. “Yes, we will have to work hard to ensure that past mistakes are not repeated, but this administration has the authority today, and the moral obligation, to take action ...to save homes and provide families a pathway to homeownership. Before the disparities among Americans grow even starker. The time to act is now.”

08.03.15
President Obama Rolls Out Clean Power Plan 2.0

The Clean Power Plan v. 2.0 includes an incentive program aimed at boosting wind and solar power to 28 percent of the national energy mix by 2030. 

08.03.15
Economic Cycles Are Shorter and Faster
08.03.15
Six Years of ZIPR Harms a Capitalistic Economy
08.03.15
The Demographics of Wealth
08.03.15
The $3 Trillion Cost of Bad Policies

"The federal government borrowed $7.8 trillion over the course of the past seven years and handed most of the proceeds out in the form of various transfer payments (which now make up over 73% of federal spending),” wrote Scott Grannis. During this period, the federal government restructured the health care industry to lower costs; rewrote the rules for the entire financial industry to provide greater consumer protections; and increased taxes to “more fairly" distribute the fruits of progress. “But it didn't work," wrote Grannis. "…[W]e have the weakest recovery in history."

08.03.15
Here Comes Puerto Rico’s Default

Investors are bracing for Puerto Rico to miss about $58 million in bond payments in coming days, as the U.S. commonwealth attempts to restructure $72 billion of debt.

08.03.15
The Puerto Rico Problem
08.03.15
The Slowest Wage Growth in the U.S. Since 1982
07.31.15
Washington Regulatory Round-Up (7/31/15)
07.31.15
TurboAppeal: Disruptor in the Property Tax Appeals Process
TurboAppeal simplifies and improves the property tax appeals process, saving consumers as much as $950.
07.31.15
Homeownership 1967 vs. 2015



07.30.15
Treasury Clarifies HAMP Participation Numbers Reported by SIGTARP

"HAMP has directly helped more than 1.5 million homeowners permanently modify their mortgages and indirectly assisted millions more by setting new standards for the mortgage industry that have led to more affordable and sustainable private modifications," said Treasury’s Mark McArdle.

07.29.15
Atlanta Fed Q2 GDP Forecast: 2.4%

07.28.15
The Fed's Dilemma

“[T]he key to managing the return to policy normality lies in effectively managing short-term interest rates via the Fed funds market and perhaps the reverse repo market, especially in the next two or three years.”

07.28.15
When Will the Fed Raise Rates?

 

07.27.15
Mortgage Reforms: Actions Need to Help Asses Effects of New Regulations
07.27.15
Roadmap to Financial and Housing Market Stabilization Plans

 

This is the July 26, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • The Federal Reserve issued a final order that establishes enhanced prudential standards for General Electric Capital Corporation.  Effective January 1, 2016, the company must comply with risk-based and leverage capital requirements, the liquidity coverage ratio rule, and related reporting requirements.  If the company is still designated by the FSOC on January 1, 2018, it would be required to comply with liquidity risk-management, general risk-management, capital-planning, governance, and stress-testing requirements, as well as restrictions on intercompany transactions.  The Federal Reserve may add to or amend the requirements in the future.
  • The Federal Reserve approved a final rule requiring the eight largest U.S. bank holding companies to increase their capital levels, with surcharges from 1.0 to 4.5 percent of each firm’s total risk-weighted assets.  The requirement will phase in between 2016 and 2019.  The rule requires the companies to calculate capital surcharges under two methods and hold the higher of the two surcharges.  The first method is based on the framework agreed to by the Basel Committee on Banking Supervision and considers a firm’s size, interconnectedness, cross-jurisdictional activity, substitutability, and complexity.  The second uses similar inputs, but is calibrated to result in significantly higher surcharges.  The Federal Reserve released a white paper describing how it calibrated the surcharges.
  • The European Commission announced the approval of a package of measures to ensure that the European Fund for Strategic Investments (EFSI) is operational by early autumn 2015.  The EFSI is designed to unlock public and private investments of at least €315 billion from the autumn of 2015 through 2017.  The fund will focus its financing on investments in infrastructure and innovation, as well as finance for small- and medium- size businesses.  The EU will provide initial funding through a €16 billion guarantee and €5 from the European Investment Bank.  England announced it will contribute €8.5 billion to projects benefiting from the fund.  France, Italy, Germany, and Poland will contribute €8 billion each to the investment plan; Spain €1.5 billion; Luxembourg €80 million; Slovakia €400 million; and Bulgaria €100 million.

 

 

 

07.27.15
How Does This Current Bubble End?

New York Times Pulitzer Prize-winning journalist John Markoff 

07.27.15
Starbucks’ Stars—An External Mobile Digital Payment Platform

.."significant expansion of our My Starbucks Rewards [MSR] loyalty program."


 

07.27.15
A Snapshot of the World’s Economy
07.27.15
China Fears Resurface


“It’s ugly out there,” said Dennis Gartman, editor of The Gartman Letter. “We’re going to continue to see weakness in commodity prices. …The overriding fundamental is China—China has difficulty. …The stock market there was down 8% overnight and down 25% or 30% from its highs. …The government is doing everything that it can to try prop up stock prices and thus far it has been utterly unsuccessful in doing so. Usually, government intervention ends badly and this does not look pretty.”

07.27.15
The De-Dollarization Continues
07.27.15
A Comparison the Individual States’ Economy to the Rest of the World
07.27.15
Tools to Identify Racial and Ethic Segregation
07.26.15
Roadmap to Financial and Housing Market Stabilization Plans Update

Attached please find the July 26, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • The Federal Reserve issued a final order that establishes enhanced prudential standards for General Electric Capital Corporation.  Effective January 1, 2016, the company must comply with risk-based and leverage capital requirements, the liquidity coverage ratio rule, and related reporting requirements.  If the company is still designated by the FSOC on January 1, 2018, it would be required to comply with liquidity risk-management, general risk-management, capital-planning, governance, and stress-testing requirements, as well as restrictions on intercompany transactions.  The Federal Reserve may add to or amend the requirements in the future.

 

  • The Federal Reserve approved a final rule requiring the eight largest U.S. bank holding companies to increase their capital levels, with surcharges from 1.0 to 4.5 percent of each firm’s total risk-weighted assets.  The requirement will phase in between 2016 and 2019.  The rule requires the companies to calculate capital surcharges under two methods and hold the higher of the two surcharges.  The first method is based on the framework agreed to by the Basel Committee on Banking Supervision and considers a firm’s size, interconnectedness, cross-jurisdictional activity, substitutability, and complexity.  The second uses similar inputs, but is calibrated to result in significantly higher surcharges.  The Federal Reserve released a white paper describing how it calibrated the surcharges.

 

  • The European Commission announced the approval of a package of measures to ensure that the European Fund for Strategic Investments (EFSI) is operational by early autumn 2015.  The EFSI is designed to unlock public and private investments of at least €315 billion from the autumn of 2015 through 2017.  The fund will focus its financing on investments in infrastructure and innovation, as well as finance for small- and medium- size businesses.  The EU will provide initial funding through a €16 billion guarantee and €5 from the European Investment Bank.  England announced it will contribute €8.5 billion to projects benefiting from the fund.  France, Italy, Germany, and Poland will contribute €8 billion each to the investment plan; Spain €1.5 billion; Luxembourg €80 million; Slovakia €400 million; and Bulgaria €100 million.

 

Regards, 

Canfield Press

 

07.24.15
Washington Regulatory Round-Up (7/24/15)
07.24.15
CFPB Releases Its Monthly Report on Consumer Complaints

The Consumer Financial Protection Bureau has released its first Monthly Complaint Report (MCR), which provides a “high-level snapshot of trends” in consumer complaints. “The [MCR] uses a three-month rolling average, comparing the current average to the same period in the prior year where appropriate, to account for monthly and seasonal fluctuations,” wrote the Bureau. “In some cases, we use month-to-month comparisons to highlight more immediate trends. For the company-level complaint data, we use a three-month rolling average of complaints sent to companies for response.”

07.23.15
A Growing Nation of Renters

On Dr. Ed’s Blog, Dr. Ed Yardeni, president and chief investment strategist of Yardeni Research, wrote: 

07.23.15
Enforcement Actions Hit Highest Level in Q2 2015

The average financial institution had to devote an additional 1.72 full time employee equivalents at an additional cost of $41,471 to address the new regulatory changes in Q2, bringing the total additional compliance cost burden to $147,000 for the past 4 quarters, according to the Banking Compliance Index, published by the Regulatory Operations Center™ (ROC). The enforcement climate continues to be “hot” with 207 enforcement actions during Q2 2015, the highest level in the past 20 years. “This isn’t a seasonal trend or a blip on the radar,” said ROC’s Pam Perdue. “It’s the new normal.”

07.22.15
Interest-Only Mortgages Return

WITH a needed twist....

07.21.15
Everyday Payments Move to Next Level in Europe
07.21.15
Volcker Rule Compliance: Taking Stock on ‘Conformance Day
07.21.15
Dodd Frank Act Scorecard


Since January 1, 2008, the Obama administration has finalized 2,929 regulations, which created 486.5 million paperwork hours at a total cost of $771.5 billion, according to American Action Forum’s Regulation Rodeo. Over the past five years, the adminstration has finalized 117 regulations required by the Dodd Frank Act (DFA), which resulted in 61.7 million paperwork hours, according to AAF. The Regulation Rodeo estimates the “finalized cost” of DFA regulations is $24.9 billion.

07.20.15
Dodd-Frank, Five Years Later

In an interview with the Wall Street Journal, former Senator Chris Dodd discussed the importance of the Dodd Frank Act.

 

07.20.15
Tectonic Shifts and Aftershocks
07.20.15
The End of Capitalism Has Begun?
07.20.15
OPM Breach Leaves Threats Hidden in Plain Sight

“The data breach of the Office of Personnel Management could affect more than 20 million Americans,” wrote Charles Allen. “Yet the true magnitude of this breach lies not in the number of individuals affected, but in the seemingly infinite ways it has compromised our national security. …[I]n my view, [the risk of identity theft] pales in comparison to how it has jeopardized our national security workforce… and degraded the integrity of our security clearance system. Quite simply, it is a national security risk unlike any I’ve seen in my 50 years in the intelligence community.”
 

07.20.15
Treasury’s Online Marketplace Lending RFI
07.20.15
Blockchain: The Greatest Technology to Come Along Since the Internet

 

 

07.20.15
More Than a Glitch: Lessons from the NYSE Outage
07.19.15
Roadmap to Financial and Housing Market Stabilization Plans

This is the July 19, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• Treasury solicited input on a study of the various business models and products offered by online marketplace lenders, the potential for online marketplace lending to expand access to credit to historically underserved borrowers, and how the financial regulatory framework should evolve to support the safe growth of this industry.

• Several agencies issued a joint report analyzing the significant volatility in the U.S. Treasury market on October 15, 2014.  The joint report makes clear that a number of developments help explain the conditions that likely contributed to the volatility.  Specifically, the report finds that in addition to other factors, changes in global risk sentiment and investor positions, a decline in order book depth, and changes in order flow and liquidity provision together provide important insight into the developments that day.  The report also underscores the changing structure of the U.S. Treasury market.  The report recommends continued analysis of U.S. Treasury market structure and functioning, focusing on trading and risk management practices, the availability of public data, and continued efforts to strengthen monitoring and inter-agency coordination related to trading across the U.S. Treasury cash and futures markets.

• The Federal Reserve proposed to modify the timing for several stress testing requirements that have yet to be integrated into the stress testing framework.  Banking organizations subject to the supplementary leverage ratio would begin to incorporate that ratio into their stress testing in the 2017 cycle.  The use of advanced approaches risk-weighted assets in stress testing would be delayed indefinitely, and all banking organizations would continue to use standardized risk-weighted assets.  The proposal would remove the requirement that banking organizations calculate a tier 1 common ratio, which has been supplanted.  

 

 

07.17.15
Washington Regulatory Round-Up (7/17/15)
07.17.15
Fed Chair Yellen Testifies Before Senate Banking Committee
07.17.15
Phantom ETF Liquidity?

Investor Carl Icahn voiced his growing fears about a bubble in high-yield bonds, noting the dangers posed by exchange-traded funds run by firms such as Larry Fink’s Blackrock. Now that ETFs own so many assets and Wall Street firms have retreated from trading, who will buy if investors sell ETFs during the next market downturn? Icahn called Blackrock “a dangerous company" and warned that Fink and Janet Yellen are "pushing the damn thing off a cliff." Needless to say, Fink does not agree with Icahn's assessment.

07.16.15
The Long Road Ahead for Greece
07.16.15
Is Greece's Debt Sustainable?

“Greece’s public debt has become highly unsustainable,” wrote the IMF. “The financing need through end-2018 is now estimated at Euro 85billion and debt is expected to peak at close to 200 percent of GDP in the next two years, provided that there is an early agreement on a program. Greece’s debt can now only be made sustainable through debt relief measures that go far beyond what Europe has been willing to consider so far. …The dramatic deterioration in debt sustainability points to the need for debt relief on a scale that would need to go well beyond what has been under consideration to date—and what has been proposed by the ESM.”

07.14.15
The Obama Administration’s Plan on Immigrant & Refuge Integration
07.14.15
Kicking the Can Again

“The [Greek] fundamentals haven’t really changed,” said Chris Whalen with Kroll Bond Rating Agency. “Mr. Tsipras has gotten a worse deal that he could have gotten a couple of weeks ago. He has the almost byzantine conditionality where we’re going to have foreign observers in Greece trying to get them to do the right thing. It all comes down to whether or not the southern European countries want to live like Germans. …Germany looks at these nations and sees their own bankruptcy, because if they had to pick up the tab …and essentially subsidize their deficits, it would break them.”

07.14.15
The Return of Gunboat Diplomacy
07.13.15
Place, Opportunity, and Social Mobility: What Now for Policy?
07.13.15
Making Our Communities Stronger Through Fair Housing
07.13.15
Seattle’s Housing Affordability: A True Gordian Knot
07.13.15
Rental Sector Remains Robust
07.13.15
Chair Yellen’s Outlook for the Economy
07.13.15
Greece for Grownups

“As long as Greece remains a member of the European Union, its taxpayers can walk away, just as Detroit’s did in the decades before its bankruptcy,” wrote Adair Turner, former chairman of the UK’s Financial Services Authority. “If remaining in Greece means living in a country where taxes are always 10% higher than public expenditures, many – especially the young and talented – will do just that. …Adult negotiators have to face two realities: large debt write-offs are inevitable, and punishing Greece further will not put the eurozone on the path to financial discipline.”

 

07.12.15
Grexit?

"Eighty billion in three-year new-money debt for Greece is a bad deal for lenders, and they know it."   

07.12.15
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the July 12, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • GAO released a TARP report entitled, Treasury Could More Consistently Analyze Potential Benefits and Costs of Housing Program Changes.  GAO found that from February 2009 to May 2015, Treasury disbursed $16.3 billion of the $37.5 billion in TARP funds allocated to support housing programs.  The number of new HAMP permanent modifications began to decline in late 2013 but has stabilized at between 9,000 and 15,000 additions per month.  Since October 2014, Treasury has expanded incentives in order to draw new entrants into the programs and further assist existing participants.  In making program changes, Treasury took steps to assess their benefits and costs but did not fully meet all of the key elements of federal benefit-cost analysis guidance.  For example, it is unclear whether the recent changes, such as extending performance incentives to borrowers in the sixth year of their HAMP modification (estimated to cost $4-6 billion), will reduce redefaults.  Treasury officials told GAO that borrower surveys confirmed that borrowers responded to performance incentives, but GAO found that Treasury does not have the estimates needed to fully assess the effectiveness of this or other recent changes. Treasury officials said that program benefits and costs depended on unknown factors and macroeconomic trends and that program benefits were difficult to quantify.  OMB guidance and GAO’s past work stress that analyzing benefits and costs can help decision makers choose among alternatives.  Without full and comprehensive analyses, Treasury will be challenged to determine whether program changes are actually achieving desired goals and are an efficient use of taxpayer dollars.  GAO recommends that Treasury develop and implement policies and procedures that establish a standard process to better ensure that TARP-funded housing program changes are based on benefit-cost analyses that meet key elements.
  • The Federal Reserve and FDIC announced that they posted the public portions of annual resolution plans for 12 large financial firms.  The twelve firms are:  Bank of America Corporation, Bank of New York Mellon Corporation, Barclays PLC, Citigroup Inc., Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group, JPMorgan Chase & Co., Morgan Stanley, State Street Corporation, UBS AG, and Wells Fargo & Company.
  • The Small Business Lending Fund released its July 2015 quarterly report showing that as of March 31, 2015, participants had increased their small business lending by $15.4 billion over a $31.3 billion baseline, an increase of $280 million over the prior quarter. 
  • Treasury released an annual report on the State Small Business Credit Initiative (“SSBCI”), stating that from 2011 through 2014, states  had expended $864 million in SSBCI funds that supported private sector loans or investments to small businesses totaling $6.4 billion, with $1.9 billion in private sector loans in 2014.  The 2010 Small Business Jobs Act created the SSBCI and funded it with $1.5 billion.  States could apply for federal funds for programs to extend credit to small businesses, and must demonstrate a minimum of $10 in new private lending for every $1 in federal funding.  Applications were due by June 2011.

 

 

07.10.15
Washington Regulatory Round-Up (7/10/15)
07.10.15
Greece: Sliding from Periphery to Exit

“[T]he [Greek] referendum might have tipped the balance of how other Eurozone countries weigh the risks of Greece’s continued membership in the common currency area versus its exit,” wrote Fitch Ratings’ James McCormack. “Greece may come to be viewed as a small and uniquely recalcitrant Eurozone member that either can be effectively ring-fenced, or cannot be sufficiently altered to fit the Eurozone mold, or both. It could therefore spend some time on the outer edges of the Eurozone periphery before membership becomes untenable.”

07.10.15
Mediocre Tranquility


“The U.S. economy is an island of mediocre tranquility in the midst of the stormy sea of the global economy,” wrote Tim Duy. “Tranquil enough to keep the Fed eyeing its first rate hike despite the surrounding storm, but sufficiently mediocre that they feel no reason to rush into that hike. As such, the Fed will remain on the sidelines until the forecast points toward sunnier skies. Uncertainty from Greece and China are likely raising the bar on the domestic conditions that would justify a rate hike.”

 

07.09.15
Mortgage Policies Are Irreparably Harming the Underserved
07.09.15
HUD Publishes Final Rule on Affirmatively Furthering Fair Housing
07.09.15
The Political Consequences of China's Stock Market Collapse

“…[I]n the past, the stock market capitalization of Chinese stock markets hovered ...around $1 trillion to $2 trillion,” said Stratfor’s John Minnich. “Now what we saw was the peak of the boom in June 12, China's stock market capitalization ...was something in the area of $10 trillion to $11 trillion. …$6 trillion of new capital that's entered into the stock market—most of it ...personal savings by the 90 million or 100 million so individual investors that are involved in the stock market. …This kind of reiterates or reinforces the point that China still has a long way to go to develop these deep and stable financial markets.”

07.08.15
IMF: U.S. Financial Reforms Remain "Incomplete"

Open-ended MFs and underlying asset markets could be vulnerable to sudden shifts

in investor sentiment.

07.08.15
The End of an Era

“In the end, political models that work by siphoning money from the more productive to buy the votes of the less productive often end up ‘going over the edge’,” wrote First Trust economists. “This system only works when the benefits for the productive of being part of a society exceed the costs and in some cases governments find the right balance. …[W]ill the problems in Greece, Detroit and Puerto Rico be seen as a sign that this era needs to come to an end? Or, will politicians and voters ignore them and stay tied to the failed policies of the past?”

07.07.15
Detroit Foreclosure Crisis Was a Team Effort

- An investigative report by The Detroit News found that one-in-three homes have been foreclosed in the last decade

07.07.15
“We Are in the Eye of the [Greek] Hurricane”

"It appears that we're in the eye of the hurricane,” said Janus Funds’ Bill Gross. “I do not believe that this situation really is calm. …[I]f European Central Bank President Mario Draghi doesn't at some point provide additional funds, and if Greece does not pay the $3 billion… euro dollar debt on July 20…, then there is going to be significant problems within the system. [ELA’s] $100 billion [bailout] to Greek banks through the ELA, will have to be declared in default because the ECB cannot lend on defaulted collateral."

07.06.15
Greeks Made a “Brave Choice”
07.06.15
A Grexit Is Now Likely
07.06.15
What is the fallout of Grexit?

~~There is no legal mechanism to kick a member out of the European Union.

07.06.15
How does the crisis affect the global financial system?
07.06.15
What Happens Next in Greece?
07.06.15
Watershed Moment In Eurozone


“It is a watershed moment,” said William Dartmouth, member of the European Parliament and Trade spokesman for UKIP. “…When you went to the Eurozone, it’s a fixed currency—you’re not meant to leave. ….If [Grexit] happens, it becomes clear that the Eurozone is simply a fixed exchange system, of which we’ve seen many before, which people come in and out of.  And, next problem after Greece is Italy. …Greece and Italy cannot manage to be in the same monetary system as Germany. It doesn’t work.”

 

07.05.15
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the July 5, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

• FHFA released its annual g-fee report.  The report tracks adjustments from 2009 through 2014 and shows that guarantee fees have increased over this period.  Overall, the average level of g-fees has increased since 2009.  The g-fees are currently two-and-a-half times their previous level; from 2009 to 2014, average fees increased from 22 basis points to 58 basis points.  From 2013 to 2014, average fees increased from 51 basis points to 58 basis points.  In 2014, primarily because of changes in the models the GSEs use to estimate the capital necessary to support their mortgage guarantee business, gaps on 30-year fixed rate loans were more negative and gaps on 15-year loans were more positive than in 2013.  A gap is the difference between actual g-fees charged and the expected cost of providing the guarantee.  While the gap on 30-year fixed rate loans was negative relative to targeted return on capital, the returns on capital were positive.  The percentage of loans that the GSEs purchased from small lenders grew substantially in 2014, while pricing differences between small sellers and large sellers remained small.

• The FFIEC released a cybersecurity assessment tool to help institutions identify their risks and assess their cybersecurity preparedness.  There are two parts to the assessment: an inherent risk profile and cybersecurity maturity.  The inherent risk profile identifies the amount of risk posed to an institution by the types, volume, and complexity of the institution’s technologies and connections, delivery channels, products and services, organizational characteristics, and external threats, notwithstanding risk-mitigating controls.  The cybersecurity maturity includes domains, assessment factors, components, and individual declarative statements across five maturity levels to identify specific controls and practices that are in place.  While management can determine the institution’s maturity level in each domain, the assessment is not designed to identify an overall cybersecurity maturity level.

• GAO released a cybersecurity report entitled, Bank and Other Depository Regulators Need Better Data Analytics and Depository Institutions Want More Usable Threat Information.  The report states:

o The largest institutions were generally examined by IT experts, while medium and smaller institutions were sometimes reviewed by examiners with little or no IT training.  Each regulator had efforts under way to increase the number of their staff with IT expertise.
o Regulators generally focused on IT systems at individual institutions but most lacked readily available information on deficiencies across the banking system.  Regulators were not routinely collecting IT security incident reports and examination deficiencies and classifying them by category of deficiency.  Bank regulators directly address the risks posed to their regulated institutions from third-party technology service providers, but the NCUA lacks this authority.  Bank regulators routinely conduct examinations of service providers’ information security.
o Depository institutions obtain cyber threat information from multiple sources, including federal entities such as the Treasury.  Representatives from more than 50 financial institutions told GAO that obtaining adequate information on cyber threats from federal sources was challenging.  Treasury has various efforts under way to obtain and confidentially share information with other institutions.
o GAO recommends that Congress consider granting NCUA authority to examine third-party technology service providers, and that regulators explore ways to better collect and analyze data on trends in IT examination findings across institutions.

• The Federal Reserve announced its first determination of the aggregate consolidated liabilities of all financial companies.  Section 622 of the Dodd-Frank Act prohibits any financial company combination if the resulting company's liabilities exceed 10 percent of this amount.  As of December 31, 2014, the amount was $21,632,232,035,000.

 

07.03.15
Washington Round-Up (7/3/15)
07.03.15
The Banner of the Free



"Let the Fourth of July always be a reminder that here in this land, for the first time, it was decided that man is born with certain God-given rights; that government is only a convenience created and managed by the people, with no powers of its own except those voluntarily granted to it by the people." 
 


President Ronald Reagan (1981)

07.02.15
No Grounds to Hold Talks Before Greek Referendum

The Greek referendum is Sunday.

07.02.15
OCC's Semiannual Risk Perspective

Comptroller of the Currency Thomas J. Curry listed cybersecurity as the OCC’s top priority in recognition of the growing risk to the industry. According to OCC’s Annual Report Fiscal Year 2014, “Attackers are customizing malware to target banks and bank customers, and the methods of attack are evolving in response to banks’ mitigating controls. …Attackers have identified and exploited vulnerabilities in widely used information technology products for all sizes of banks."

 

07.01.15
Liquidity Down the Drain

Bill Gross, Janus Capital Group Investment Outlook

07.01.15
Greek Debt Crisis Escalates


“Greece’s potential exit from the euro area would represent a stiffer challenge than debt default,” wrote AB Bernstein. “...Greece has been ring-fenced…This suggests that the authorities should be able to contain the spillover to other economies and markets more generally… Still, we are conscious that a Greek exit would represent a step into uncharted territory, with unpredictable consequences. The outlook is therefore highly uncertain—but would be much more so if the ECB weren’t acting as a backstop.”

06.30.15
The GSE Report

Graccident

What we are seeing here is what economists call the sudden stop, when the payment system stops. The banks are closed. The stock market is closed. …The logic of a sudden stop is a massive economic contraction, social unrest and it’s going to make continued membership of the euro zone very difficult for Greece. ...There’s an 85% probability that Greece will be forced to leave the Eurozone not because it wants to do so but because it simply is no longer to stay in the Eurozone.

06.30.15
The Unintended Consequences of Financial Repression

“Unconventional monetary policies help to finance the public sector’s debt burden,” wrote Swiss Re, a leading wholesale provider of reinsurance, insurance and other insurance-based forms of risk transfer. “…Today’s low interest rate environment is not only driven by macroeconomic factors, but also by policy actions that help governments deal with the high sovereign debt burden. These policies—called “financial repression”—have unintended consequences for both households and long-term investors like insurance companies or pension funds.” 

06.29.15
Graccident: The Payment System Stops in Greece
06.29.15
Is the Unthinkable Becoming Routine?

“[T]he global economy is still struggling to shake off completely the post-crisis malaise,” said BIS’s  Claudio Borio. “The most visible symptom of this predicament is the persistence of ultra-low interest rates. Interest rates have been exceptionally low for an extraordinarily long time, against any benchmark. Moreover, the negative bond yields that have prevailed in some sovereign bond markets are simply unprecedented and have stretched the boundaries of the unthinkable. …The result is too much debt, too little growth and too low interest rates. In short, low rates beget lower rates.”

06.28.15
The American Dream in Crisis
06.28.15
The Future of Housing Finance
06.28.15
There’s No Free Lunch with Obamacare
06.28.15
Business and Finance Outlook 2015
06.28.15
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the June 28, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • The European Central bank announced today that it will hold its emergency liquidity assistance to Greek banks at the level of June 26, 2015.  The central bank said it will work closely with Bank of Greece to maintain financial stability.
  • FHFA released its Foreclosure Prevention Report for the first quarter of 2015, showing:
    • The GSEs completed 65,960 foreclosure prevention actions in the quarter of 2015, bringing the total to nearly 3.5 million since the start of the conservatorships.  These measures have helped nearly 2.9 million borrowers stay in their homes, including 1.8 million who received permanent loan modifications.  
    • Approximately 31% of all permanent loan modifications in the quarter helped to reduce homeowners’ monthly payments by over 30%.
    • The number of 60+ day delinquent loans declined 9% during the quarter.
    • The serious delinquency rate of GSE loans fell to 1.8% at the end of the quarter.
    • The GSEs’ REO inventory declined 10% during the quarter to 100,279.
  • The OCC released its Mortgage Metrics Report for the first quarter of 2015, showing:
    • 94.2% of mortgages in the report were current and performing at the end of the quarter, compared with 93.1% a year earlier. 
    • The percentage of mortgages that were 30 to 59 days past due was 1.9% of the portfolio, a 7.0% decrease from a year earlier. 
    • Seriously delinquent mortgages made up 2.6% of the portfolio, a 16.4% decrease from a year earlier.
    • The number of mortgages in the process of foreclosure at the end of the quarter fell to 299,424, or 1.3%, a decrease of 30.8% from a year earlier. 
    • Servicers initiated 83,058 new foreclosures during the quarter, a decrease of 8.6% from a year earlier. 
    • Completed foreclosures decreased 31.5% from a year earlier to 38,509. 
    • Servicers implemented 188,816 home retention actions during the quarter, compared with 47,430 home forfeiture and non-retention actions. 
    • The number of home retention actions decreased 20.6% from a year earlier.
    • More than 89.2% of modifications in the quarter reduced monthly principal and interest payments; 55.6% reduced payments by 20% or more.  Modifications reduced payments by $271 per month on average.
    • Servicers implemented 3,696,929 modifications from January 1, 2008, through December 31, 2014.  Of these, approximately 53% were active at the end of the quarter, and 47% had exited the portfolio through payment in full, involuntary liquidation, or transfer to a non-reporting servicer. 
    • Of the 1,969,431 active modifications at the end of the quarter, 72.2% were current and performing, 22.4% were delinquent, and 5.5% were in the process of foreclosure.
  • GAO released a report entitled, Bank Regulation – Lessons Learned and a Framework for Monitoring Emerging Risks and Regulatory Response.  GAO reports that it has incorporated the regulatory lessons learned into a two-part framework for monitoring regulators’ efforts to identify and respond to emerging risks to the banking system.  First, the framework incorporates quantitative information in the form of financial indicators that can help users of the framework track and analyze emerging risks and qualitative sources of information on emerging risks—such as regulatory reports and industry and academic studies.  Second, the framework monitors regulatory responses to emerging risks, such as agency guidance, with the goal of flagging issues for further review when questions arise about the effectiveness of these responses.  Users—oversight bodies such as inspectors general—can analyze regulatory actions taken to address emerging risks and gain insights into regulators’ ability to take forceful actions to address problematic behavior at banks.  Such ongoing monitoring can provide a starting point for identifying opportunities for more targeted and frequent assessments of these efforts.  GAO plans to implement this framework in its future work.

 

 

 

06.28.15
RESPA Lessons Redux

Consumer Mortgage Coalition

06.28.15
Reforming Regressive Regulation to Boost U.S. Economic Growth
06.26.15
Washington Regulatory Round-Up (6/28/15)
06.26.15
The Importance of Growth.

If Congress fails to re-authorize the ExIm Bank, GE will be "left to make choices of our own," said Immelt.

06.26.15
The Supreme Court’s Victory for Disparate Impact Includes a Cautionary Tale

“[T]he next challenge to ‘disparate impact’ theory the Court will undoubtedly be forced to consider may prove to be a far more difficult one,” wrote Cory Andrews with the  Washington Legal Foundation. “As Justice Scalia noted in his concurrence in Ricci v. DeStefano, whether any statute that affirmatively requires race-based actions to remedy ‘disparate impacts’ can be harmonized with the Fourteenth Amendment’s guarantee of equal protection is not an easy question to answer. ... the Court will not be able to avoid [that thorny question] forever.”

06.25.15
The State of the Nation's Housing

According to JCHS’s State of the Nation’s Housing 2015:

  • Homeownership rates are at 20-year lows and continues to fall.
  • The rental market continues to boom, as the share of U.S. households renting their  home reached a 20-year high of 35.5% in 2014.  
  • Costs burdens and affordability continues to be a problem particularly for low-income and minority households.
  • The housing construction recovery continues to lag while household formation growth is expected to continue accelerating. 
06.25.15
The Changing Dynamics of Mortgage Servicing

In cooperation with PwC and the Mortgage Bankers Association.

 

 

 

06.24.15
The New York Fed’s Mortgage Lending Snapshot


“Credit standards for mortgage lending tightened sharply between 2007 and mid-2009, and loosened somewhat since 2012 despite an uptick in 2015Q1,” wrote the New York Fed. “Lending standards remain tight compared to levels in the early 2000s. Nearly 72 million people in the population of adults with credit reports currently have scores below 650; the share of originations to borrowers in this range has fallen from 25% to 10% since the recession.” 

06.23.15
The Era of Living Services

Fjordnet.com

06.22.15
The New Housing Crisis?

The guessing game for businesses to know if and when they may be penalized has produced the most defensive lending posture in years. This atmosphere of the unknown; this environment of fear and trepidation rather than an environment of constructive engagement and compliance have a steep cost. 

06.22.15
Headships and Homeownership: What Does the Future Hold?

Laurie Goodman, Rolf Pendall, Jun Zhu

Urban Institute

06.22.15
FHA Proposes Clearer Rules for Lenders with Updated Defect Taxonomy

“Currently, Single Family FHA uses 99 different codes to describe defects in loans,” according to the agency’s press release. “The taxonomy, once implemented, will bring this down to nine distinct defects, supported by codes that will identify the source and cause of the defect, and offer some new insight into the significance of a given deficiency... This new approach will give lenders additional information that helps identify where their challenges are in originating FHA loans and allow them to make changes to reduce errors that potentially trigger enforcement actions.” 

06.21.15
Roadmap to Financial and Housing Market Stabilization Plans

This is the June 21, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • FHFA released its annual report to Congress showing:  
    • The GSE conservatorships have three goals:
      • Maintain, in a safe and sound manner, foreclosure prevention activities and credit availability for new and refinanced mortgages to foster liquid, efficient, competitive, and resilient national housing finance markets;
      • Reduce taxpayer risk through increasing the role of private capital in the mortgage market; and
      • Build a new single-family securitization infrastructure for use by the GSEs and adaptable for use by other participants in the secondary market in the future.
    • FHFA and the GSEs have made progress on the representation and warranty framework.  To obtain representation and warranty relief, no more than two delinquent payments are allowed within the first 36 months after loan acquisition.  Additionally, the GSEs eliminated automatic repurchases following rescission of mortgage insurance coverage.  FHFA also started efforts in 2014 to develop an independent dispute resolution program.
    • FHFA and the GSEs revised their foreclosure timeline methodology, which increased timelines in a majority of states and gave servicers a set of tools to help them manage compensatory fees more effectively.  The GSEs provided servicers with enhanced loss mitigation and foreclosure prevention alternatives for severely delinquent loans subject to compensatory fees.
    • The GSEs will permit creditworthy borrowers to have 3% down payments.
    • In the first quarter of 2014 the GSEs issued lender guidance clarifying a number of property and appraisal requirements for small towns and rural areas.
    • FHFA and the GSEs enhanced requirements related to foreclosure alternatives, unemployment forbearance, and rate-reset notifications.
    • FHFA has worked with the GSEs to develop additional guidelines for ongoing sales of nonperforming loans, with a focus on avoiding foreclosure wherever possible, and that require post-sale reporting to track borrower outcomes.
    • The 2014 Conservatorship Scorecard tripled the required amount of risk transfer transactions on single-family loans,
    • As of December 31, Fannie Mae’s retained portfolio was $413 billion and Freddie Mac’s was $408 billion, below the cap of $470 billion required for 2014.
    • FHFA and the GSEs finalized new standards for mortgage insurer master policies that were approved by all state regulators, and took effect in October.
    • To develop a common securitization platform (CSP), FHFA and the GSEs have been developing the technology and operational infrastructure; establishing a software development and testing environment that is independent of the GSEs; and developing the CSP’s security issuance, registration, and settlement capabilities. 
    • FHFA has solicited and reported on input on a single security to be issued by both GSEs.  
  • The OCC announced that it anticipates that approximately $280 million from the independent foreclosure review of OCC-supervised institutions will remain unclaimed at the end of the year after considerable efforts to locate eligible borrowers have been exhausted, and will escheat to the states.  The OCC also terminated foreclosure-related consent orders against three national bank mortgage servicers that have met the consent order requirements.  They are Bank of America, Citibank, and PNC Bank.  The OCC imposed business restrictions on six national banks that have not completed the required corrective actions.  They are EverBank; HSBC Bank USA, JPMorgan Chase Bank, Santander Bank, U.S. Bank, and Wells Fargo Bank.
  • The federal banking agencies finalized revisions to the regulatory capital rules adopted in July 2013.  The final rule applies to large, internationally active banking organizations that determine their regulatory capital ratios under the advanced approaches rule – generally those with at least $250 billion in total consolidated assets or at least $10 billion in total on-balance sheet foreign exposures.  The agencies published changes to the rules affecting these organizations on December 18, 2014, and the final rule adopts these changes substantially as proposed.
  • Treasury announced results of its auction of its preferred shares in five institutions.  
    • Citizens Bank & Trust Company, (Covington, LA), for $1,638,328; Treasury paid $2,400,000;
    • CSRA Bank Corp. (Wrens, GA), for $3,079,816; Treasury paid $2,400,000;
    • Metropolitan Capital Bancorp, Inc. (Chicago, IL), for $3,079,816; Treasury paid $4,388,000;
    • Prairie Star Bancshares, Inc. (Olathe, KS), for $3,514,326; Treasury paid $2,800,000; and
    • SouthFirst Bancshares, Inc. (Sylacauga, AL), for $2,887,668; Treasury paid $2,760,000.

 

 

06.21.15
How Blockchain Could Change Everything
06.21.15
A Critical Moment for the Future of the Internet
06.21.15
The Feds Are ‘Light Years Behind’ Private Sector Innovation
06.21.15
Venture Capital vs. Community Capital
06.21.15
How the Internet of Things Will Connect Shoes, Cars, Doctors and Power Plants
06.19.15
Washington Regulatory Round-Up (06/19/15)
06.19.15
Mortgage Lending Shaped by the Customer
06.19.15
Why We’re Stuck at Zero

“I think the people [who] are at zero really want to make sure the economy has a full head of steam before we go,” said Michael Feroli, JPMorgan chief U.S. economist. Why—six years later—are we still stuck at zero? "We had negative GDP growth in the first quarter,” said Feroli. “I think it’s kind of hard to hike when you’re staring at that… You had a very strong dollar in the second half of last year …that took almost 2 percentage points growth in the first quarter. …They don’t want the dollar to take off. They’re responding to currencies.” 

06.18.15
Engaging the Digital Customer

"Digital is, in many ways, revolutionizing many of the things we do, from finance to parts of operations to the way client onboarding happens" said Citigroup CEO Michael L. Corbat.

 

06.18.15
Should the Administration Initiate a "Reformed Relief" of the GSEs?

“[President] Obama has the power to release the [enterprises] right now, heading off the inevitable attacks on the GSEs and their affordable housing goals,” wrote Trevor Thompson. “By delaying this decision, he is gambling with the future of affordable housing in America. …President Obama [should] initiate a ‘reformed release’, whereby he re-amends the terms of the bailout loan, and then releases the companies from conservatorship, allowing them to regain the strength they need to ward off partisan attacks.”

06.17.15
The Disruption Report

The new breed of disruptive companies are the fassted growing in history. Uber, Instacart,Alibaba, Airbnb, Seamless, Tiwtter, WhatsApp, Facebook and Google are indescriobably thin layers that sit on top of vast supply systems (where the costs are) and interface with a huge number of people (where the money is),

06.17.15
FHFA's 2014 Report to Congress
06.17.15
The Way We Bank Now: It’s in Your Hands


“It took a few years for digital banking to take off as slow and limited access to the Internet made it easier to visit a branch,” wrote BBA, the UK’s leading trade group for banks. “The advent of wireless broadband and Internet-enabled smartphones changed all that. Suddenly, millions of us started banking on the move and digital banking exploded into our everyday lives. …Technology is transforming the Way We Bank Now and customers are driving this change.”

06.16.15
Goldman Sachs Will Offer Consumer Loans Online

Goldman Sachs will soon enter a new business line—the $840 billion consumer loans business. The 146 year old investment bank has hired Harit Talwar, a former top executive at Discover Financial Services, to create an online lending unit to offer consumer loans to customers and small businesses. "The firm has identified digitally led banking services to consumers and small businesses as an area of opportunity for GS Bank," wrote CEO Lloyd Blanfein and president Gary Cohn. 

06.15.15
The Endgame for Greece Nears

Bill Gross, Fund Manager, Janus Capital

06.15.15
The Productivity Recession

06.14.15
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the June 14, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • Treasury announced that it intends to auction all its preferred shares in the following:
    • Citizens Bank & Trust Company, (Covington, LA);
    • CSRA Bank Corp. (Wrens, GA);
    • Metropolitan Capital Bancorp, Inc. (Chicago, IL);
    • Prairie Star Bancshares, Inc. (Olathe, KS); and
    • SouthFirst Bancshares, Inc. (Sylacauga, AL).

 

 

06.14.15
State of the Real Estate Online Lending Market

Presented by Dan Ciporin, General Partner at Canaan Partners. 

06.14.15
Real Estate Data & Technology
06.14.15
Transforming Mortgage Markets
06.14.15
No Ordinary Disruption
06.14.15
The States’ Economic Performance in 2014
06.12.15
Washington Regulatory Round-Up (6/12/15)
06.12.15
Senators Urge FHFA to Release Plan for Transferring GSEs’ Credit Risk to the Private Sector

“…[W]e ask that you prioritize work with the Enterprises on transactions designed specifically to push out first loss credit risk to the market, and to encourage transparency for investors and the public so that we can all better judge how these transactions impact returns to the Enterprises, costs to the taxpayer, and effects to the health of the broader housing finance system,” wrote Senators Mark Warner (D-VA), Bob Corker (R-TN), Heidi Heitkamp (D-ND), Mike Crapo (R-ID), Jon Tester (D-MT) and Dean Heller (R-NV).

06.10.15
The First Round of Student Debt Relief Is Here

 "The Obama administration’s plan to forgive the federal loans of Corinthian Colleges students could usher in an unprecedented number of debt forgiveness requests from borrowers at other for-profit schools and cost taxpayers hundreds of millions of dollars,” wrote Washington Post’s Danielle Douglas-Gabriel. 

06.10.15
Should Treasury Contribute Its GSEs’ Warrants to the Affordable Housing Fund?

“Before the end of the Obama Administration, there is a unique opportunity to ...build a lasting legacy of affordable housing,” wrote The Leadership Conference on Civil and Human Rights. “…Treasury …currently owns warrants for 79.9% of the common stock of each of Fannie Mae and Freddie Mac. …If the Administration were to contribute a portion or all of these warrants to affordable housing that would ensure funding of necessary assistance to our communities for a generation.”

06.10.15
The Long Road Back to A Different Normal


“We feel that the potential growth rate of the economy has decreased,” wrote John Silva, chief economist for Wells Fargo. “…We have the federal funds rate coming back to 3.50 percent near the end of the decade. Long-term interest rates are also expected to rise gradually, although there will undoubtedly be a great deal of volatility along the way. Moreover, the yield curve is expected to flatten considerably, as short-term interest rates rise more than long-term rates.”

06.09.15
A Closer Look at the Sharing Economy
06.09.15
How Do We Get to a Higher Fed Funds Rate?

Lawrence LIndsey, The Lindsey Group CEO.

06.09.15
The Economic Well-Being of U.S. Households in 2014

“Most renters express a preference for homeownership,” wrote the Federal Reserve. “Homeowners are generally optimistic about the trajectory of their home values. However, many renters, and especially lower-income renters, indicate that financial barriers to homeownership prevent them from purchasing a home. The most common reasons renters cite for renting rather than owning a home are a perceived inability to afford the necessary down payment (50%) or a perceived inability to qualify for a mortgage (31%).”

 

06.08.15
House Passes Amendment to Ban Justice Department from Using Disparate Impact Claims

The House passed an amendment to H.R. 2578, the FY2016 Commerce, Justice, and Science Appropriations Act, by a 232-196 vote, which would prohibit the Justice Department from using funds to prosecute and obtain legal settlements from lenders, landlords, and insurers in discrimination suits based on the disparate impact legal theory. This summer, the Supreme Court is expected to rule in Texas Dept. of Housing v. Inclusive Communities Project, which challenges the disparate impact theory in mortgage lending under the Fair Housing Act.

06.07.15
Housing Roller Coaster

With new home sales up and existing home sales down in April, radio show host Jim Bohannon called it a housing sales roller coaster in a recent interview with Collingwood’s Chairman Tim Rood.

06.07.15
The Centralization of Ownership
06.07.15
Millennials Need New Social Contract
06.07.15
The Impact of Sharply Rising Mortgage Rates
06.07.15
The U.S. Is the Epicenter of Economic Progress

We are the Secretariat… if only…. Richard Fisher

06.07.15
Disruption Is Being Disrupted
06.05.15
Washington Regulatory Round-Up (6/5/15)
06.05.15
The Peter Pan Approach to Central Banking

“I trust that many of you are familiar with the story of Peter Pan, in which it says, ‘the moment you doubt whether you can fly, you cease forever to be able to do it,’” said Haruhiko Kuroda, Governor of the Bank of Japan. “Yes, what we need is a positive attitude and conviction. Indeed, each time central banks have been confronted with a wide range of problems, they have overcome the problems by conceiving new solutions. I am sure that we all can share a conviction backed by our collective experience and wisdom.”

06.04.15
Banks Are NOT Intermediaries of Loanable Funds

“In the real world, banks provide financing through money creation,” wrote the Bank of England.  

06.04.15
Roadmap to Financial Regulatory Reform Legislation

The Senate Banking Committee’s reported bill, the Financial Regulatory Improvement Act (“FIRA”), and the Democratic Alternative differ in several significant respects, and share some identical provisions.

  • FIRA is much more comprehensive, and addresses GSE reform, procedures for designating SIFIs, and includes a large number of technical corrections to the Dodd-Frank Act.  
  • Both bills address QM loans, with the Republican bill creating a new type of QM loan that is held in portfolio by any creditor (bank or non-bank) or sold, but not securitized.  The Democratic alternative would create a narrower definition, would terminate QM status upon a transfer of the loan, and would only be available to insured depositories, including insured credit unions, with under $10 billion in assets.  
  • The Democratic bill would give the CFPB authority to administer much of the Servicemembers Civil Relief Act, and would reinstate the Protecting Tenants at Foreclosure Act.
  • Both bills address the SAFE Act restrictions on loan originators who change jobs.  Currently, loan originators must be registered if they work at a depository, and must be licensed if they do not.  Registration and licensure is at the state level, so loan originators who move from a depository to a non-depository institution, or who change states, must be re-credentialed.  The Republican bill would deem a loan originator credentialed for 120 days after being hired by a non-depository, or after moving to a new state, regardless of state law.  The Democratic bill would permit states to provide similar relief.
  • Both bills have identical provisions to remove the requirement for annual GLBA privacy notices, to expand the depositories that would be examined every 18 months instead of 12 months, permit FHLB membership to privately insured credit unions, and set the same registration threshold for bank and thrift holding companies. 

Regards,

Anne C. Canfield

06.04.15
FHA’s New Handbook: 2,669 “Musts” for FHA Appraisals

“After reviewing the new HUD handbook, my overall conclusion is that there were not many changes to the overall requirements other than the word MUST,” wrote Mark Glade, VP of the Arizona Association of Real Estate Appraisers. “The prior handbook was a list of items that should be completed and verified whereas the updated HUD handbook clearly states that the properties MUST meet these items and the appraiser MUST verify the items in question… Just in case you do not have the time to count the word MUST, it appears in the new FHA Handbook 2,669 times.”

06.03.15
Bank Lending Is Back
06.03.15
The Future of FinTech and Banking


06.02.15
Strategic Trends and Implications of New Technologies

Drones.automated vehicles.artificial intelligence.peer 2 peer.

06.02.15
New World of Banking


“We are in a new world of banking,” said Kelly King, BB&T chairman & CEO. “Post Dodd Frank, it really is dramatically different. In terms of the infrastructure costs that are involved in complying with the new regulatory requirements—remember Dodd Frank required 393 new rules. They’ve only rolled out 300 and it’s already massive. So it requires huge investments…and therefore scale becomes much more important today than it ever has in our business.  You can grow organically, but this is a relatively slow economy.”  

06.01.15
The New Normal Boom

"…I'm not sure that the current situation is a classic bubble because I'm not certain that most people have extravagant expectations," said Robert Schiller Robert Shiller, professor of economics at Yale University, “In fact, the current environment may be driven more by fear than by a sense of a new era. I detect a tinge of anxiety and insecurity now that is a factor in markets, which is quite different from other market booms historically. In fact, the current environment may be driven more by fear than by a sense of a new era. I detect a tinge of anxiety and insecurity now that is a factor in markets, which is quite different from other market booms historically.”

06.01.15
Rebuilding Housing Finance

How will housing finance evolve amid regulatory change and the challenges of achieving large-scale reform legislation?

06.01.15
Digital Future: The Internet of Things

Michael Schrage, Research Fellow, MIT Sloan Initiative on the Digital Economy

06.01.15
How Technology is Changing the Future of Finance

Moderator: Felix Salmon, Senior Editor, Fusion

06.01.15
The Future of FinTech

Invest in financial technology or FinTech is exploding.

06.01.15
What Online Lending Means for Banks, Businesses and Borrowers.

"..accounted for almost $9 billion in loans last year.."

05.31.15
Will wages rise faster than prices, so we have real income growth?
05.29.15
Internet Trends for 2015

The average adult now spends three hours a day–more than half of total Internet usage time–on mobile, compared to less than an hour a day five years ago. 

05.29.15
Is the Fed Painted into a Corner?


"I think the Fed is trapped—they’re painted themselves into a corner," said Chris Whalen, managing director at Kroll Bond Rating Agency. "The time to gently raise rates was when Chairman Bernanke was on his way out the door. And now you have a situation where they need to raise rates--we have to restore income to the system. The system is dying from the lack of income. And at the same time, they don’t see the growth that they want to see to validate that change [in rates]."

05.28.15
The Rise of Executive Federalism


“…[T]he time has come to fight today's federalism battles over executive federalism and to prepare for tomorrow's — for example, the sure-to-come question of federal bailouts for major cities and entire states,” wrote Michael S, Greve, professor at George Mason University School of Law. “ Could the Federal Reserve recapitalize the state of Illinois? A TARP for states: Would that be constitutional? If so, who would enforce the repayment obligations or promises of fiscal discipline, and how?”

 

05.27.15
Federalism and the Constitution
05.26.15
Is Peer-to-Peer Lending the Future of Loans?
05.26.15
The Road Ahead for Postal Financial Services

“If the Postal Service offered [more affordable financial] services, they could be extremely popular,” wrote the UPSP Inspector General. “…A logical first step could be to revamp existing services to make them more appealing to consumers, then expand into adjacent products that could be allowable under current law …[before seeking] additional authority to offer new financial products. ...[E]xpanded financial services would benefit the underserved and shore up the strength of the postal network, helping to ensure that the Postal Service [meets] the needs of all citizens in the 21st century.”

05.25.15
Higher Rates Are on Tap by Year-end

Janet Yellen, Chair, Board of Governors of the Federal Reserve System 

05.24.15
“Denying Climate Change Endangers Our National Security "

President Barak Obama at U.S.Coast Guard Academy

05.24.15
Memorial Day Remembrance

"...the will and moral courage..."  President Ronald Reagan on Memorial Day.  

05.24.15
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the May 24, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • The Federal Reserve proposed adding certain general obligation state and municipal bonds to the range of assets a large banking organization may use to satisfy liquidity requirements.  The proposal would allow investment grade, general obligation U.S. state and municipal bonds to qualify, up to certain levels, if they meet the same liquidity criteria that currently apply to corporate debt securities.  This would apply to:
    • Bank holding companies, certain thrift holding companies, and state member banks with $250 billion or more in assets or $10 billion in on-balance sheet foreign exposure;
    • State member banks with $10 billion in assets that are subsidiaries of the above entities; and
    • Bank holding companies and certain thrift holding companies with $50 billion in assets, to which a less stringent liquidity standard applies.
  • FHFA and the GSEs announced minimum financial eligibility requirements for seller/servicers.  They did not substantively change from the proposed requirements announced in January 2015.
    • Net worth of $2.5 million plus 25 basis points of UPB for single-family loans serviced.
    • Minimum capital ratio (nondepositories only) of Tangible Net Worth/Total Assets ≥ 6%.  Depositories must comply with their regulatory standard.
    • Liquidity (nondepositories only) (depositories must comply with their regulatory standard):
      • 3.5 basis points of total Agency servicing (GSEs and Ginnie Mae) UPB plus
      • Incremental 200 basis points of total non-performing Agency servicing UPB in excess of 6% of the total Agency servicing UPB.  Depositories must comply with their regulatory standard.

The standards are effective December 31, 2015.

  • Treasury announced that it completed an auction to sell its warrant positions in nine financial institutions in private transactions for $50.9 million.
    • BBCN Bancorp, Inc., Los Angeles, California for $1,150,000; 
    • City Holding Company, Cross Lanes, West Virginia for $900,500;
    • CommunityOne Bancorp (FNB United Corp.), Charlotte, North Carolina for $10,677;
    • F.N.B. Corporation, Pittsburgh, Pennsylvania for $10,063,121;
    • Fidelity Southern Corporation, Atlanta, Georgia for $32,401,354;
    • First United Corporation, Oakland, Maryland for $120,786;
    • HMN Financial, Inc., Rochester, Minnesota for $5,700,600;
    • The First Bancorp, Inc., Damariscotta, Maine for $401,111; and
    • Valley National Bancorp, Wayne, New Jersey for $103,677.

Treasury did not sell its warrant positions in M&T Bank Corporation, Synovus Financial Corp., or a second warrant position in BBCN Bancorp, Inc. because it did not receive bids above the minimum price.

 

 

05.24.15
“These Are Not Dark Days—These are Great Days. ”

“The liberty we prize is not America's gift to the world, it is Almighty God's gift to humanity".

05.24.15
Shaping the Arc of History for African Americans and All Americans

First Lady Michelle Obama at Tuskegee Commencement.

05.24.15
“Progress is Possible Whatever Line of Work You Choose”
05.24.15
Life Is an Exercise in Living with the Certainty of Uncertainty

Jason Kilar (Class of ’93), founder of Hulu, delivered the Commencement Address at UNC–Chapel Hill.  

 

 

05.24.15
Honoring the Fallen


05.22.15
Washington Regulatory Round-Up (5/22/15)
05.22.15
Updated Roadmap to Financial Regulatory Improvement Act of 2015

Yesterday, the Senate Banking Committee reported out of Committee the Financial Regulatory Improvement Act of 2015.  Attached please find an updated Roadmap that includes the provisions that were included in Chairman Shelby’s Manager’s Amendment that was passed yesterday in Committee.  

As noted in an e-mail note yesterday, the following is a summary of the Committee proceedings yesterday:

  • The Democratic Substitute failed by on a party-line vote of 10 to 12.
  • Senator Crapo's amendment #19 passed by a vote of 13 to 9, with Senator Donnelly supporting the Republican amendment.   It would prohibit federal banking and credit union regulators from implementing or participating in the Department of Justice's Operation Choke Point Initiative.  Senator Crapo dubbed his amendment the "Tom Cruise" amendment after a brief explanation of/comparison to the movie "Minority Report," which was very amusing.  
  • Senator Toomey offered his Amendments #3, #4, #8, and #11.   He offered and then withdrew three of the four amendments, requesting a recorded vote on Toomey Amendment #8 that would increase from $10 billion to $50 billion, the threshold for direct examination.   Amendment #8 was adopted by a vote of 13 to 9, with Senator Donnelly supporting the Republican amendment. 
  • Senator Vitter offered and withdrew his amendments #14 and #16.   #14 would limit the compensation for nongovernmental directors of the Board of Directors of Securities Investor Protection Corporation.  Ranking Member Brown noted that he would support the goal of the amendment but not vote for it in Committee.  Senator Vitter noted that the Committee will likely hold a hearing on Amendment #14 in the future.     #16 would address equity capital requirements for the “Too Big to Fail” entities.   Again, Senator Vitter offered and withdrew his Amendment #14 and Amendment #16.   He did not offer his two other amendments. 
  • The Financial Regulatory Improvement Act of 2015 passed by a vote of 12 to 10.  

Both sides of the aisle agreed much work is left to be done before the bill makes it to the Senate Floor.

 

Regards,

Canfield Press

05.22.15
Housing in California: A Profound Public Policy Failure

RealClearMarkets.com, Carson Bruno

05.22.15
Regulators Issue Final Interpretation for Forward Contracts with Embedded Volumetric Optionality

“On May 12, 2015, the Commodity Futures Trading Commission and Securities and Exchange Commission jointly issued the CFTC’s final interpretation clarifying its interpretation concerning forward contracts with embedded volumetric optionality (‘Final Interpretation),” wrote Morrison Foerster’s Julian Hammar.  “The Final Interpretation appears to signal that ...the CFTC will take a more relaxed view of which transactions constitute ‘forward contracts’ that are not subject to regulation as swaps.”

05.21.15
MasterCard Send Disrupts Payments


“[MasterCard Send is] a first-of-its-kind, global personal payments platform that’s breaking down network barriers by facilitating secure payment transactions through a single connection,” said  the credit card company in its May 19th rollout. MasterCard Send allows businesses to send funds to their customers typically within seconds, displacing the use of checks or prepaid cards to transfer money.  

05.20.15
Roadmap to Senate Banking Committee Markup; List of Amendments

This Roadmap compares the Chairman’s mark to the Democratic substitute legislation, scheduled for markup May 20, 2015. It is a working draft that will be updated as the legislation proceeds through the legislative process.

The Chairman’s mark is considerably longer than the Democratic substitute, so a side-by-side comparison would be difficult for a review of much of the Chairman’s mark. For ease of reading, this Roadmap contains a side-by-side of areas of overlap, and a standalone description of the entire Chairman’s mark. More specifically, first there is a side-by-side comparing the Democratic substitute with the comparable provisions in the Chairman’s mark. 

Where both bills are identical, or nearly so, the side-by-side has only one column. The side-by-side includes all provisions in the Democratic substitute even if there is no comparable provision in the Chairman’s mark, but does not contain provisions in the Chairman’s mark for which the Democratic substitute has no comparable provision. Following the side-by-side is a comprehensive description of all of the Chairman’s mark, including its technical corrections to the Dodd-Frank Act.

Also attached is the list of amendments that are expected to be offered at tomorrow’s Senate Banking Committee markup.  If the amendments are adopted, we will include them in an updated Roadmap.

We hope you find this useful. 

Best regards,

Canfield Press

05.20.15
Privatizing the GSEs: Be Careful What You Ask For
05.20.15
An Increasingly Destabilized World
05.20.15
Future of Housing Finance
05.20.15
Is Systemic Risk on the Horizon?

"Regulators ...have been focused on the growth of nonbanks as an area of future risk," wrote KBRA's Chris Whalen. "While nonbanks ...definitely pose risks to the financial system, these entities tend to operate at low levels of leverage compared with depository institutions. Nonbanks engaged in fiduciary or financing activities do not pose the same types of market and credit risks to the financial system, but do pose risks to investors... KBRA believes that investors, regulators and policy makers need to be more aware of the different types of business models [for] the nonbank universe and the ...risks they pose, and fashion public policy accordingly."

05.19.15
The Puzzle of Weak First-Quarter GDP Growth

“The very weak initial estimate of first-quarter real GDP growth this year surprised many forecasters, in part because it was at odds with other fairly positive data, including solid employment gains over the past six months,” wrote San Francisco Fed analysts. “ [However,] …the published real GDP data still exhibit calendar-based fluctuations—that is, residual seasonality. After we apply a second round of seasonal adjustment directly to the published aggregate data, we estimate much faster real GDP growth [1.8%] in the first quarter of this year[,] ...substantially stronger than reported.”

05.18.15
Today's Failed Housing Policies

Bring confidence back. Give us the confidence to provide access to credit to more qualified

borrowers at the lower and middle income levels. Return private capital to the secondary

mortgage market. Reignite the economic engine of the real estate market.

05.18.15
45 Million Are Victims of the Traditional Credit-Scoring System

“The CFPB divides consumers with limited credit histories into ‘credit invisibles’ and ‘unscorables,’” wrote Investor Business Daily. “Credit invisibles don't have credit records [26 million individuals or 11% of the adult population]. ‘Unscorables’ have credit records, but the records can't be scored... [including 19.4 million or 8.3% of adults]. ...[M]ore than 45 million—or roughly one in five U.S. adults—have credit histories too sparse to generate a credit score. Imagine the credit crisis the financial sector could face if 45 million deadbeats and undocumented immigrants are mainstreamed into the credit market.”

05.18.15
CNBC Top 50 Disruptors

The third annual Disruptor 50 list, CNBS features private companies in 16 industries.

05.18.15
CNBC Top 50 Disruptor: Wealthfront

Funding: $129.5 million
Industries disrupted: Financial services, investing 

05.18.15
The Credit Invisibles

Over 10 million of the estimated 26 million credit invisibles are younger than 25. Consumers in this age group also account for a disproportionate share of insufficient-unscored credit records. 
 

05.18.15
CNBC Top 50 Disruptor: Square

Funding: $590 million
Industry disrupted: Mobile payments 

05.18.15
CNBC Top 50 Disruptor: TransferWise

Funding: $91 million (Source: TransferWise)
Industries disrupted: Money wire-transfer services, financial services, currency exchanges

05.18.15
CNBC Top 50 Disruptor: Coinbase

Funding: $106 million
Industries disrupted: Financial services, e-commerce, investing 

05.17.15
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the May 17, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • FHFA released an update on its single security initiative.  
    • A single security would have underlying fixed-rate mortgage loans that were purchased either 100 percent by Fannie Mae or 100 percent by Freddie Mac.  Re-securitizations could have underlying legacy securities or single securities issued only by Fannie Mae, only by Freddie Mac, or a combination of single securities issued by both GSEs.  Lenders may pool either seasoned or current loans into a single-lender security but loans that are aged more than 12 months may not be included in multi-lender securities.
    • The key features of the single security will be the same as those of the current Fannie Mae MBS, including an investor remittance delay of 55 days.
    • Each GSE will issue second-level single securities (re-securitizations) backed by first- or second-level securities issued by either GSE.  For a legacy Freddie Mac PC to be re-securitized, the investor would have to first exchange the PC for a single security issued by Freddie Mac, so that the payment date of all of the securities in the collateral pool backing the re-securitization would be the same.
    • Freddie Mac will offer investors the option to exchange legacy PCs for comparable single securities backed by the same loans, and will compensate investors for the cost of the change in the payment delay.  Fannie Mae will not offer an exchange option for legacy MBS because FHFA expects investors to treat them as fungible (interchangeable) with single securities.
    • Maintaining the current high degree of similarity between the prepayment speeds of the GSEs’ securities is an important objective for FHFA.  FHFA will not require standardization of the legal documents that support GSE securitization of single-family mortgage loans.  Doing so would be a large undertaking and is unnecessary to ensure similar prepayment speeds.

 

 

05.15.15
Washington Regulatory Round-Up (5/15/15)
05.15.15
The Bond Tantrum

05.15.15
Spring Housing Boom--But Limited Supply
05.14.15
Q2 GDP Forecast Cut To 0.7% By Atlanta Fed
05.14.15
The $4 Trillion Question


"Four trillion is unprecedented, but to shrink it by two-thirds you don't have a comparable period in our history," said former New York Stock Exchange chief Dick Grasso. "…How are you going to do that in the context of everyone else in the world stimulating [and] lowering rates—applying, if you will, the type of stimulus we applied?”

05.13.15
Ten Thousand Commandments 2015

“Federal regulation and intervention cost American consumers and businesses an estimated $1.88 trillion in 2014 in lost economic productivity and higher prices,” wrote Clyde Wayne Crews with the Competitive Enterprise Institute. “If U.S. federal regulation was a country, it would be the world’s 10th largest economy, ranking behind Russia and ahead of India. Economy-wide regulatory costs amount to an average of $14,976 per household—around 29% of an average family budget of $51,100.” 

05.12.15
Big Banks Are Moving Too Slowly on Checking Account Protections
This product continues to be laden with terms that put consumers at risk," said Susan Weinstock, director of Pew's consumer banking initiative. 
 
05.12.15
CFPB Issues Guidance on Fair Lending Practices

“The Bureau has become aware of ...institutions excluding or refusing to consider income derived from the Section 8 HCV Homeownership Program during mortgage loan application and underwriting...,” wrote the CFPB. “Some institutions have restricted the use of Section 8 HCV Homeownership Program vouchers to only certain home mortgage loan products or delivery channels. ECOA and Regulation B prohibit creditors from discriminating in any aspect of a credit transaction against an applicant ‘because all or part of the applicant’s income derives from any public assistance program.’”

 

05.11.15
Roadmap to Monetary Policy Reform

Norbert J. Michael, CATO Institute 

 

 

 

05.11.15
The Impact of Litigation Risk on FHA Lending

“The goals of the enforcement arms of government should recognize the need to maintain the stability of the US housing market and access to credit,” wrote Urban Institute’s Laurie Goodman. “Overly aggressive, unnecessary enforcement of the False Claims Act and FIRREA is constraining access to credit. The Department of Justice and HUD’s inspector general could protect consumers and taxpayers by motivating lenders to improve their underwriting, not simply shut it down. We would all be much better served by their enforcement efforts if they did.”

05.10.15
Eight High Tech Trends
05.10.15
Is Banking an Engineering Problem?
05.10.15
A Decade of Displacement
05.10.15
All Eyes on the Consumer
05.10.15
Escape Velocity for Peer-2-Peer Lending
05.08.15
Washington Regulatory Round-Up (5/8/15)
05.08.15
The Current State of the Loan Servicing Industry

05.07.15
New Lending For a New Economy
05.07.15
Can Indebtedness and Interest Rates Both Increase?
05.07.15
"We Have Not Seen This Movie Before"


“I think the Fed has done exactly the right thing—100% the right thing,” said Warren Buffett, CEO of Berkshire Hathaway, in a CNBC Squawk Box interview. “And, I think the ECB is doing the right thing, in terms of their situation. But, they still have consequences and it’s hard to envision the consequences. …In theory you have to have deflation to make negative rates to make any sense. It’s a strange situation…” 

05.06.15
Bail-In
05.06.15
The Coming of Age of the Chinese Yuan‏

“…[China’s reforms] should be welcomed, wrote Cumberland Advisor’s Bill Witherell. "The likely eventual inclusion of the Chinese yuan in the elite rank of “reserve currencies” will not threaten the global leadership position of the US dollar, which currently accounts for over 60% of global currency reserves. The yuan’s position in global reserves is likely to increase at a slow rate over the years following its inclusion. In view of the greenback’s current strength and interest rate advantage, its share in global reserves may well rise in the coming years."

05.05.15
Steve Wynn's View of the Economy
05.05.15
Bill Gross: "This Is All Ending"
05.05.15
CFPB's 2014 Fair Lending Report

In 2014, the CFPB’s fair lending supervisory and public enforcement actions resulted in $224 million in remediation to approximately 303,000 consumers and 15 referrals to the Justice Department. DOJ declined to open independent investigations in five of the referrals. In 2015, the CFPB will focus on (i) HMDA data integrity and validation, more in-depth analysis of mortgage lending in exams and investigations, and pricing policies and practice; (ii) discretionary dealer markup and compensation policies for auto dealers; and (iii) small business lending data collection rulemaking and supervisory activity in the small business lending market.  

05.03.15
Will Commercial Banks Remain Central to the Financial System?
05.03.15
How Can Central Banks Regulate Shadow Banking’s Systemic Risk?
05.03.15
Will the Traditional Banking Channel Remain Central to Monetary Policy?
05.03.15
Should Shadow Banks Be a Central Focus of Macroprudential Policy?
05.03.15
The Importance of the Nonbank Financial Sector
05.03.15
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the May 3, 2015 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • FHFA announced stress test results for the GSEs. The combined remaining funding commitment under the PSPAs as of September 30, 2014 was $258.1 billion.  Under the severely adverse scenario, incremental Treasury draws range between $68.6 billion and $157.3 billion, depending on the treatment of deferred tax assets.  The remaining funding commitment under the PSPAs ranges between $189.4 billion and $100.8 billion.  The test horizon is September 30, 2014 through December 31, 2016.  The test assumes a deep and protracted recession, with the unemployment rate increasing by 4 percentage points to 10 percent in the middle of 2016.  By the end of 2015, real GDP declines by 4.5 percent and begins to recover in 2016.  Short-term interest rates remain near zero.  The 10-year Treasury falls to 1 percent in the fourth quarter of 2014, and long-term rates then increase slowly.  Spreads on domestic investment-grade bonds widen from 170 basis points to 500 basis points.  Equity prices fall by roughly 60 percent and equity market volatility increases substantially.  Home prices decline by 25 percent over the forecast horizon.  Option-adjusted spreads on MBS widen significantly, and each GSE’s largest counterparty is assumed to fail. 

 

 

 

05.03.15
Not a Boom Time for Housing

Wells Fargo CEO John Stumpf.

05.01.15
Washington Regulatory Round-Up (05/01/15)
05.01.15
Homeownership Lowest in 25 Years
05.01.15
The Limits of Model-Based Regulation

“As a response to the financial crisis in 2007–2008, the Basel Committee has drafted a third revision of the regulatory framework for banks (Basel III),” according to a Cato Research Brief. “This framework contin­ues to rely on model-based regulation, but further increas­es complexity to address substantial weaknesses of the old framework. …[O]ur results suggest that further increases in complex­ity are unlikely to increase financial stability. …[S]impler and more transparent rules would be more effective in achieving the ultimate goal of financial stability.”

04.30.15
Global Deflation & Credit Spreads

“Now seven years since the 2008 financial crisis, [Knoll Bond Rating Agency] believes that it is clear the FOMC needs to end its extraordinary low interest rate policy and restore function to the private money markets,” wrote senior managing director Chris Whalen. “Just as the Federal Reserve System had to win back its independence from the Treasury at the end of WWII, today the U.S. bond market needs to again become independent of active Fed market manipulation. By ending its low interest rate policy, the Fed can make clear that the next step in the process of recovery must come from Congress...”

04.29.15
No Ordinary Disruption

McKinsey&Company

04.29.15
Will Commercial Banks Remain Central to the Financial System?

“We may be at a defining moment for both banks and commercial banks,” concluded former Fed board governor Randall Kroszner, in a presentation at the Atlanta Fed’s annual conference on financial markets. “Disruptive innovation and dyspeptic regulators will hold the keys to the future. …Evidence suggests banks are still 'special,' but for how long? The future of banks may depend on acting as technology-data analytics firms in financial services rather than financial services firms using technology/“big data." 

04.28.15
Expanding the Market for Infrastructure Public-Private Partnerships
04.28.15
Technology Firms Are Exploiting Banking Opportunities

“What’s interesting for people like Google and Apple, is they’re not actually really interested in making money out of the banking,” said Edward Firth, head of European banks research at Macquarie. “Initially what Google is interested in is information. …[T]hey want to cross sell their other products, their marketing for their adverting—that’s their initial focus. And with Apple, it’s about selling their phones. And in an sense that’s even more worrying for the bank sector, because if that's their focus, then clearly their margin requirements will be somewhat less.” 

04.27.15
Trends in the Use of Non-Prosecution, Deferred Prosecution and Plea Deals

Cindy R. Alexander, Mark A. Cohen, Law and Economics Center, George Mason University.

04.27.15
Roadmap to Financial and Housing Market Stabilization Plans

This is the April 26, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • The FDIC released an ANPR seeking comment on whether banks and thrifts with a large number of deposit accounts, such as more that 2 million, should be required to enhance their recordkeeping to ensure access to the deposits in the event of bank failure.  
  • FHFA reaffirmed that it has not consented, and will not consent in the future, to the foreclosure or other extinguishment of any Fannie Mae or Freddie Mac lien or other property interest in connection with homeowners association foreclosures of super-priority liens.  Under the law governing the GSE conservatorships, FHFA’s consent is required for such a foreclosure to be effective.

 

 

04.27.15
The Digital Transformation of Banking

“One thing is absolutely clear and it's—and we believed this from the beginning, that every bank is going to need to transform itself,” said Richard D. Fairbank, chairman, president and CEO of Capital One during the April 23 Earnings Call. “The digital revolution is changing banking on just about every dimension that you can imagine basically. It's changing what it takes to win in payments, in distribution, in marketing, in brand, foundational infrastructure, experience design, if you will, the way information is used. ...And we're going to need to think more like technology companies and maybe a little less like banks..”

04.26.15
Global Overview of Online Lending
04.26.15
Is Banking an Engineering Problem?
04.26.15
The Power of the Crowd in Lending.

"The brand is no longer what we tell the customer it is..it's what people tell each other it is!"

04.26.15
The Future of Real Estate Investing
04.26.15
Boom, Bust and Beyond in Financial Services Industry
04.26.15
Next Steps in Housing Finance Reform

Susan Wachter, PhD, Penn Wharton, University of Pennsylvania

04.26.15
The Hourglass Effect
04.24.15
Washington Regulatory Round-Up (04/24/15)
04.24.15
DOJ Sues Quicken Loans Over Mortgage Violations

The Department of Justice filed a lawsuit against Quicken Loans, accusing the  the nation’s largest FHA lender of violating mortgage underwriting rules that resulted in millions of dollars of losses to HUD. The Justice Department accuses Quicken Loans of knowingly submitting claims from September 2007 to December 2011 for hundreds of improperly underwritten government-insured loans. "Those who do business with the United States must act in good faith, including lenders that participate in the FHA mortgage insurance program," said Principal Deputy Assistant AG Benjamin Mizer.

04.23.15
What Is the Impact of the Decline in U.S. Economic Freedom?
04.23.15
The Unexpected Ripple Effect of New Bank Capital Requirements

“We …encourage the Basel Committee on Banking Supervision and the Federal Reserve to revisit the rules as they relate to capital requirements for derivatives trading, specifically by reassessing the treatment of client margin in leverage ratios and the requirements for funding,” wrote Pimco analysts. ”Should these rules not change, in our view the cost of transacting in the markets will continue to increase and risks will become more concentrated in the hands of fewer market participants, creating a more interlinked and fragile market system that is more vulnerable to dislocations.”

04.22.15
The Overcriminalization of American Life

“The application of ignorantia legis to the current system of regulatory crime creates a situation where a wide variety of conduct is criminal and many people do not know the criminal nature of their action, nor do they suspect it,” wrote federal judicial clerk Michael Anthony Cottone. “When people do not have notice that their action may be criminal …the power of the state can blindside them when they become subject to the enforcement of obscure laws. …Economic analysis of ignorantia legis reveals that the principle ...creates costs that promote perverse incentives and inefficiencies.”

04.21.15
Greece Is Heading for an "Accident"

Mohamed El-Erian, Bloomberg View Columnist

04.21.15
Canary in the Coal Mine?

Joe Calhoun with Alhambra Partners, April 19, 2015

04.21.15
Leading In Extraordinary Times


04.20.15
The Epicenter of Change: Technology

 Michael Dell, Chairman and CEO, Dell Inc.

 

04.20.15
Transforming Health Care

Joel Allison, CEO, Baylor Scott & White Health 

04.20.15
The Changing Financial Services Landscape

Beth E. Mooney, Chairman and CEO, KeyCorp

04.20.15
The Changing Utility Sector

John G. Russell, President and CEO, CMS Energy Corporation and Consumers Energy Company

04.20.15

Rodney O'Neal, CEO and President, Delphi Automotive Systems LLC

 

04.20.15
Time Is of the Essence for Greece to Reach Deal
04.20.15
The Future of Banking

“Within 10 years the fastest growing banks around the world will be technology companies, not banks,” wrote Brett King. “The fastest growing brands in banking will be those that have taken just one single slice of the universal banking model and optimized it, creating a compelling real-time experience—they won’t be businesses that own a charter. Many of these will need to partner with banks who do the boring compliance stuff, but increasingly even the choice of those bank partners will be driven by their technical competency to work with a start-up.”

04.19.15
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the April 19, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following: 

  •        FHFA and the GSEs announced revised eligibility requirements for PMI companies, effective at year-end for existing approved companies.  PMI companies will be required to use capital stress tests that use macroeconomic assumptions consistent with the Federal Reserve’s Comprehensive Capital Analysis and Review severely adverse scenario, and have contingencies for raising additional capital in anticipation of any projected shortfall.  Approved insurers must have a documented risk diversification policy, must maintain lender and servicer guidelines on their websites, must determine loan eligibility and borrower creditworthiness before insuring a loan, appraisal review procedures, lender review procedures, and limit captive reinsurance contracts. 
  •        FHFA announced that, after reviewing the GSEs’ g-fees, the GSEs will eliminate the adverse market charge put in place in March 2008 and replace its revenue with targeted increases in g-fees to address various risk-based and access-to-credit considerations.  The result is a set of modest changes to upfront g-fees that are roughly revenue neutral and will result in either little or no change for most borrowers, effective September 1, 2015.
  •        The Federal Reserve Board released information about the Large Institution Supervision Coordinating Committee, formed in 2010 to coordinate supervision of domestic bank holding companies and foreign banking organizations that pose elevated risk to U.S. financial stability and other nonbank financial institutions designated as systemically important by FSOC.  

o   The LISCC Operating Committee (OC), in consultation with the LISCC, is responsible for setting priorities for and overseeing the execution of the LISCC supervisory program. 

o   The Supervision Program Management Committee (SPMC) coordinates supervisory program management for the LISCC firms.  

o   The Vetting Committee is a forum to discuss the results of key components of the supervisory program, and to provide feedback and guidance to the dedicated supervisory or LISCC horizontal teams.  

o   The Risk Secretariat identifies risks to LISCC firms’ operations and reviews and evaluates risk management practices across the LISCC portfolio, prioritizes risks for supervisory action, and supports supervisory activities aimed at mitigating key risks.  The Risk Secretariat also makes recommendations to the OC regarding proposed supervisory ratings related to specific risk types or risk management functions. 

o   The Capital and Performance Secretariat (CaPS) supports the identification of emerging risks.

o   The LISCC Data Team is chartered by the OC to support its data needs, to provide transparency into data collections, and to identify gaps in data needs.  

o   The OC oversees the committees that are charged with the execution of three annual horizontal exercises for LISCC firms:  the Comprehensive Capital Analysis and Review (CCAR) for LISCC firms, the Comprehensive Liquidity Analysis and Review (CLAR), and the Supervisory Assessment of Recovery and Resolution Preparedness (SRP).  

o   The LISCC supervisory program also includes the Quantitative Surveillance (QS) group, which uses quantitative methods to monitor the financial system , and the Systemic Risk Integration Forum, which ensures that potential risks to financial stability consistently reflect the insights coming from supervisory activities and analysis.

 

 

04.17.15
Washington Regulatory Round-Up (4/17/15)
04.17.15
The Unfinished Business of Financial Reform

“What’s needed are smarter and simpler regulations, the kind of regulations that give smaller institutions a fighting chance to meet their compliance obligations without going bankrupt,” said Senator Elizabeth Warren (D-MA). “The goal is to make markets more competitive, and that means a simple, structural solution: break up the biggest banks so that no bank is too big to fail. That would let us cut the tangle of the regulations that are intended to stop a Too Big to Fail bank from taking on too much risk and bringing down the economy.” 

04.16.15
U.S. Must Beware of "Asset Priced Bubbles"

James Bullard, St. Louis Fed President on CNBC.

04.16.15
The World Economic Outlook


“Global growth remains moderate, with uneven prospects across the main countries and regions,” wrote the IMF. “It is projected to be 3.5 percent in 2015, in line with forecasts in the January 2015 World Economic Outlook Update. Relative to last year, the outlook for advanced economies is improving, while growth in emerging market and developing economies is projected to be lower, primarily reflecting weaker prospects for some large emerging market economies and oil-exporting countries.”

04.15.15
Why the Eurozone Crisis Is Not Over
04.15.15

When a central bank prints money and buys a government bond, it is the same thing as cancelling that bond (so long as the central bank does not sell the bond back to the public), according to Richard Duncan, author & publisher of Macro Watch. Quantitative Easing has only been possible because it has occurred at a time when globalization is driving down the price of labor and industrial goods. The combination of fiat money and globalization creates a unique moment in history where the governments of the developed economies can print money on an aggressive scale without causing inflation.

04.14.15
Capital Markets 2020
04.14.15
The Economic Challenges Ahead

“I don't see anything the magnitude we dealt with [in 2008] happening in the U.S. anytime soon,” said former Treasury Secretary Hank Paulson. “We have already taken some very, very significant steps. Our banks are much better capitalized… much better managed. We have better regulation…[and] better risk control. We still have plenty of problems we need to correct, and there are plenty of risks in the global economy. Financial crises happen every 8, 10, 12 years. ...[D]o we have the tools necessary to make sure we don't have the sort of crisis we had or it spills over into our economy? I believe we've got the necessary tools.”

04.13.15
Housing Outlook for 2015

Capital Markets Today.

04.13.15
This Could End "Very Badly"

“[The Fed] kept coming up with this term back [in 2003 and 2004], they wanted an insurance policy,” said Stan Druckenmiller. “This we got to ensure this economic recovery keeps going. The only thing they ensured in my mind was the financial crisis. So, to me you're getting the same language again out of policymakers. On a risk-reward basis why not let this thing a little hot? You know, we got to ensure that it gets out. But the problem with this is when you have zero money for so long, the marginal benefits you get through consumption greatly diminish, but there's one thing that doesn't diminish, which is unintended consequences.”

04.13.15
Will the ‘Internet of Food’ Disrupt Agriculture?

Telefonica Innovation Hub, Jennifer Riggins.  4.10.15

04.12.15
The Obama Administration Addresses Cyberthreats
04.12.15
Why Virtual Reality Will Matter to You
04.12.15
Peter Thiel on the Future of Innovation
04.12.15
Digital Disruption in the Banking Industry
04.12.15
Mobile Banking’s Impact on Poverty
04.12.15
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the April 12, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • The Federal Reserve issued a final rule to expand the applicability of its Small Bank Holding Company Policy Statement and to apply it to certain savings and loan holding companies.  This facilitates the transfer of ownership of small community banks and thrifts by allowing their holding companies to operate with higher levels of debt than would normally be permitted.  While holding companies that qualify for the policy statement are excluded from consolidated capital requirements, their depository institution subsidiaries continue to be subject to minimum capital requirements.  The final rule raises the asset threshold of the policy statement from $500 million to $1 billion.  All firms must still meet certain qualitative requirements, including those pertaining to nonbanking activities, off-balance sheet activities, and publicly-registered debt and equity.  This rulemaking implements Public Law 113-250, which amended Dodd-Frank § 171(b)(5) to add to the exemptions from leverage and risk-based capital requirements.
04.10.15
Washington Regulatory Round-Up (4/10/15)
04.10.15
Jeffrey Sachs on the Future of Economic Development

“What’s happened of fundamental significance for the world is that East Asia has become the third growth pole in the world, or arguably the second, because for the first 200 years of modern economic growth, it was all the North Atlantic,” said Columbia University Professor Jeffrey Sachs. “...[I]t was the US and Europe that defined 90 percent of the technological advance that created the underlying dynamics to which the whole rest of the world would engage in catching up, integration, or falling under imperial rule... My take is that China will be a great and successful country in the 21st century.”

04.09.15
JPMorgan Chase's Letter to Shareholders
04.09.15
The Disruption Report

Creative self-disruption

...An industry can be transformed by top-down economic, financial, political, and regulatory changes. But companies like Airbnb, Amazon, Apple, and Uber exemplify a different kind of transformation: agile players invade other, seemingly unrelated industries and brilliantly exploit huge but previously unseen opportunities. Importantly and counter-intuitively, doing so serves their own core competencies, rather than those of the industry that they seek to disrupt. 

04.09.15
BBVA Rolls Out Real-Time Bank Transfers

Ben Milne, Dwolla CEO wants to eliminate the 2-5 day wait for business transfers.

04.09.15
Heterogeneous Central Banks And Markets

“The Fed is a tad above neutral with a slight bias towards tightening,” wrote Cumberland Advisors’ David Kotok. “Fed policymakers want to get away from the zero lower bound. They know they have to do it: the zero bound has created distortions. They also know that they must get markets to clear. In order for that to occur, U.S. interest rates must go up, even if only by a small amount. Elsewhere, nearly the entire developed world and a good part of the developing world are lowering interest rates and easing monetary policy. …[F]or the last century there has not been anything like this present environment.”

 

04.08.15
The SEC Adopts Final Rules Amending Regulation A

On March 25, the SEC approved the long-awaited final rules for Title IV of the JOBS Act, commonly referred to as Regulation A+. Pursuant to the 450-pages of final rules, Regulation A+ will permit companies to offer and sell up to $50 million of securities—up from $5 million—to the general public subject to certain eligibility, disclosure and reporting requirements. “These new rules provide an effective, workable path to raising capital...,” said SEC chair Mary Jo White “It is important for the Commission to continue to look for ways that our rules can facilitate capital-raising by smaller companies.”

04.07.15
The Impact of Tight Credit Standards on Lending

An additional 1.25 million loans would have been made in 2013 if the cautious standards of 2001, rather than the severe standards of 2013, had been in place, according to Urban Institute. 

04.07.15
GSEs/Affordable Housing
04.07.15
Disparate Impact Analysis at the Supreme Court


04.06.15
Adopting Digital Innovation in Lending
04.06.15
The Future of Payments: Biometrics
04.06.15
How Will Banks Deal with Millenials and Their Money?
04.06.15
Black Swan Risks in Europe

“History doesn't repeat itself, but it does rhyme,” wrote Mark Twain. 

04.06.15
Why Banks Are Focusing on Most Profitable Segments
04.06.15
Is It a Brave New World for Banking?
04.06.15
The Future of Banks
04.06.15
CFPB Releases New Mortgage Toolkit

On March 31, the CFPB released a new toolkit as part of its “Know Before You Owe” mortgage initiative, preceding the August 1st effective date for the TILA/RESPA integrated mortgage disclosure rule. The Bureau’s new toolkit, designed to “help customers understand the nature and costs of real estate settlement services,” provides a step-by-step guide to obtaining a mortgage. The toolkit, which includes worksheets, checklists, and research tips for consumers, replaces an existing HUD booklet that creditors provide to mortgage applicants.

 

04.03.15
Washington Regulatory Round-Up (4/3/15)
04.03.15
Coming of Age in the Great Recession

High student debt, poor job prospects and shifting consumer attitudes have restricted homeownership among Millennials, potentially hindering their accumulation of wealth, according to Federal Reserve governor Lael Brainard. “Young people’s attitudes toward home buying may have changed as a result of witnessing their parents’ experiences during the housing crisis,” said Brainard. “Instead of seeing homeownership as a reliably safe investment, many of today’s young adults may now see some risk that houses could become financial albatrosses due to events beyond their control.”

04.03.15
The China Challenge

“China is the only adult in the room.”

04.02.15
Treasury Sweep of GSEs’ Profits Puts Taxpayers at Risk

“[T]he conservatorships have left the enterprises in a state of suspended animation; neither private nor public entity and yet their business must continue,” wrote Bill Isaac and former Senator Bob Kerrey. “The government’s decision to violate HERA in 2012 by invoking the so-called ‘profit sweep’ has deprived the GSEs of their ability to rebuild capital and has put taxpayers at greater risk. …If private capital can’t count on the rule of law, it won’t participate in the future and taxpayers will have to pick up the pieces of what’s left of the financial system.”

04.01.15
Will Real Estate Values Continue to Go Up When Rates Rise?

Tight supply is driving up homes prices.

03.31.15
Most Overvalued Housing Markets
03.31.15
GARP Webinar
03.31.15
Test
03.31.15
Conflicts of Interest Forum
03.31.15
The Markets Are "Exhausted"


“The Fed has been spoiling financial markets since the depth of the financial crisis,” said Hoover Institution’s Kevin Warsh. “…After the taper tantrum, markets got uncomfortable and the Fed said ‘oh, we’re not going to rush.' Then we’ve had the dollar tantrum. And all of a sudden the Federal Reserve says ‘well, don’t worry, what we said last time isn’t quite true again.’ So markets think they have her number. The market thinks they’re going control these things and let markets go up. This is a very dangerous development.”

03.31.15
The GSE Report

The monetary illusion.

As economic growth returns again to Europe and Japan, the prospect of a synchronous global expansion is taking hold.  Or, then again, maybe not. In a recent research piece published by Bank of America Merrill Lynch, global economic growth, as measured in nominal U.S. dollars,is projected to decline in 2015 for the first time since 2009, the height of the financial crisis.

In fact, the prospect of improvement in economic growth is largely a monetary illusion. No one needs to explain how policymakers have made painfully little progress on the structural reforms necessary to increase global productive capacity and stimulate employment and demand. Lacking the political will necessary to address the issues, central bankers have been left to paper over the global malaise with reams of fiat currency.

03.30.15
The Sniper's Approach to Mortgage Complaints?

The National Real Estate Post.

03.30.15
Why Are Interest Rates So Low?

The Fed’s ability to affect real rates of return, especially longer-term real rates, is transitory and limited,” wrote Ben Bernanke. “Except in the short run, real interest rates are determined by a wide range of economic factors, including prospects for economic growth—not by the Fed.”

03.29.15
Innovations in the Auto Industry
03.29.15
The First 3D Printed House Is Coming
03.29.15
The Transformation of the Payments System
03.29.15
Unicorns: The 11 Digit Club
03.29.15
The End of An Era: Kodak
03.29.15
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the March 29, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • The OCC released its Mortgage Metrics report for the fourth quarter of 2014, showing:
    • At year-end, 93.2% of mortgages included in the report were current, compared with 93.0% at the end of the previous quarter and 91.8% a year earlier. 
    • The percentage of loans 30 to 59 days past due was 2.4%, a 9.4% decrease from a year earlier. 
    • Seriously delinquent mortgages were 3.1% of the portfolio, a 12.2% decrease from a year earlier.
    • Loans in foreclosure at the end of the fourth quarter of 2014 fell to 315,922 or 1.4%, a decrease of 39.7% from a year earlier. 
    • Servicers initiated 75,395 new foreclosures during the quarter, a decrease of 39.4% from a year earlier. 
    • The number of completed foreclosures decreased 35.3% from a year earlier to 39,331. 
    • Servicers implemented 195,577 home retention actions during the quarter compared with 49,749 home forfeiture actions. The number of home retention actions decreased 19.5% from a year earlier. 
    • More than 88% of modifications in the quarter reduced monthly principal and interest payments; 52.2% of modifications reduced payments by 20% or more. 
    • Modifications reduced payments by $243 per month on average, while HAMP modifications reduced monthly payments by an average of $274.
    • Servicers implemented 3,649,010 modifications from January 1, 2008, through September 30, 2014. Of these modifications, more than 55% were active at the end of the fourth quarter of 2014 and 45% had exited the portfolio through payment in full, involuntary liquidation, or transfer to a non-reporting servicer. 
    • Of the 2,012,632 active modifications at the end of the fourth quarter, 68.8% were current, 25.8% were delinquent, and 5.4% were in the process of foreclosure.​
  • FHFA released its Foreclosure Prevention Report for the fourth quarter of 2014, showing:
    • The GSEs completed nearly 65,900 foreclosure prevention actions in the quarter, bringing the total foreclosure prevention actions to more than 3.4 million since the start of the conservatorships.
    • The share of modifications with principal forbearance fell to 20%, while modifications with extend-term only increased to 46% due to improving house prices and declining HAMP eligible population.
    • As of December 31, 2014, approximately 17% of loans modified in the fourth quarter of 2013 had missed two or more payments, one year after modification.
    • Approximately 33% of all permanent loan modifications helped to reduce homeowners' monthly payments by over 30% in the fourth quarter;
    • There were 10,800 short sales and deeds-in-lieu in the fourth quarter, bringing the total to approximately 605,000 since the start of the conservatorships. 
    • The number of 60+ day delinquent loans declined another 3% during the quarter to the lowest level since the start of conservatorships.
    • The serious delinquency rate fell to 1.9 percent at the end of the quarter compared with 6.0% for FHA loans, 3.4% for VA loans, and 4.5% percent for all loans (industry average).
    • Third-party sales and foreclosure sales fell 7% to nearly 36,200 while foreclosure starts decreased slightly to approximately 74,000 in the fourth quarter.
    • REO inventory declined 8% during the quarter to approximately 111,000.
  • The Federal Reserve and FDIC announced that they requested amendments by year-end to the living wills of BNP Paribas, HSBC Holdings, and The Royal Bank of Scotland Group.  The agencies said the plans had shortcomings, including:  unrealistic or inadequately supported assumptions about the likely behavior of customers, counterparties, investors, central clearing facilities, and regulators; and inadequate analysis regarding interconnections within the firms.
  • The Federal Reserve and FDIC announced they adjusted the annual resolution plan filing deadline for AIG, GE Capital, MetLife, and Prudential Financial, from July 1 to December 31 beginning in 2016.

 

                         

03.27.15
Washington Regulatory Round-Up (3/27/15)
03.27.15
Liquidity Risks in the New Normal

The endgame for the central banks, who have onboarded some 7 years of market risk on their balance sheet. 

03.27.15
Loan servicing: The Rise of the Non-Bank Servicer


03.26.15
Dodd-Frank Act Rulemakings, Studies, and Reports Update

Attached please find an updated Roadmap to the Dodd-Frank Act Rulemakings, Studies, and Reports.

  • The CFPB released its policy for publishing consumer complaint narratives and proposes to publish complements.
  • The CFPB solicits comment on the credit card market.
  • The CFTC reopened for public comment the cost benefit analyses of eight regulations in response to a judicial challenge, SIFMA et al. v. CFTC, 13-1916 (D.D.C. Sept. 14, 2014).  The rules are: real-time reporting; SDR reporting; swap entity registration rule; daily trading records, risk management, and chief compliance officer rules; entity definition rule; historical SDR reporting rule; portfolio reconciliation rule; and swap entity registration.
  • The CFTC published a rule to remove the December 31, 2018 automatic termination date for the phased-in compliance schedule for futures commission merchants and to provide assurance that the residual interest deadline will only be revised through a separate rulemaking.
  • The SEC proposes a rule to require issuers to disclose in any proxy or consent solicitation material for an annual meeting whether any employee or board member is permitted to hedge or offset any decrease in the market value of equity securities either granted to the person as compensation or held by the employee or director.
  • The SEC proposed a regulation to require a national securities exchange or security-based swap execution facility to report to a registered security-based swap data repository (SDR) a security-based swap executed on the platform that will be submitted to clearing and to require a registered clearing agency to report to a registered SDR any security-based swap to which it is a counterparty.
  • The SEC finalized two new rules to require security-based swap data repositories to register with the SEC and prescribe reporting and public dissemination requirements for security-based swap transaction data.  The SEC also proposed certain additional rules, rule amendments and guidance related to the reporting and public dissemination of security-based swap transaction data.  Regulation SBSR and SDR registration.

 

Regards, 

Canfield Press

 

03.26.15
Atlanta Fed Forecasts Only 0.2% GDP Growth in First Quarter

The Atlanta Fed’s GDPNOW forecast has fallen from 1.2% (March 3) to 0.2% (March 25).  

03.26.15
Yemen: The Middle East's Shipping Chokepoint

Although Yemen contributes less than 0.2% of global oil output, (133,000 barrels of oil a day), the small country’s location at the southern end of the Arabian Peninsula puts it near the center of world energy trade. As regional powers began bombing rebel targets (on March 26), global oil prices jumped more than 5%. “While thousands of barrels of oil from Yemen will not be noticed, millions from Saudi Arabia will matter, said John Vautrain, head of Vautrain & Co. “Saudi Arabia has been concerned about unrest spreading from Yemen.”

03.25.15
Soros: Greece Is at the Cusp of a Grexit

“It’s now a lose-lose game and the best that can happen is actually muddling through,” said George Soros in a Bloomberg TV interview. “Greece is a long-festering problem that was mishandled from the beginning by all parties. …You can keep on pushing it back indefinitely [making interest payments without writing down debt], but in the meantime there will be no primary surplus because Greece is going down the drain. Right now we are at the cusp [of a Grexit] and I can see both possibilities.” Greece is expected to run out of cash on April 20, unless fresh aid is provided by creditors.

 

03.24.15
A Tipping Point for Fannie and Freddie?

David Stevens, Mortgage Bankers Association President and CEO.

03.24.15
The Rescue of Fannie Mae and Freddie Mac

Federal Reserve Bank of New York.

03.24.15
S.F. Backs New Strategy to Prevent Foreclosure in Low-Income Neighborhoods

The San Francisco Board of Supervisors unanimously adopted a resolution, supporting the use of an innovative strategy to encourage the owners of at risk-mortgages to sell the loans "at fair market value" to non-profits and CDFIs. National organizations, such as National Community Capital and Hogar Hispano, would leverage unspent TARP funds to reduce loan principals and prevent foreclosure. In San Francisco, there are approximately 3,000 underwater loans at risk of foreclosure, concentrated in four zip codes.

03.22.15
Government Barriers to Economic Growth

John Tamny, editor of RealClearMarkets and Political Economy Editor for Forbes.

 

03.22.15
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the March 22, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • FHFA released a progress report on the initiatives outlined in the 2014 Strategic Plan for the Conservatorships and the 2014 Conservatorship Scorecard.  The report notes important progress in advancing access to credit, continuing and enhancing loss mitigation and foreclosure prevention efforts, increasing the role of private capital in the mortgage market, and furthering the development of the Common Securitization Platform (CSP) and a single security.  
  • FHFA’s IG released a white paper titled, The Continued Profitability of Fannie Mae and Freddie Mac Is Not Assured. The report states that the GSEs profitability in 2013 and 2014 was significantly generated by non-recurring sources.  The paper states, “At present, it appears that Congressional action will be needed to define what role, if any, the Enterprises play in the housing finance system.”
  • The Federal Reserve announced 2015 annual CCAR results.  The Board objected to the capital plans of Deutsche Bank Trust Corporation and Santander Holdings USA, Inc. due to widespread and substantial weaknesses across their capital planning processes, and it issued a conditional non-objection to Bank of America Corporation and is requiring the BHC to correct weaknesses in some elements of its capital planning process and to resubmit a capital plan. 
  • Treasury released its MHA (HAMP and HARP) servicers report for the fourth quarter of 2014, showing that two servicers need minor improvement while five need moderate improvement, the same numbers as from the prior quarter.
03.22.15
Central Banks, Money and the Great Wheel of Circulation

“The great wheel of circulation is altogether different from the goods which are circulated by means of it. The revenue of the society consists altogether in those goods, and not in the wheel which circulates them” Adam Smith, 1811, page 202

03.22.15
Three Key Takeaways from the FOMC Meeting
03.22.15
Riding a Wave of Accommodation—Carefully
03.22.15
Winners/Losers in the Digital Age
03.22.15
The Justice Department Expects Banks to Do More than File SARs
03.20.15
Washington Regulatory Round-Up (03/20/15)
03.20.15
The Most Remarkable Monetary Policy Experiment in History

“The world’s two most prominent reserve currencies are separating themselves by an expanding chasm known as an interest rate spread,” wrote Cumberland Advisors’ David Kotok. “They are doing so through independent policies that are focused domestically. They do not talk about each other’s impacts on their own policies or how the interface between them will play out worldwide. But when you delve into the details, you will find many references to the currency drama that is taking place.”

03.20.15
Will Facebook and Apple Pay Kill Visa and Mastercard?

Facebook Pay with your debit card and friends.

03.19.15
Significant Lawsuits Concerning the GSEs' Net Worth Sweep
03.18.15
The Housing Affordability Landscape for 2015

The Center for Housing Policy/National Housing Conference.

03.17.15
What Caused the Dramatic Fall in GSE Profits?

03.16.15
New CFPB Rule Will Render Pre-Approvals Usless
03.16.15
Why Did the GSEs' Profits Fall Dramatically in 2014?
03.16.15
Will the Fed Drop “Patient”?

“FOMC [is] meeting [this] week, with a subsequent press conference with Fed Chair Janet Yellen,” wrote Tim Duy.  “Remember to clear your calendar for this Wednesday. It is widely expected that the Fed will drop the word ‘patient’ from its statement. Too many FOMC participants want the opportunity to debate a rate hike in June, and thus ‘patient’ needs to go. The Fed will not want this to imply that a rate hike is guaranteed at the June meeting, so look for language emphasizing the data-dependent nature of future policy.”

03.15.15
Apple: The Game Changer

Cramer is talking to CEO of APPL

03.15.15
The Surging U.S. Dollar
03.15.15
Are Rates Finally Starting to Rise?

The 10-year Treasury yield climbed to 2.16 percent from 1.98 percent this time last month, signaling the expected fed funds rate hike.

 

03.15.15
Rent Versus Buy?

“Real estate is highly sensitive to rates—even 25 basis points—can peel 10% off real estate prices,” said Kevin O’Leary. “Watch it happen. It’s coming to a theater near you.” 

03.15.15
Oil Price Hasn’t Hit Bottom Yet
03.15.15
Islamic State Has “Snowballed”

“ISIL demonstrates the worst in developments because it has basically been a phenomenon that has snowballed in terms of its appeal,” said CIA Director John Brennan. 

03.15.15
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the March 15, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • The European Parliament voted to cap interchange fees, resulting in an estimated €6 billion reduction annually.  Generally, the regulation will cap the fees at 0.2% of the transaction value for consumer debit cards and at 0.3% for consumer credit cards.  For consumer debit cards, it also gives flexibility to Member States to define lower percentage caps and to impose maximum fee amounts.

 

 

 

03.13.15
Washington Regulatory Round-Up (03/13/15)
03.13.15
The United States’ Nationalized Banking System

Dick Bove, Rafferty Capital 

CNBC's Steve Liesman 

 

 

03.13.15
The $9 Trillion Stress Test

Foreigners have borrowed $9 trillion in U.S. currency outside American jurisdiction—up from $2 billion in 2000, according to a BIS study. The emerging market’s share (mostly Asian) has doubled to $4.5 trillion since 2008. Today, the world credit system is acutely sensitive to shifts in the Federal Reserve’s monetary policy. Asian and Latin American companies are frantically trying to hedge their dollar debts on the derivatives markets, driving the dollar even higher and feeding a vicious cycle, according to Stephen Jen with SLJ Macro Partners. "This is how avalanches start,” said Jen.

03.12.15
Dodd-Frank Act Enforcement
03.12.15
Devaluation Contagion?
03.12.15
The Federal Reserve’s Annual Stress Test

03.11.15
NIRP, ZIRP and PIRP

03.10.15
The Increasingly Complex Global Monetary Policy

~"Central banks around the world have put together a lot of intricate policies," said DoubleLine's Jeff Gundlach. "Ultimately, the tower will not be able to stand."

 

03.10.15
CBO Projects $486 Billion Deficit for FY2015
03.10.15
Repeat Foreclosures Have Tripled Since the Financial Crisis

New and repeat foreclosure starts hit a 12-month high in January, according to Black Knight Financial (BKF). “Repeat foreclosures made up 51 percent of all starts for the month, and increased 11 percent from December,” according to BKF’s MortgageMonitor. “First time foreclosure starts were up just a fraction of a percent (0.33 percent) from the month prior. …Judicial state foreclosure starts jumped about 10 percent from December as compared to just a 1.7 percent increase in non-judicial states.”

 

03.09.15
Atlanta Fed’s Forecast for Q1 2015 GDP
03.09.15
Reformation of the Banking System into a Digital Value Exchange
03.09.15
Making Sense of the February Jobs Numbers
03.09.15
Greenspan: “American Productivity Has Gone Nowhere in the Last Few Years”
03.09.15
A New Model for the Provision of Affordable Homeownership
03.09.15
Death By Regulation

"No regulator, as far as I know, has considered the overall regulatory burden on financial services firms when determining whether to impose additional costly regulations," said SEC Commissioner Daniel Gallagher. "We as regulators are, when it comes to the possibility that our rules are causing death by a thousand cuts, the proverbial ostrich—head firmly entrenched in the sand. …The stakes here are considerable: regulatory burdens divert capital away from the real economy—this acts as a barrier to entry for new market participants and further entrenches those institutions that are increasingly 'too big to fail.'"

03.08.15
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the March 8, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • FHFA announced enhanced requirements for GSE sales of non-performing loans (NPLs), to transfer risk to the private sector. reduce GSE losses, and improve borrower and neighborhood outcomes by providing alternatives to foreclosure wherever possible.  Sales are generally expected to include loans that are severely delinquent, such as more than a year past due.  Future GSE NPL sales will include the following:

o Bidder qualifications:  Bidders will be required to identify their servicing partners at the time of qualification and must complete a servicing questionnaire to demonstrate a record of successful resolution of loans through alternatives to foreclosure;
o Modification requirements:  The new servicer will be required to evaluate all pre-2009 borrowers (other than those whose foreclosure sale date is imminent or whose property is vacant) for the Making Home Affordable programs, including HAMP.  All post-January 1, 2009 borrowers (other than those with an imminent foreclosure sale date or vacant property) must be evaluated for a proprietary modification, without an upfront fee or prepayment of any mortgage debt, and must provide a benefit to the borrower with the potential for a sustainable modification;
o Loss mitigation waterfall requirements:  Servicers must apply a waterfall that includes evaluating borrower eligibility for a HAMP or proprietary modification, a short sale, and a deed-in-lieu of foreclosure.  Foreclosure must be the last option in the waterfall.  The waterfall may consider NPV to the investor;
o REO sale requirements:  Servicers are encouraged to sell REO properties to individuals who will occupy the property as their primary residence or to non-profits.  For the first 20 days after any NPL that becomes an REO property is marketed, the property may be sold only to buyers who intend to occupy the property as their primary residence or to non-profits;
o Subsequent servicer requirements:  Subsequent servicers must assume the responsibilities of the initial servicer;
o Bidding transparency:  To facilitate transparency of the NPL sales program and encourage robust participation by all interested participants,
o Each GSE will develop a process for announcing upcoming NPL sale offerings.  This will include an NPL webpage on the GSE’s website, email distribution to small, non-profit and minority- and women-owned business investors, and proactive outreach to potential bidders.  Additionally, each GSE will host training sessions for interested non-profit and minority- and women-owned investors.  The GSEs will also offer small pools of NPLs where feasible;
o Reporting requirements:  NPL buyers and servicers, including subsequent servicers, must report loan resolution results and borrower outcomes to the GSEs for four years after the NPL sale.  These reports will help inform whether to make future changes to NPL sales requirements and determine whether an NPL buyer and NPL servicer continue to be eligible for future sales based on pool level borrower outcomes, adjusted for subsequent market events.  Consistent with applicable law, FHFA and/or the GSEs will provide public reports on aggregate borrower outcomes at the pool level.

  • The Federal Reserve announced stress test results for the 31 largest U.S.-based bank holding companies.  The results project that in the most severe scenario, loan losses at the 31 participating bank holding companies would total $340 billion during the nine quarters tested.  This scenario features a deep recession with the unemployment rate peaking at 10%, a 25% decline in home prices, a stock market drop of nearly 60%, and a notable rise in market volatility.  The 31 firms’ aggregate tier 1 common capital ratio would fall from an actual 11.9% in the third quarter of 2014 to a minimum of 8.2%.  This hypothetical post-stress minimum is significantly higher than the 31 firms’ aggregate tier 1 common capital ratio of 5.5% measured in the beginning of 2009.
  • The Office of Financial Research released a working paper entitled, Are the Federal Reserve’s Stress Test Results Predictable?  It found that projected losses by bank and loan category are fairly predictable and are becoming increasingly so.  It suggests three ways to reduce predictability. 

o The adverse and severely adverse scenarios required by Dodd-Frank stress tests could bring more diversity to the testing. 
o The number of scenarios could be expanded.
o The testing could be expanded to include knock-on and feedback effects between institutions, and interactions between solvency and liquidity.

  • GAO released a report on TARP’s CPP program, showing CPP returns have surpassed original investments.  As of December 31, 2014, Treasury had received $226.4 billion in repayments, sales, dividends, and interest, exceeding the amount originally disbursed by $21.5 billion.  As of the same date, the program was largely wound down, with only 34 of the original 707 institutions remaining.  Over the past 5 years, repayments and auctions were the primary means by which institutions exited CPP.  However, Treasury officials indicated that more of the remaining institutions may use restructurings as an exit strategy.  The 34 remaining CPP institutions showed some improvements in their financial condition, as measured by key metrics of financial condition, but many continued to miss payments and maintain low capital levels.

 

03.06.15
Washington Round-Up (3/6/15)
03.06.15
Oil's Supply and Demand Dilemma
03.06.15
Renewal of HAMP is “Highly Unlikely,” said FHFA Director Watt

"It's highly unlikely that we would extend the coverage period [for the Home Affordable Refinance Program, created in 2009],” said Federal Housing Finance Agency Director Mel Watt. Extending HARP could have "moral hazard considerations" given that it was put in place to deal with the effects of the financial crisis, not as an ongoing program, Watt added. He also said his agency’s decision on guarantee fees, charged by Fannie Mae and Freddie Mac, might be delayed until April. It had been expected this month.

03.05.15
The Administration's Vision of a More Sustainable Housing Finance System
03.05.15
Fed Chair Yellen: Improving the Oversight of Large Financial Institutions
03.05.15
A Closer Look at the Housing Market Recovery

“The U.S. housing market is currently facing two challenges: (1) a dearth of credit creation and (2) a shortage of homes available for sale,” wrote Kroll Bond Rating Agency’s Chris Whalen. “The dearth of credit is a function of Dodd-Frank and the oppressive U.S. regulatory environment, which is discouraging bank credit expansion for consumers and businesses alike. Factors behind the shortage of homes for sale are more complex, especially in states (CA, FL) where some home prices are now above pre-2008 levels.”

03.03.15
A Potentially Bipartisan Way to Help the Middle Class

Economic Studies at Brookings 

03.03.15
The Millennial Generation Will Redefine and Drive the Future of Financial Services

“There is a demographic trend happening today that no one is really talking about,” wrote LendAcademy’s Ryan Lichtenwalk. “It is a trend that will ensure a major tailwind for online lending platforms and a potential headwind for traditional banks. The millennial generation ...[doesn't] like doing business the way our parents’ generation did. …Above all else, millennials are open to a new way of doing things. We will be among the fastest group to adopt nontraditional banking services ...[including] mobile wallets, alternative payments services and  peer to peer lending.”

03.03.15
CBO's Analysis of Public Spending on Transportation and Water Infrastructure

Representative John Delaney’s American Infrastructure Fund proposal: An idea whose time has come?

03.02.15
Growing, Fast and Slow


“The economic jury is still out on whether recent rates of growth are a temporary post-crisis dip or a longer-lasting valley in our economic fortunes,” said Andrew G Haldane, chief economist at the Bank of England. “Pessimists point to high levels of debt and inequality, worsening demographics and stagnating levels of educational attainment. Optimists appeal to a new industrial revolution in digital technology. Given its importance to living standards, this debate is one of the key issues of our time.”

03.01.15
Pros and Cons of Net Neutrality
03.01.15
A Recovery Unlike Any in Recorded History

RealClearPolitics.com, Jeffrey Snider

February 27, 2015

03.01.15
Europe: The “unequal” continent
03.01.15
Conducting Monetary Policy with a Large Balance Sheet

Remarks by Stanley Fischer, Vice Chairman of the Board of Governors of the Federal Reserve System

03.01.15
What Will Be the Impact of the Net Neutrality Rules?
02.27.15
Regulatory Round-Up (02/28/15)
02.27.15
GSE Report

A recipe for another global crisis?

" Seven years after the global financial crisis, global debt and leverage have continued to grow. From 2007 through the second quarter of 2014, global debt grew by $57 trillion, raising the ratio of global debt to GDP by 17 percentage points. This is not as much as the 23-point increase in the seven years before the crisis, but it is enough to raise fresh concerns. Governments in advanced economies have borrowed heavily to fund bailouts in the crisis and offset falling demand in the recession, while corporate and household debt in a range of countries continues to grow rapidly."

Richard Dobbs, Susan Lund, Jonathan Woetzel and Mina Mutafchieva

McKinsey Global Instittute

February 2015

 

 

02.27.15
Should the Federal Reserve Be Free of Supervision?
02.26.15
Shareholder Revolution?

“In the 1960s and 1970s, an additional dollar of earnings or borrowing was associated with about a 40-cent increase in investment,” wrote Roosevelt Institute’s J.W. Mason. “Since the 1980s, less than 10 cents of each borrowed dollar is invested ...[and] shareholder payouts have nearly doubled; in the second half of 2007, aggregate payouts actually exceeded aggregate investment. ...This change in corporate finance, associated with the “shareholder revolution,” means there is good reason to believe that the real economy benefits less from the easier credit provided by macroeconomic policy than it once did.”

 

02.25.15
ZIRP: The Greatest Protracted Experiment in Price Controls in Modern Time
02.25.15
Existing Home Sales Fall to 9-Month Low
02.24.15
The Ten Best Books About Banking
02.24.15
Mortgage Meltdown Brewing?
02.24.15
JPMorgan Chase Sees $18B Benefit Kept Together

 

JP Morgan contends it has $18 billion of synergies--$15 billion of revenue synergies and $3 billion of cost synergies.

02.23.15
The Financial Stability Oversight Committee Needs Fixing
02.23.15
The Economic Report of the President
02.23.15
How Are Small Banks Faring Under Dodd-Frank?
02.23.15
Why Does the Internet of Things Matter?
02.23.15
Global Debt Has Increased $57 Trillion Since 2007

02.23.15
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the February 22, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • Freddie Mac announced results for 2014, showing net income of $7.7 billion for the year and of $227 million for the fourth quarter of 2014.  The GSE reported a net worth of $2.7 billion as of December 31, 2014, resulting in a dividend obligation to Treasury of $0.9 billion, expected to be paid in March 2015.  With the March 2015 dividend payment, the GSE will have paid $91.8 billion in dividends to Treasury.
  • Fannie Mae announced results for 2014, showing net income of $14.2 billion for the year and of $1.3 billion for the fourth quarter of 2014.  The GSE reported a net worth of $3.7 billion as of December 31, 2014, resulting in a dividend obligation to Treasury of $1.9 billion expected to be paid in March 2015.  With the March 2015 dividend payment, the GSE will have paid $136.4 billion in dividends to Treasury.  
  • The Federal Reserve and FDIC announced that they are extending the resolution plan, or living will, submission deadline for American International Group, Inc., General Electric Capital Corporation, Inc., and Prudential Financial, Inc., consistent with similar extensions provided to other firms in previous years.  The three organizations will be required to submit their second annual plans by Dec. 31, 2015, instead of July 1, 2015.
  • FHFA released its Refinance Report for the fourth quarter of 2014, showing:
    • In the fourth quarter of 2014, there were 37,397 HARP refinances, bringing the total from the inception of HARP to 3,270,451.
    • Borrowers who refinanced through HARP had a lower delinquency rate compared to borrowers eligible for HARP who did not refinance through the program.
    • More than 25 percent of all 2014 HARP refinances for underwater borrowers (those with a loan-to-value ratio greater than 105 percent) resulted in 15- and 20-year mortgages.

FHFA is continuing its efforts to reach HARP-eligible borrowers, with a March 4 event in Newark, NJ. 

 

02.23.15
If Oil Prices Are Surprising, Then That Can Only Mean Demand

"these kinds of price movements only occur during severe economic dislocations of a global scale."

02.20.15
Washington Regulatory Round-Up (2/20/15)
02.20.15
87% of U.S. Homes Qualify for Down Payment Assistance

02.19.15
No Economy is an Island
02.19.15
The Student Loan Crisis?

Average borrower left with the average load of $33,000 in class of 2014.

02.19.15
The Student Loan Landscape

02.18.15
Devastation Awaiting Residential Mortgage-Backed Securities

02.18.15
The Age of Billion Dollar Unicorns
02.18.15
Import of the Port Dispute

215,000 TEU is equivalent to about 1.2% of the fleet—nearly the ‘idle’ boxship capacity of 1.3% of the fleet.

 

02.18.15
Peter Theil’s Views on Transformational Business and Regulations
02.18.15
The Public Bank Movement

San Francisco, Santa Fe, New Mexico, Seattle and Maine are considering the creation of public banks.

 

02.18.15
12 Reasons to Love the U.S. Housing Market
02.18.15
Hero of the Month?
02.17.15
The Structural Change in the Capacity of the Market to Provide Liquidity


“The biggest risk is this illusion of liquidity,” said Mohamed El-Erian, Allianz chief economic adviser. “People actually believe that they can quote rationally bubble-wide til the turn and when that turn comes, they actually believe they’re going to reposition themselves. …History tells us that there isn’t as much liquidity as people like to think there, when there’s a major change in the market paradigm.”

02.17.15
Cybercriminal Stole Millions From Banks

Up to 100 financial institutions around the world have been hit by sophisticated cyber attacks on the finance industry, according to Kaspersky Lab, a Russian security company.
 

02.16.15
Nobody Is Safe on the Internet
02.16.15
FAA Proposed Rule Would Bar Delivery By Drone

On Sunday morning, the FAA released proposed rules to speed up the integration of unmanned aircraft into the American economy under the following conditions: (i) drones can only be flown in daylight hours within the direct line of site of the operator; (ii) operators must be at least 17 years old, pass an aeronautical knowledge test and obtain an FAA UAS operator certificate; (iii) drones must be under 55 pounds, can’t fly higher than 500 feet or faster than 100 mph, and can’t fly over people; and (iv) drones can’t allow “any object to be dropped.” The rules, open for public comment, would go into effect in 2016. 

 

02.15.15
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the February 15, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • The Office of Financial Research released a working paper entitled, Process Systems Engineering as a Modeling Paradigm for Analyzing Systemic Risk in Financial Networks, proposing that a modeling methodology called signed directed graphs (SDG) is a useful framework to address systemic risk.  The SDG framework can represent and reveal information missed by more traditional network models of financial system.  This framework adds crucial information to a network model about the direction of influence and control between nodes, providing a tool for analyzing the potential hazards and instabilities in the system. The paper also discusses how the SDG framework can facilitate the automation of the identification and monitoring of potential vulnerabilities, illustrated with an example of a bank/dealer case study.
  • The banking agencies released an optional tool to simplify calculations of risk-based capital requirements for securitization exposures. The agencies are making this tool available for all banks that use the simplified supervisory formula approach to help calculate associated capital requirements.  Banks may opt to use the simplified supervisory formula approach under the standardized approach.  The revised capital rule replaced the existing generally applicable risk-based capital standards with a standardized approach.  Banks subject to the advanced approaches risk-based capital rule must use the standardized approach to determine their risk-based capital floor, and all other banks must use the standardized approach to determine their overall minimum risk-based capital requirements.
02.13.15
Washington Regulatory Round-Up (2-13-15)
02.13.15
World War ¥€$

"Is there any hope for an end to the currency wars?" asked Charlie Bilello. "Perhaps. There is a a growing consensus that the Federal Reserve will make a peace offering with a rate hike by the middle of this year. …[T]he alternative, doing nothing, may be more harmful still as the unintended consequences of distorting market rates is becoming more and more obvious... Will the Fed choose to ‘save capitalism’ or continue with the command economic system that has been serving the short-term interests of financial assets to the detriment of the real economy? …They either need to abandon the Bernanke “wealth effect” theory or continue the status quo."

02.12.15
The Fed IS Audited, Argues Fisher

Dallas Fed President Richard Fisher in an interview with CNBC's Steve Liesman.

02.12.15
FHA Looks to Ease Lenders’ Worry about Mortgage Errors

FHA requires lenders to certify the mortgages they’ve originated have no errors. When errors occur, the Department of Justice has used the False Claims Act to pursue treble damages from the lenders. (Case in point: DoJ's $614 million settlement with JPMorgan Chase.) Many lenders have opted to apply credit overlays or discontinue FHA lending altogether to limit litigation and repurchase risk. In an effort to expand credit, FHA officials are considering changing the lenders' certification and clarifying other penalties they could face for certain mistakes.

02.11.15
A Closer Look at America's Advanced Industries

Brookings Institute. What they are.  Where they are. And Why they Matter.

02.11.15
Unfair, Deceptive, or Abusive Acts or Practices Roundup for 2014

K&L Gates, 2014 Round Up.

02.11.15

BankAlliance, a group of 200 small banks, is teaming up with Lending Club to purchase consumer loans originated through the marketplace lender’s website. The alliance with Lending Club will help small banks over come the costs of underwriting a large pool of loans, while meeting regulatory requirements and helping them extend credit to borrowers with lower credit scores than they previously served. The banks will own the loans acquired through Lending Club and absorb any losses incurred. 

02.10.15
Grexit?


“Exit from the euro does not even enter into our plans, quite simply because the euro is fragile” said Greece’s finance minister Yanis Varoufa. “It is like a house of cards. If you pull away the Greek card, they all come down.  Do we really want Europe to break apart? Anybody who is tempted to think it possible to amputate Greece strategically from Europe should be careful. It is very dangerous. Who would be hit after us? Portugal?”

02.09.15
The Unintended Consequences of Dodd Frank

 "What if Dodd-Frank created a too-small-to-succeed problem in addition to the too-big-to-fail problem?” asked Professor Marshall Lux, author of the study. 
 

02.09.15
Who Regulates Whom and How?

An example of regulation of JPMorgan derivatives trades.

02.09.15
A Recipe for Economic Growth.

An interview of Larry Summers. McKinsey & Company Insights.

02.09.15
A Closer Look at the Oil Market.
02.09.15
Do Fannie and Freddie Conservatorships Violate HERA and Established Insolvency Principles?
02.09.15
Neutralizing Greece's Debt

“The Eurozone will create the compromise for Greece,” wrote John Mauldin. “…[W]hen the next European crisis hits, probably triggered by France, Europe will either have to create a true fiscal union and mutualize the debt of all countries or break up the Eurozone. Since an increasingly large portion of Europeans (especially younger voters, who are becoming the majority as time goes by) want to keep the European Union, and since we are talking a political decision and not an economic decision, I think they will end up neutralizing Greece’s debt. Then the debt problem then simply goes away. Voilà! Problem solved."

02.08.15
Greenspan: Greece will eventually leave the Eurozone
02.08.15
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the February 8, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • FSOC announced revised procedures and updated FAQs regarding its process for reviewing nonbank financial companies for potential designation.  The changes are designed to provide:  earlier engagement with companies under consideration; transparency, through making information public; and engagement with designated companies during FSOC’s annual reevaluations of designations. 
  • On February 3, 2015, the European Commission published a report that recommends granting pension funds a two-year exemption from central clearing requirements for their over-the-counter derivatives due to the cost of holding cash for variation margin requirements.

 

 

 

02.06.15
Washington Regulatory Round-Up (2/6/15)
02.06.15
Employment Report: 257,000 Jobs, 5.7% Unemployment Rate

02.06.15
Global Debt and Not Much Deleveraging

McKinsey Global Institute

02.05.15
How Digital Is Revolutionizing the Payments Environment
02.05.15
7.3 Million Boomerang Buyers Are Poised to Return to the Housing Market

“In 2015, the first wave of 7.3 million homeowners who lost their home to foreclosure or short sale during the foreclosure crisis are now past the seven-year window they conservatively need to repair their credit and qualify to buy a home,” wrote RealtyTrac. “More waves of these potential boomerang buyers will be moving past that seven-year window over the next eight years corresponding to the eight years of above historically normal foreclosure activity from 2007 to 2014."

02.04.15
Loss Severity on Residential Mortgages

In an analysis of loss severity of residential mortgages, Urban Institute’s Laurie Goodman and Jun Zhu found:

  • Mortgage insurance significantly lowers the severities;
  • Small loans have higher severity than larger ones;
  • Real-estate-owned sales have higher severity than short sales; and
  • No stable relationship exists between the state of origination and severity.  

 

02.03.15
Big U.S. Oil Companies Slash Capital Spending

With oil prices crashing and demand falling, U.S. oil companies have announced their plans to cut their capital spending in 2015.

02.03.15
Will Lending Be Untethered from Banks?

“[The] lending of yesterday is done through these stodgy banks and government run balance sheets and programs,” said Insikt CEO James Gutierrez. “Lending of the future is going to be through awesome customer experiences built by new companies that realize they [have]  more, unique data on customers—and if they put that data to work, can make really attractive loans. ...The lending of the future is going to be through awesome customer experiences built by new companies that realize they [have] more, unique data on customers."

02.02.15
Bank of America: I.T. Is an Arms Race
02.02.15
Obama Requests 14% Corporate Tax on $2.1 Trillion of Overseas Earnings
02.02.15
The President’s Roadmap for Growth, Opportunity and Fiscal Responsibility
02.02.15
Advanced Industries Are Powering America’s Prosperity
 America’s “advanced industries” stand out as a vital component for the future of the U.S. economy.
02.02.15
The Super Bowl’s Other Winner: Budweiser’s “Lost Dog”

21+ million people voted Lost Dog the Super Bowl’s best advertisement.   

02.02.15
Less Than Zero

There is currently €1.5tr or $1.7tr of Euro area government bonds of greater than one year maturity trading with negative nominal yields, almost all of them of core euro governments of up to 5 years maturity,” wrote JP Morgan analysts. “This figure rises to $1.8tr if one adds $16bn of Swedish, $60bn of Swiss and $45bn of Danish government bonds currently trading with a negative yield. Almost all Japanese government bonds are trading with positive yields this week. …So the total universe of government bonds traded with a negative yield was $3.6tr last week or 16% of the JPM Global Government Bond Index.”

02.02.15
Larry Summers' View of the Global Economy

Inflation and deflation across the world with Charlie Rose.

02.01.15
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the February 1, 2015 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • SIGTARP released a quarterly report to Congress, showing: 
    • Regarding CPP:
      • Treasury’s treatment of smaller CPP banks differs from its treatment of large CPP banks.  Treasury took a public and active role with the largest CPP banks, and became more like a passive investor in the smaller CPP banks.  SIGTARP suggests that Treasury could have assisted small CPP banks repay their TARP funds by restructuring or exchanging the shares.  
      • Some private investors have bought out Treasury’s CPP stakes at discounts from 1% to 90%.  In some instances, the private investors buy and flip CPP shares at a profit, often in a matter of weeks or months.
      • As of December 31, 2014, 68 institutions remained in CPP.  In 34 of them, Treasury holds only warrants to purchase stock.  
      • As of December 31, 2014, taxpayers were still owed $5.5 billion related to CPP.  According to Treasury, it had write-offs and realized losses of $5 billion in the program, and $197.2 billion of the CPP principal (or 96%) had been recovered.
      • As of December 31, 2014, of the 34 CPP banks with remaining principal investments, 26 had missed at least five dividend payments, and Treasury had assigned observers to 12 current CPP recipients, while 12 declined consent to Treasury observers. 
    • Treasury and SIGTARP disagree about whether Treasury is doing enough to ensure timely processing of HAMP applications.  The report states:

“While Treasury requires that servicers review a completed HAMP application within 30 days, Treasury allows servicers to extend the review time indefinitely if the application is incomplete, even though the homeowner may not be at fault. . . . Treasury must do more to ensure that servicers help homeowners complete their application faster than the current rates.”  [CFPB regulations usually prohibit servicers from acting on incomplete loss mitigation applications.]

  • Beginning in mid-2013, Treasury approved a HHF program for blight elimination.  Through December 2014, Treasury has approved blight elimination programs in six states, Alabama, Illinois, Indiana, Michigan, Ohio, and South Carolina.  Treasury did not authorize new funds for these states, but instead reallocated funds from the states’ other HHF programs.  
  • HUD released an interim final regulation that will govern the Housing Trust Fund.  HERA created the Housing Trust Fund and the Capital Magnet Fund and required the GSEs co contribute to them, but FHFA suspended the contributions a few months later when the GSEs were out into conservatorship.  FHFA revoked the suspension in December 2014.  Treasury, which administers the Capital Magnet Fund, issued regulations for it in 2010, at 12 C.F.R. Part 1810.
  • The Federal Reserve released a report, Strategies for Improving the U.S. Payment System, on a plan for collaborating with payment system stakeholders to enhance the speed, safety and efficiency of the U.S. payment system.  It is the result of 18 months of research to identify key gaps and opportunities, gaining industry and end-user perspectives on needs and priorities and defining ways to achieve payment improvements.  The paper outlines the Federal Reserve's intent to establish a task force to identify approaches for implementing safe, ubiquitous, faster payment capabilities.  The paper calls for a task force to advise the Federal Reserve on reducing payment fraud and advancing the safety, security and resiliency of the payment system.  Additionally, the Federal Reserve will pursue efforts to enhance payment system efficiency through work on standards, directories, and business-to-business payment improvements, alongside efforts to enhance Fed-provided services for same-day ACH, risk management, and settlement.

 

Regards, 

Canfield Press

01.30.15
Washington Regulatory Round-Up (01/30/15)
01.30.15
Era of Central Banks' Improvisation of World's Growth Strategy Comes to an End

01.29.15
Games People Play

Bill Gross, Janus Capital Group, Investment Outlook

01.28.15
Only 40% of the World’s Population Is Free

In 2014, global freedom has suffered a disturbing decline with 60% of the world's population, or 2.6 billion people, living in countries that are not completely free, accrording to Freedom House. 

 

01.28.15
SIG TARP's Quarterly Report to Congress

01.28.15
Is Greece is the Tipping Point for the Eurozone


“The anti-austerity Syriza political party has won in Greece,” wrote George Mason’s Anthony Sanders. “Alexis Tsipras was sworn in as Greek prime minister and handed a mandate to form a government that will challenge international creditors over the budget cuts. ...Tsipras said his priority is ‘for Greece and its people to regain their lost dignity.’ The reaction? Greece 10 year sovereign yields spike 53 basis points.”

01.27.15
Rethinking the American Dream
01.27.15
Diverging Monetary Policies Will Test the Financial System


Diverging monetary policies will "test capital flows across the global economy, including to emerging markets," said Mark Carney, governor of the Bank of England. The $9 trillion of borrowings in U.S. dollars by companies in the developing world “will test the resilience of that new financial system.” He added, "We are particularly concerned about an illusion of liquidity that has existed in a number of financial markets. I would say that illusion of liquidity is gradually being disabused.”

01.26.15
Are Banks Facing a Deflationary Trap?
01.25.15
The New Banking Context

World Economic Forum in  Davos.

01.25.15
The Price of Instability

Forum Debate at the World Economic Forum in Davos.

01.25.15
The New Digital Context and Future of Digital Economy
01.25.15
The Outlook for the United States

Panel Member Penny Pritzker, U.S. Secretary of Commerce at Davos.

01.25.15
ECB Move Gives Europe Time to Improve

We have seen in the last few years you have to trust in Mario,” said Blackrock's Fink.

01.25.15
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the January 25, 2015 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • The European Central Bank announced an expanded program of purchasing sovereign bonds to address the risks of prolonged low inflation.  Combined monthly purchases will amount to €60 billion.  They are intended to be carried out until at least September 2016 and in any case until the Governing Council sees a sustained adjustment in the path of inflation that is consistent with its aim of achieving inflation rates below, but close to, 2% over the medium term.  The ECB will buy bonds issued by euro area central governments, agencies, and European institutions in the secondary market against central bank money, which the institutions that sold the securities can use to buy other assets and extend credit to the real economy.  Purchases of securities of European institutions (which will be 12% of the additional asset purchases, and which will be purchased by NCBs) will be subject to loss sharing.  The rest of the NCBs’ additional asset purchases will not be subject to loss sharing.  The ECB will hold 8% of the additional asset purchases.  This implies that 20% of the additional asset purchases will be subject to risk sharing.

 

 

 

01.23.15
Washington Regulatory Round-Up(1/23/15)
01.23.15
The Supreme Court Hears Oral Arguments on Disparate Impact

On January 20, the Supreme Court heard oral arguments in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, in which Texas challenged the disparate impact theory of discrimination under the Fair Housing Act (FHA).  The Justices focused on (i) whether the phrase “making unavailable” in the FHA provides a textual basis for disparate impact, (ii) whether three provisions within the 1988 amendments to the FHA demonstrate congressional acknowledgement that the FHA permits disparate impact claims, and (iii) whether they should defer to HUD’s disparate impact rule.

01.22.15
QE Won’t Solve the Eurozone’s Structural Problems
01.22.15
What is the Value of Money in a Negative Interest Rate Environment?


“We have a deflationary set of circumstances with zero interest rates or negative interest rates,” said Ray Dalio, founder of Bridgewater Associates LP. “How far will negative interest rates carry you? It’s going to begin to call into question what the value of holding money is. What is money? With negative interest rates, literally, the under the mattress looks good.”

01.22.15
Home Ownership Years Away for a Lot of Millennials

Jed Kolko, Trulia Chief Economist and VP of analytics. on CNBC

01.21.15
Tonight We Turn the Page


"We are fifteen years into this new century. Fifteen years that dawned with terror touching our shores; that unfolded with a new generation fighting two long and costly wars; that saw a vicious recession spread across our nation and the world. It has been, and still is, a hard time for many. But tonight, we turn the page."

President Barack Obama
State of the Union Address
January 20, 2015

01.20.15
ECB Faces Crucial Test

The ECB faces a crucial test of its resolve to do ''whatever it takes'' to preserve the euro when it decides this week on buying government bonds.

 

01.20.15
The Endgame for Central Bankers

“Major centrals banks claim to be independent, but they are all ultimately under the control of politicians,” wrote Saxo Bank’s CIO and chief economist Steen Jakobsen. “Many developed countries have tried to anchor an independent central bank to offset pressure from politicians and that’s well and good in principle until an economy or the effects of a monetary policy decision beginning spinning out of control. At zero bound for growth and for interest rates, politicians and central banks switch to survival mode, where rules are bent or even broken to fit an agenda of buying more time.”

 

01.19.15
Housing Expectations in the U.S. for 2015
01.19.15
Global Housing and Mortgage Outlook
01.19.15
The Long Growth Drag from Financial Regulations
01.19.15
What Changed in International Banking on January 15?
01.19.15
A Generational Change in Banking
01.19.15
The Extensive Repercussions from the Oil Crash

“The current bear market for oil may actually be the beginning of a longer and extended period of low commodity prices,” wrote Abe Gulkowitz in The Punchline. “First, the price of oil at $100/bl or above had been an absurdity. Second, many nations simply cannot afford to curtail pumping oil, even at a loss in the short run. Third, global growth is proving to be woefully inadequate and uncertain. Fourth, the shale gas revolution has transformed America’s energy markets, with profound effects for economic growth, competitiveness, security, and environmental quality.”

01.18.15
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the January 18, 2015 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • MetLife challenged FSOC’s designation that the company is a nonbank systemically important financial institution, on a number of bases, including that the designation was based on “numerous critical errors that fatally undermined the reasoning[,]” and on a fundamental misunderstanding of state insurance regulation.  The complaint asserts that FSOC repeatedly denied MetLife access to data and materials FSOC used.  MetLife states that procedural shortcomings severely impaired its ability to respond to FSOC.  “These deficiencies were exacerbated by the extraordinary design in the Dodd-Frank Act of FSOC itself, which identifies individual companies for designation, establishes the standards that govern the designation decision, and then sits in judgment of its own recommendations, relying each step of the way on the same staff that identified the company for designation in the first place.”

MetLife also asserts that it is not a “nonbank financial company” subject to FSOC designation.  The Dodd-Frank Act permits FSOC to designate U.S. or foreign nonbank companies, under § 113(a)(1) or (a)(2).  The difference between the U.S. and foreign companies depends on where they are chartered.  For both U.S. and foreign companies, the definition of a nonbank financial institution, in § 112(a)(4), and depends on whether the company is “predominantly engaged” in financial activities.  A company is predominantly engaged in financial activities if at least 85% of its consolidated annual gross revenues are from, or consolidated assets are related to, “activities that are financial in nature” as defined in § 4(k) of the Bank Holding Company Act.  MetLife states that it is not predominantly engaged in activities that are financial in nature because more than 15% of its revenues are from, and assets are related to, insurance activities in foreign markets, while the Bank Holding Company Act defines insurance activities as financial in nature only if they are conducted in the U.S.  MetLife v. Financial Stability Oversight Council, No. 15-45 (D.D.C. Jan. 13. 2015).

 

  • On January 14, 2015, FHFA released its 2015 Scorecard outlining specific priorities for Fannie Mae, Freddie Mac and their joint venture common securitization platform (CSP).  The 2015 Scorecard furthers the goals outlined in FHFA's Strategic Plan for the Conservatorships.  The goals include:  
    • Maintain, in a safe and sound manner, credit availability and foreclosure prevention activities for new and refinanced mortgages to foster liquid, efficient, competitive and resilient national housing finance markets. [40%].  For this goal, the GSEs are to:
      • Work to increase access to mortgage credit for creditworthy borrowers, consistent with the full extent of applicable credit requirements and risk-management practices: 

§  Effectively implement key loss mitigation activities, 

§  Maintain the dollar volume of new multifamily business for each Enterprise at $30 billion or below, excluding affordable housing loans, loans to small multifamily properties, and loans to manufactured housing rental communities. 

  • Reduce taxpayer risk through increasing the role of private capital in the mortgage market.  [30%]  For this goal, the GSEs are to:

§  Transact credit risk transfers on reference pools of single-family loans with UPB of at least $150 billion for Fannie Mae and $120 billion for Freddie Mac.

§  Determine the feasibility of multifamily risk transfers; and

  • Implement private mortgage insurance eligibility requirements. 
  • Build a new single-family securitization infrastructure for use by the GSEs and adaptable for use by other participants in the secondary market in the future.  [30%]  For this goal the GSEs are to:
    • Finalize the Single Security structure, including security features, disclosure standards, and related requirements. 
    • Develop a plan to implement the Single Security in the market.
    • Provide active support for mortgage data standardization initiatives:
  • The Federal Reserve and FDIC released the public portions of resolution plans for firms with generally less than $100 billion in qualifying nonbank assets, and the FDIC released the public portions of resolution plans of 22 insured depository institutions, mostly subsidiaries of bank holding companies that submitted resolution plans.

 

 

 

01.18.15
The New Normal for Consumer Debt Collections and Recoveries

"Over 35% of Americans have debt and unpaid bills that have been reported to collection agencies."

 

01.16.15
Regulatory Round-Up (01/16/15)
01.16.15
The Policy Challenges of the 114th Congress
01.16.15
The 2015 Scorecard for Fannie Mae, Freddie Mac and Common Securitization Solutions

FHFA’s 2015 Scorecard will assess Fannie Mae, Freddie Mac and Common Securitization Solutions on (i) the safety and soundness of their activities; (ii) their support of a competitive, resilient, and liquid secondary mortgage market; (iii) their consideration for diversity and inclusion consistent with FHFA's expectations for all activities; (iv) their cooperation and collaboration with FHFA, each other, and stakeholders; and (v) the quality, thoroughness, creativity, effectiveness, and timeliness of their work products.

01.15.15
Banks Will Break Up by Shedding Assets: Whalen

“The key problem for banking industry is it’s difficult for banks to generate revenue,” said Chris Whalen, senior managing director at Kroll Bond Rating Agency. “You have regulation, you have a lack of demand for credit. …We’re in an extraordinary environment. Zero rates are driving stock prices… The central bankers keep saying ‘if we do more of what we’ve been doing, things are going to get better.’ I think that’s wrong. I think we have to look at different approaches to what’s essentially a deflationary trap for the entire world...”

 

01.14.15
A Closer Look at the Oil Market and Central Banks’ Monetary Policies
01.14.15
Doubleline’s Market Outlook for 2015


“Oil is incredibly important right now,” said Doubleline’s Jeff Gundlach during his 2015 Market Outlook webinar. “If oil falls to around $40 a barrel then I think the yield on ten-year Treasury note is going to 1%. I hope it does not go to $40 because then something is very, very wrong with the world, not just the economy. The geopolitical consequences could be—to put it bluntly—terrifying."

01.13.15
A Closer Look at the U.S. Economy at the County Level

95% of the county economies have not recovered to pre-recession unemployment lows.

01.13.15
The Paradigm Shift in the Oil Industry

“Prices have to remain low enough to keep capital out of the [oil] market,” said Goldman Sachs' Jeff Currie. “...[T]his market is experiencing a paradigm shift right now. And what’s driving that shift?... Shale is fast cycle production, which means you put capital in today, you can get production in 30- or 60-days from now. …Capital is now the new margin of adjustment…Once you get down to $40 a barrel…, if you stay there for six months, you start to create real default probabilities …that’s going to be the driver to ...take action on financial stress.”

01.12.15
Disruption in Home Construction

The next housing solution: 3D print your own. 

01.12.15
Oil Supply Shock and Awe


“Over the past 30 years, there have been six major declines in the price of oil (defined as a greater than 50 percent cumulative decline),” wrote Guggenheim’s Scott Minerd. “The current decline now stands at around 55 percent, matching the magnitude of some of the worst historical oil crashes. However, most of the past declines have been due to faltering global demand, whereas the current slump is due to a glut of oil. …With no near-term signs of supply letting up, oil prices could continue to fall.”

01.11.15
Everything Becomes Computers
01.11.15
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the January 11, 2015 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • On January 6, 2015, GAO released a TARP report entitled Treasury Continues to Wind down Most Programs, but Housing Programs Remain Active, as of September 14, 2014, showing:
    • Treasury has exited four of the nine TARP non-housing programs, and was managing $2.9 billion in remaining assets. 
    • Treasury incurred $15.2 billion in lifetime losses on AIG.
    • Treasury has recouped 86% of its expenditures and incurred an estimated lifetime cost of $12.2 billion for the Automotive Industry Finance Program.  It still holds 13% in Alley Financial.
    • Treasury has disbursed $13.7 billion (36%) of the $38.5 billion in TARP housing funds.  The number of new HAMP permanent modifications added on a monthly basis rose in early 2013 but fell in 2014 to the lowest level since the program’s inception.  Homeowners have until at least December 31, 2016, to apply for assistance under MHA programs, and Treasury will continue to pay incentives for up to 6 years after the last permanent modification begins.  Treasury’s obligation under FHA Short Refinance will continue until September 2020.
    • Treasury estimates it had income of $16.1 billion on CPP and $4 billion each on its Asset Guarantee Program and Targeted Investment Programs.
    • Treasury does not know when it will completely exit the CPP program.  By the end of 2014, all of the institutions with outstanding preferred share investments were required to pay dividends at a 9 percent rate, rather than the 5 percent rate that had been in place for the past 5 years.

 

 

 

01.11.15
Dodd-Frank Act Rulemakings, Studies, and Reports Update

Attached please find an updated Roadmap to the Dodd-Frank Act Rulemakings, Studies, and Reports.

  • The CFPB proposed amendments to Regulations E and Z regarding prepaid financial products to require disclosures, apply limited liability and error resolution procedures, and to protect consumers from unauthorized transfers.  It would apply to prepaid cards but not gift cards.  
  • The CFTC reopened the comment periods for an aggregation proposal and a position limits proposal both released in 2013, until January 22, 2015.
  • Treasury proposed regulations to require qualified financial contract recordkeeping with respect to positions, counterparties, legal documentation, and collateral.  The Dodd-Frank Act provides that if the federal primary financial regulatory agencies do not prescribe such regulations to assist the FDIC as receiver to exercise its rights and fulfill its obligations within 24 months of enactment, which they did not, the FSOC Chairperson must.

 

Regards, 

Canfield Press

 

01.11.15
House of Representatives Approve Keystone Pipeline

As Nebraska Supreme Court Clears the Pipeline.

01.11.15
Can the Internet of Things Flourish and Protect Privacy?
01.11.15
The Hackers, Nerds, and Wonks that Brought on the Digital Revolution

A fireside chat with Walter Isaacson.

01.11.15
Cyber Crimes and Security Threats in 2015
01.11.15
Back to the Future: The Internet of Everything
01.09.15
Washington Regulatory Round-Up (1/09/15)
01.09.15
Urban Institute's Critique of FHA's MMIF

Acturial Assessment for 2014.

Laurie Goodman, January, 2015

01.09.15
The American Dream Is Back?

 

01.08.15
2014: The Year of Regulation

"President Obama’s pen and phone imposed $181.5 billion in regulatory costs during 2014, including proposed and final rules,” wrote American Action Forum’s Sam Batkins. “In 79,066 pages of regulation, Americans will feel higher energy bills, more expensive consumer goods, and fewer employment opportunities.. …How does $181.5 billion in total burdens compare on a personal level?

  • Per Capita: $567
  • Per Voter (18 years and older): $692
  • Per Day the Government was Open: $726 million"
01.07.15
Urban Institute's Critique of FHA's MMIF Actuarial Assessment for 2014
01.07.15
Politics Are Changing In Europe


“[Anti-EU populism is] going to prevent good policies being implemented going forward,” said David Woo, head of global rates and currency research at Bank of America Merrill Lynch. “…Weak governments across ...Europe are going to find it more and more difficult to do the right things economically speaking to basically revive their economies.  …They’re going to have to embrace more populist policies and that’s going to be the problem.”

01.06.15
State of American Energy 2015
01.06.15
Oil Is Causing Dramatic Shift in Global Power


“[Falling oil prices is] one of the things that’s causing a dramatic shift in global power," said Eurasia Group President Ian Bremmer. “It's one of the reasons the United States has so much less interest in getting sucked into the Middle East. It’s one of the reasons why President Putin in Russia is likely to be much more on the offensive in 2015 than he otherwise would be, recognizing that in the nearer term, it’s better for him to act.”

01.05.15
Top Risks of 2015
01.05.15
Greenspan: The Structure of the Oil Market Has Changed


“There’s something fundamental that’s going on [in the oil market]…”  said former Fed chairman Alan Greenspan. “…The market continues [to be] weak and that’s largely because the structure of the market has changed. The marginal producers are gradually becoming the shale producers. …At the moment, OPEC is not functioning. And, I’m not at all convinced that, short of a major change in the Saudi’s view of the future, that’s going to fundamentally change.”

01.04.15
Is the CDS Market Being Manipulated?

Just the U.S. dollar EM corporate debt: $5.7 trillion, split between $3.1 trillion in bank loans and $2.6 trillion in bonds." Below, dollar denominated credit to all foreign non-bank borrowers totaling est. $9 trillion.

01.04.15
Dodd-Frank Act Rulemakings, Studies, and Reports Update

Attached please find an updated Roadmap to the Dodd-Frank Act Rulemakings, Studies, and Reports.  

 

  • The Federal Insurance Office released a report entitled The Breadth and Scope of the Global Reinsurance Market and the Critical Role Such Market Plays in Supporting Insurance in the United States.  The report states that a substantial portion of reinsurance supporting the U.S. insurance sector is provided by companies not licensed in all states and, in many cases, neither domiciled nor licensed in the U.S.  It states that non-U.S. reinsurers accepting reinsurance premium ceded from U.S. insurers are not subject to the same state supervision applicable to licensed or accredited U.S. insurers and reinsurers.  Such reinsurers are indirectly regulated by state laws requiring that, to obtain “credit for reinsurance,” the non-U.S. reinsurer must post collateral for reinsurance liabilities, but state law is varied.  Treasury and the U.S. Trade Representative are considering an agreement with respect to collateral requirements for reinsurers and preemption of state laws.   

 

Regards, 

 

Canfield Press

 

01.04.15
How E-Commerce Is Finally Disrupting The $600 Billion-A-Year Grocery Industry.

Groceries are the biggest untapped opportunity in e-commerce.

01.04.15
The Coming Micropayment Revolution

"The innovation that will shape the coming year, I think, will be the consumer use of digital currencies.." Walter Isaacson, Aspen Institute CEO.

01.04.15
What Would the World Be Without Apple?
01.04.15
Disruption in Digital Banking
01.02.15
Washington Regulatory Round-Up (01/02/15)
01.02.15
As Greek Default Risk Soars To 66%, ECB May Be Unable to Launch QE

“[T]he Greek political turmoil complicates matters for the ECB and its ...sovereign QE program,” wrote Morgan Stanley analyst Elga Bartsch. ...[A] sovereign default in the Eurozone and the prospect of the ECB potentially incurring severe financial losses is likely to intensify the debate on the Governing Council, where purchases of government bonds remain highly controversial. ...The specter of default does not only make the issue of sovereign QE less certain again than the market believes, it also could create new limitations in its implementation.

12.31.14
The Disruption Report

Changes in technology are happening at a scale, which was unimaginable before and will cause disruption in industry after industry. This has really begun to worry me, because we are not ready for this change and most of our leading companies won’t exist 15–20 years from now.

Five sectors to keep an eye on:  Manufacturing, Finance,  Health Care, Energy and Communications. 

12.31.14
Happy New Year!
12.30.14
The 50 Best Fintech Innovators
12.29.14
Bank Capital Punishment and Other Nostrums

By Steve H. Hanke  , This article appeared in the January 2015 issue of Globe Asia .

12.29.14
Oil Slump “May Tip Certain Countries Over”

The collapse of oil prices is a “net positive for the global economy—particularly for consumers, but it’s not without what I call the bad and the ugly,” said Mohamed El-Erian. “The bad is it discourages investment in energy and alternative energy. The ugly is it may tip certain countries over—Russia, …Venezuela, Nigeria. It’s what you call the high absorption ones—the ones that cannot cope easily with sharp declines in oil prices. …This is a fundamental change in the oil market.” The supply paradigm for oil has changed.  

12.29.14
Oil May Not Rebound Until "Well Into 2016"

Gianna Bern, Brookshire Advisory and Research on Bloomberg.

12.29.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the December 28, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • FHFA announced that it is challenging two Nevada foreclosures by homeowners’ associations (“HOA”) based on the HOAs’ assertions of super-lien status.  Some states, including Nevada, grant HOA liens for a few months’ of unpaid HOA assessments priority, and this HOA lien takes priority even over a first mortgage lien that predates the HOA lien.  In one suit, FHFA claims that the HOA did not establish that its lien fell into the super-priority category, and in both cases FHFA asserts that the HOA lien cannot be prior to Fannie Mae’s lien, while Fannie Mae is in conservatorship.  This argument is based on HERA § 1145(j)(3), which provides that during conservatorship:

“No property of the Agency shall be subject to levy, attachment, garnishment, foreclosure, or sale without the consent of the Agency, nor shall any involuntary lien attach to the property of the Agency.”

In both cases, the HOA foreclosure sales price was considerably less than the outstanding mortgage loan amount.

FHFA also emphasizes that the GSEs cannot purchase a mortgage loan on a property that has a first-lien PACE loan attached to it.  FHFA stresses that “it is important for states and municipalities to understand these restrictions before continuing to offer the [PACE] programs.  Additionally, FHFA believes that borrowers should fully understand these restrictions prior to taking out a first-lien PACE loan.”  FHFA states that, in addition to aggressive enforcement of PACE policies, it is continuing to explore other possible remedies and legal actions to protect the GSEs’ lien position in response to first-lien PACE programs.

  • CBO released a report, Transitioning to Alternative Structures for Housing Finance, on mechanisms that could attract private capital to the secondary mortgage market:
    • A market with a single, fully federal agency that would carry out the two GSEs’ main function of buying eligible mortgages and turning them into securities that are guaranteed against losses from default on the underlying mortgages.  The transition to such an agency would require little or no change to the structure of the GSEs’ guarantees, the fees charged for them, or the GSEs’ loan limits because no significant amounts of new private capital would be required beyond those that are expected to be invested under current policy.  By the end of the transition period, the federal agency would have a smaller share of the market than Fannie Mae and Freddie Mac have today.
    • A hybrid public-private market with federal guarantees against catastrophic losses.  Under that structure, the government and private investors would share credit losses on eligible MBSs, with federal guarantees covering catastrophic risks (those associated with severe downturns in the housing market) for a significant share of mortgages.  As a result, taxpayers would bear most of the losses during a crisis, but private investors would bear most of the losses in other periods.  The main policy mechanism used to transition to that structure would be sharing credit risk with private investors.
    • A market with the federal government as “guarantor of last resort,” in which private companies would guarantee most new mortgages in normal times, but the government would fully guarantee most new mortgages during financial crises.  (In normal times, the government would guarantee a small sample of mortgages of all sizes to ensure that it is capable of doing so in times of crisis.)  The major policy actions taken to establish the new structure would be auctioning off the GSEs’ new guarantees and raising their loan limits.
    • A largely private market with no explicit federal guarantees of MBSs (other than those provided by the Ginnie Mae).  That structure would minimize the explicit credit risk borne by taxpayers.  The main policy changes made during the transition would be raising guarantee fees and lowering loan limits until the GSEs no longer guaranteed new mortgages.
  • FHFA released its Foreclosure Prevention Report for the third quarter of 2014, showing:
    • Fannie Mae and Freddie Mac completed 72,700 foreclosure prevention actions in the third quarter, bringing the total to more than 3.3 million since the start of the conservatorships.  These measures have helped nearly 2.8 million borrowers stay in their homes, including 1.7 million who received permanent loan modifications.   
    • The number of 60+ day delinquent loans declined 3 percent to the lowest level since the start of conservatorships;
    • The serious delinquency rate fell to 2 percent at the end of the third quarter;
    • Approximately 34 percent of all permanent loan modifications helped to reduce homeowners' monthly payments by over 30 percent in the third quarter;
    • About 22 percent of borrowers who received permanent loan modifications in the third quarter had portions of their mortgage balance forborne;
    • Nearly 12,900 short sales and deeds-in-lieu were completed in the third quarter, bringing the total to approximately 594,200 since the start of the conservatorships; 
    • Third-party sales and foreclosure sales fell 9 percent to nearly 39,100 while foreclosure starts dropped 13 percent to approximately 74,600 in the third quarter;
    • The REO inventory of Fannie Mae and Freddie Mac declined 9 percent during the quarter to nearly 120,100 as dispositions continued to outpace acquisitions.

 

12.26.14
Washington Regulatory Round-Up (12/26/14)
12.23.14
Oil Outlook for 2015


Demand for oil is down—half of what was predicted for 2014—and the oversupply of oil came from the U.S., according to Boone Pickens, founder of BP Capital. “We’re already seeing the oil rig count come down,” said Pickens, noting that 75 rigs have dropped in the last three weeks in the U.S.  “I think [oil] will be back up to $90 to $100 a barrel in 12 to 18 months,” said Pickens. “…OPEC is not a cartel anymore—it’s a trade association.”

12.22.14

To paraphrase Dr. Seuss, we are living through a period of incredible “thinks”:

  • In the next 10 days, 112,000 people in the US, Europe and Japan will reach the retirement age of 65.
  • In each of the last three years, sales of adult diapers in Japan have exceeded sales of baby diapers.
  • Meanwhile, 97 out of every 100 births now occur in developing countries.
  • 56% of the world economy is currently being supported by official policies of zero interest rates.
  • In the last 15 years, the value of prime London real estate has quadrupled; and yet today, UK interest rates are the lowest they have been in 300 years.
  • In the next 10 seconds, the US national debt will have risen by $322,000.
  • 2015, the U.S. federal government will spend $3.77 trillion (an amount larger than Germany’s GDP), while 50 million people live in poverty in the United States.
  • The number of U.S. government regulations increased from 834,949 in 1997 to 1,040,940 by 2012.
  • In the last 10 years, the number of industrial robots is up 72%, while the number of US manufacturing jobs is down 16%.
  • And by 2023, the average $1,000 laptop will be able to communicate at the speed of the human brain (and 25 years later, at the rate of the entire human race).
12.22.14
The Race for the Future Continues
12.22.14
The Role of Technology in Banking
12.22.14
Don’t Underestimate Eurozone Political Risks

Nouriel Roubini,  New York University

12.22.14
Five Waves of Technology Disruption
12.22.14
Mobile Has the Power to Change the Global Economy
12.22.14
The Future of Cybercrime
12.22.14
Are We Losing the Sense of Limitless Possibility?

“Small businesses, not big businesses, give two-thirds of Americans their first job,” said Carly Fiorina, former CEO of HP. “They employ half the people. Small businesses innovate at seven times the rate of big businesses. So …if we want to grow our economy, we have to start focusing on the most important resource we have –human potential—and unlock it ...[by revitalizing] Main Street entrepreneurship. Today, for the first time in our history, we are destroying more businesses than we are creating.”

12.21.14
Security, Liberty, and Privacy in 2025

Technical innovation is outpacing regulators’ ability to act and react. It is not clear what direction public norms about privacy will emerge. 

12.21.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the December 21, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • Treasury announced that it agreed to sell all of its remaining 54.9 million shares of Ally Financial common stock at $23.25 per share, recovering $1.3 billion.  Treasury reports that in total it recovered $19.6 billion on Ally, $2.4 billion more than it put in.  
  • The OCC released its Mortgage Metrics Report for the third quarter of 2014, showing:
    • 93% of mortgages were current and performing at the end of the quarter, compared with 91.4% a year earlier.  
    • The percentage of mortgages that were 30 to 59 days past due was 2.4% of the portfolio, an increase of 1.9% from the previous quarter but an 8% decrease from a year earlier.  Seriously delinquent mortgages were 3.1% percent of the portfolio, a decrease of 14.5% from a year earlier.
    • Loans in the process of foreclosure at the end of the third quarter fell 41.5% from a year earlier. 
    • The number of home retention actions decreased by 34.3% from a year earlier. 
    • Servicers implemented 3,595,553 modifications from January 1, 2008, through June 30, 2014.  Of these, almost 57% were active at the end of the third quarter and almost 43% had exited the portfolios of the reporting institutions, through payment in full, involuntary liquidation, or transfer to a non-reporting servicer.  Of the 2,047,719 modifications that were active at the end of the third quarter, approximately 68.6% were current and performing, 25.7% were delinquent, and 5.7% were in the process of foreclosure.

 

  • The Federal Reserve and OCC released an interim final regulation that amends the definition of “qualifying master netting agreement” under the regulatory capital rules, and the liquidity coverage ratio rule, as well as under the lending limits rule applicable to national banks and Federal savings associations.  The rule also amends the definitions of “collateral agreement,” “eligible margin loan,” and “repo-style transaction” under the regulatory capital rules.  The amendments are designed to ensure that the regulatory capital, liquidity, and lending limits treatment of certain financial contracts is not affected by implementation of special resolution regimes in foreign jurisdictions or by the International Swaps and Derivative Association Resolution Stay Protocol.
  • The banking agencies propose to clarify, correct, and update their regulatory capital rules applicable to banking organizations that are subject to the advanced approaches risk-based capital rule.  The proposed revisions are largely driven by the agencies’ observations during the parallel-run review process.  They are also intended to enhance consistency of the U.S. regulations with international standards.
  • Treasury released a report on the State Small Business Credit Initiative (“SSBCI”), a program enacted in 2010 and funded with $1.5 billion.  Under this program, states could apply for federal funds to extend credit to small businesses by demonstrating a minimum of $10 in new private lending for every $1 in federal funding.  Applications were due in June 2011.  The report shows that, as of September 30, 2014, states deployed $1,003,975,220, of which $943,285,735 was from original SSBCI allocations and $60,689,485 was from funds repaid and reused.  

 

12.19.14
Washington Regulatory Round-Up (12/19/14)
12.18.14
Housing Finance Reform Is Not Expected to Generate Significant Savings for Taxpayers

“Because policymakers have already raised the [g-fees] charged by Fannie Mae and Freddie Mac close to those that CBO estimates would be charged by private insurers, the budgetary costs of the two GSEs’ activities over the next 10 years are expected to be small,” wrote the agency. "As a result, the budgetary savings would also be small under any of the transition paths to a more private system that CBO considered. Thus, the choice between the different market structures probably rests primarily on considerations other than budgetary costs.”

12.17.14
Servicing Is an Underappreciated Constraint on Credit Access
12.17.14
Panic in Russia as Rubble Continues to Fall

Russia has lost control of its economy and may be forced to impose Soviet-style exchange controls after its central bank’s efforts to stem the ruble’s collapse failed. “The situation is critical,” said Sergei Shvetsov, vice chairman of Russia's central bank. “What is happening is a nightmare that we could not even have imagined a year ago. If a rise of 650 basis points won’t do the job, we are near the end. That means stringent capital controls.” BNP Paribas’ Michal Dybula, warned that the plunge of the rubble risks setting off a systemic bank run. 

 

12.16.14
Roadmap to Dodd-Frank MORTGAGE Rulemakings

Attached please find an updated Roadmap to the Dodd-Frank Act Mortgage Rulemakings.  The updates include:

 

  • The CFPB proposed several amendments to its mortgage servicing rules relating to loss mitigation, successors-in-interest to homeowners, and bankruptcy.

 

  • The CFPB finalized a regulation that permits a cure period for points and fees calculations for QM mortgage loans until 2021, and amends the definition of a small mortgage servicer.

 

  • The CFPB proposed changes to its integrated disclosures, including permitting revised loan estimates to be delivered the day following a rate-lock.

 

  • The banking agencies, Farm Credit Administration, and NCUA proposed rules requiring escrows of flood insurance premiums, under the Homeowner Flood Insurance Affordability Act of 2014.. 

 

 

 

12.16.14
Dodd-Frank Act Rulemakings, Studies, and Reports Update

Attached please find an updated Roadmap to the Dodd-Frank Act Rulemakings, Studies, and Reports.

 

  • The Comptroller finalized a rule that adjusts the timing of its annual stress testing cycle by three months and that clarifies how the agency calculates regulatory capital in the stress tests.

 

  • The Federal Reserve proposed a capital regulation to identify whether a U.S. bank holding company is a global systemically important banking organization (“GSIB”). A GSIB would be subject to a risk-based capital surcharge based on its systemic risk profile.  Eight U.S. firms would currently be GSIBs: Bank of America Corporation, The Bank of New York Mellon Corporation, Citigroup Inc., The Goldman Sachs Group, Inc., JPMorgan Chase & Co., Morgan Stanley, State Street Corporation, and Wells Fargo & Company.  

 

The first method would consider the GSIB's size, interconnectedness, cross-jurisdictional activity, substitutability, and complexity, consistent with a methodology developed by the Basel Committee.  The second method would replace substitutability with use of short-term wholesale funding, and would generally result in significantly higher surcharges than the BCBS framework.  Under the proposal, estimated surcharges for bank holding companies that are GSIBs currently would range from 1.0 to 4.5 percent of total risk-weighted assets.

 

Regards, 

 

Canfield Press

12.16.14
Deflation Remains the Dominant Theme for 2015

The 10-year Treasury note vs. the high yield corporate index shows investors are pulling back from the credit markets generally because of perceived dysfunction.

12.16.14
Is Oil the 800-Pound Gorilla?


How will lower energy prices impact inflation? And will falling prices impact the Federal Reserve’s move to raise interest rates? "That 800 pound gorilla known as oil—will anybody notice it?” asked Dorothy Weaver, CEO of Collins Capital. “Yes. It will be noticed. The Fed will have to address it. It needs to be proactive. [Fed Chairman] Yellen will want to keep her options open. People are spooked and nervous right now. Anything can be a tipping point for the market and the Fed does not want to be that tipping point."

12.15.14
The Subscription Economy
12.15.14
The Oil Oligopoly Is Confused
12.15.14
“This $550 Billion Mania Ends Badly"
12.15.14
Why Won’t OPEC Decrease Production?
12.15.14
The Great 2014 Oil Crash: "A Textbook Macroeconomic Shock"


“There is no doubt that the fall in the price of oil in 2014 has been a significant economic shock,” wrote Deutsche Bank analysts. “Most estimates suggest that this should add to global growth, weigh on global inflation and most likely have varied but oil-specific asset price implications (EM oil producing nations and US HY weakness stand out); however it is likely that growth tailwinds from this year’s fall in oil prices will not be the main story for investors in 2015.”

12.14.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the December 14, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • The Federal Reserve proposed a capital regulation  to identify whether a U.S. bank holding company is a global systemically important banking organization (“GSIB”).  A GSIB would be subject to a risk-based capital surcharge based on its systemic risk profile.  Eight U.S. firms would currently be GSIBs: Bank of America Corporation, The Bank of New York Mellon Corporation, Citigroup Inc., The Goldman Sachs Group, Inc., JPMorgan Chase & Co., Morgan Stanley, State Street Corporation, and Wells Fargo & Company.  

A first method would consider the GSIB's size, interconnectedness, cross-jurisdictional activity, substitutability, and complexity, consistent with a methodology developed by the Basel Committee.  A second method would replace substitutability with use of short-term wholesale funding, and would generally result in significantly higher surcharges than the BCBS framework.  

-Under the proposal, estimated surcharges for bank holding companies that are GSIBs currently would range from 1.0 to 4.5 percent of total risk-weighted assets.

  • The Federal Reserve proposed a capital regulation that would illustrate application of the common equity tier 1 capital qualification criteria to depository institution holding companies that are not organized as stock corporations.  The proposal would amend Regulation Q to address unique issues presented by certain savings and loan holding companies that are trusts and by depository institution holding companies that are employee stock ownership plans.  

Institutional investors may structure their investments in banks and bank holding companies through non-stock entities, such as limited liability corporations and limited partnerships.  However, certain capital instruments issued by these firms may not qualify as common equity tier 1 capital.  The Federal Reserve expects to propose regulatory capital rules in the future for savings and loan holding companies that are personal or family trusts and are not business trusts, and would provide a temporary exemption for those entities from the revised capital rules.  The Federal Reserve also expects to clarify the application of its regulatory capital rules to depository institution holding companies that are employee stock ownership plans.  The proposal does not apply to most depository institution holding companies.

  • Treasury announced that it completed its first pre-defined written trading plan for common stock of First BanCorp., Puerto Rico, selling 4,388,888 shares for $22 million (about $5 per share), leaving Treasury with 15,291,553 shares, or 7.2 percent of the company’s common stock, down from 9.2 percent.  Treasury intends to sell additional shares of common stock in the company through a second pre-defined written trading plan.  Treasury reported that on November 30, its outstanding investment in the company was worth $239 million, its largest remaining CPP investment, while the second-largest was worth much less, $50.2 million.

 

 

 

12.14.14
Blood in the Streets in the Oil Industry

The Opec oil cartel no longer exists in any meaningful sense and crude prices will slump to $50 a barrel over the coming months as market forces shake out the weakest producers, Bank of America has warned.

12.14.14
The Financialized Oil Dominoes Are Toppling

The drop in oil revenues has triggered a self-reinforcing feedback dynamic.

12.14.14
Washington Regulatory Round-Up (12/14/14)
12.12.14
FHFA Reverses Its Suspension of the Housing Trust Fund

In a December 11 letter to Fannie Mae and Freddie Mac, FHFA Director Mel Watt directed the GSEs to begin setting aside 4.2 basis points on each dollar of new mortgage purchases for allocation to the Housing Trust Fund and Capital Magnet Fund, pursuant to the Housing and Economic Recovery Act of 2008. Separately, FHFA sent to the Federal Register an Interim Final Rule to address the statutory requirement that the allocations may not result in transferring their expense to originators or other GSE counterparties. The Interim Final rule has a 30-day comment period.

12.11.14
10 Top Trends in Business Intelligence in 2015

Rapid integration leveraging simple interfaces will become standard.

12.11.14
The Changing World of Payments

Consumer choice will shape the future of payments.  Accenture 2014 Consumer Survey

12.11.14
Oil Hasn’t Reached the Bottom


“I think we’re going to see distressed debt in the high yield market soar—in terms of amount of distressed in energy and then you’re going to see defaults there,” said Martin Sass, founder at MD Sass Associates. “….There are ripple effects that are destabilizing [for] the market. We’re seeing increased volatility in the market, which I think are going to be characteristic of 2015—not only because of oil, but because of a lot of macro factors. We have Fed rate hikes likely to be forthcoming, we have Europe teetering on recession…”

12.10.14
Will the 3% Down Payment Mortgages Boost Homeownership?

“Since Fannie and Freddie’s 3% [down payment] program targets first time homebuyers, defaulters if they haven’t owned a home in 3 years and lower-income households, this a segment of the population that has been pulverized since the last decade,” wrote Anthony Sanders, finance professor at George Mason University. “The black unemployment rate and 20-24 age unemployment rate both remain above 10%. In other words, the pool of potential beneficiaries as designed is likely to be small.”

12.09.14
This Time is Different

QE and Inflation Expectations... a slide presentation.

12.09.14
The Great Escape

Tony Crescenzi, PIMCO

12.08.14
“The Unthinkable Becomes Routine”

“The highly abnormal is becoming uncomfortably normal,” wrote BIS. “Central banks and markets have been pushing benchmark sovereign yields to extraordinary lows—unimaginable just a few years back. …Moreover, estimates of term premia are pointing south again, with some evolving firmly in negative territory. And as all this is happening, global growth—in inflation-adjusted terms—is close to historical averages. There is something vaguely troubling when the unthinkable becomes routine.”

12.07.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the December 7, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • Treasury and HUD announced enhancements to Making Home Affordable (MHA) programs as follows:
    • Homeowners in HAMP will be eligible to earn $5,000 in the sixth year of their modification.  Before this change, HAMP Tier 1 permanent modifications earned a “pay for performance” principal balance reduction, payable annually for the first five years, if the loan is in good standing and has not been paid in full.  HAMP Tier 2 borrowers will be eligible to receive a principal balance reduction payment of $5,000 in year six.  The announcement says approximately one million homeowners with HAMP modifications are eligible to earn the increased HAMP incentive.
    • Subject to investor guidelines, servicers must offer to re-amortize an eligible HAMP Tier 1 reduced loan balance (excluding deferred principal) over the remaining loan term, at year 6.
    • The interest rate for HAMP Tier 2 modifications will be reduced by 50 basis points.
    • Relocation assistance is increased to $10,000, up from $3,000.

 

 

12.07.14
The Future of Jobs

McKinsey Global Institute's Michael Chui and James Manyika moderate a discussion at the Churchill Club.

12.07.14
Lending Club's Initial Public Offering
12.07.14
Mother of All Bubbles?
12.07.14
The WOW Jobs Report in the U.S.

Myles Udland, Business Insider.

12.07.14
The Payments Landscape

The international payments market is $26tn, and small to md sized businesses remain largely underserved. 

12.07.14
Disruption from Above and Below.

Zanny Minton Beddoes, The Economist

12.07.14
Washington Regulatory Round-Up (12/07/14)
12.05.14
It’s All Coming to an End


“How could they?” asked Janus Capital’s Bill Gross. “How could policymakers have allowed so much debt to be created in the first place, and then failed to regulate their own system accordingly? How could they have thought that money printing and debt creation could create wealth instead of just more and more debt? How could fiscal authorities have stood by and attempted to balance budgets as opposed to borrowing cheaply and investing the proceeds in infrastructure and innovation.”

12.04.14
Revolutionizing Banking
12.04.14
The Battle Against Lowflation

2015: economic growth will be 'below par and brittle".  Morgan Stanley.

12.04.14
Is the Fed in Need of a Fix?


“The key problem is that monetary policy always trumps safety and soundness,” said Knoll Bond Rating Agency’s Chris Whalen. “That’s been the historic conflict in the Fed.  ...[T]he way that large bank supervision is handled by the Fed in New York is really a problem. …When you see Dudley say that we’re ‘not cops on the beat, we’re fire wardens'—no, you’re a cop on the beat. You’re responsible for the safety and soundness of a bank holding company and they only have permission to own that bank, so long as you allow them…”

12.03.14
Washington Regulatory Round-Up (11/30/14)
12.03.14
OFR's 2014 Annual Report to Congress

Revised capital standards are contributing to rapid growth.

12.03.14
Mortgage Lenders Argue the Fair Housing Act Does Not Support Disparate-Impact Claims

"On November 24, 2014, K&L Gates filed a brief with the Supreme Court on behalf of the American Financial Services Association, [CMC], the [ICBA], and the [MBA] as amici curiae in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc., No. 13-1371,” wrote the law firm. “The brief supports the petitioners’ argument that the Act is properly read as being limited to cases of intentional discrimination and explains the negative impact of the disparate-impact theory on the residential mortgage lending industry.”

12.01.14
The Evolution of a Supercomputer in Your Pocket
12.01.14
Fannie and Freddie Will Allow Mortgage Write-Downs for Foreclosed Borrowers

On November 25, FHFA directed Fannie Mae and Freddie Mac to sell existing REO properties to any qualified purchaser at the property’s fair-market value, a step that will allow principal write-downs for underwater homeowners. The new policy will apply to only 121,000 foreclosed homes that are currently on the GSEs’ books. “In our experience at Boston Community Capital, permitting sales at fair-market value is a just and sound strategy for helping the many underwater homeowners still seeking relief,” said CEO Elyse Cherry. 

11.30.14
P2P Lending in the U.S. vs. UK
11.30.14
Alternative Finance in the UK

P2P Lending Accounts for 90% of UK Alternative Finance Market.

11.30.14
The Bank of the Future

MvcKinsey&Company

11.30.14
U.S. Regulatory Moat Creates “Untouchable” Data
11.30.14
The Traditional Banking Model Is Increasingly Anachronistic
11.30.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the November 30, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • FHFA directed the GSEs to permit former homeowners who have been through foreclosure and want to buy their homes back to purchase them at fair-market value, for use as their principal place of residence.  The GSEs used to require repayment of the full loan amount.  Under existing GSE rules, former borrowers must wait three years after a foreclosure to be eligible for a GSE loan.  This policy revision is limited to GSE REO of single-family homes as of November 25, 2014.  The GSEs hold approximately 121,000 REO properties.  Certain property exclusions may apply.
  • FHFA released its Refinance Report for the third quarter of 2014, showing:
    • Total refinance volume for the third quarter exceeded 389,000, while HARP refinances were down slightly at 44,136, or 11% of total refinance volume. 
    • Since 2009, there have been nearly 20 million GSE refinances, including more than 3.2 million through HARP.  
    • More than 25% of all HARP refinances for underwater borrowers (LTV greater than 105%) were for 15- and 20-year mortgages through the third quarter.
    • Year-to-date through September, HARP refinances represented 33% of total refinances in Georgia and 31% in Florida, nearly double the 16% of total refinances nationwide.
  • FHFA released an interactive map of HARP-eligible loans with a refinance incentive, meaning a note rate 150 basis points above the market rate.  FHFA estimates that, as of second quarter 2014, there are more than 722,000 such borrowers.  FHFA states that nationwide these borrowers could save, on average, as much as $200 per month.
  • The Federal Reserve announced, and invited public comment on, a proposal to apply enhanced prudential standards to General Electric Capital Corporation (“GECC”).  The agency describes the standards as including standards similar to those for large bank holding companies, such as for risk-based and leverage capital, capital planning, stress testing, liquidity, and risk management.  The standards would also include independence requirements for GECC’s board, restrictions on intercompany transactions, and the enhanced supplementary leverage ratio that applies to the largest, most systemic U.S. banking organizations.  
  • The Federal Reserve and FDIC announced that they had completed their review of Wells Fargo’s 2014 resolution plan, and noted improvements from the original plan, including the description of the firm’s preferred resolution strategy and the progress in addressing obstacles identified by the agencies.  The agencies note that the firm's 2014 plan provides a basis for a resolution strategy that could facilitate an orderly resolution under bankruptcy.  The agencies have also identified specific shortcomings of the 2014 plan that need to be addressed in the 2015 plan. 

 

 

 

11.30.14
The Re-Invented Bank Branch

Umpqua's store in San Francisco is the latest manifestation of the project.

11.26.14
Could the EU Force Google to Break Up?

Key U.S. lawmakers sent three open letters to the EU expressing great concern about a plan calling for an unbundling of search engines from other services. “We support healthy competition and a fair playing field for Internet companies in the U.S. and around the globe and we believe these goals can be accomplished through the traditional regulatory process,” wrote Rep. Darrell Issa (R-CA). “We believe that antitrust enforcement should be applied independent of politics and firmly rooted in our shared and international principles,” wrote House Judiciary Chairman Bob Goodlatte (R-VA) in a separate letter.

11.26.14
The Return of Conundrum
11.26.14
The Disruption Report

~~Power has shifted from companies to consumers, and expectations have never been higher.  Companies can’t get away with having crummy products, at least not for long.  For example, bad product reviews trump clever marketing. Today, great products win. Meanwhile, within companies the power has shifted as well.  Individuals and small teams can have a MASSIVE IMPACT. They can create new ideas, experiment, fail, and try again, and get their successes to a global market.

The people that can have the biggest impact of all are the ones we can smart creatives. These are the product folk who combine technical knowledge, business expertise, and creativity.  When you put today's technology tools in their hands and give them lots of freedome they can do amazing things, amazingly fast.

 

 

11.25.14
The Housing Market still has a LONG way to go.

The housing market is a patient in recovery......

11.25.14
What’s Keeping Millennials at Home? Is it Debt, Jobs, or Housing?

“Although peak credit has been surpassed, a substantial portion of the rise in credit is in the form of student loans that cannot and will not be paid back without bailouts,” wrote Mike Shedlock. “Importantly, millennial attitudes towards cars and other material goods is not the same as their parents. …Millennials will assist aging boomers via taxation and by overpaying for Obamacare. ...[B]ecause boomers live longer than ever, the economic drain and time commitment from millennials will increase every year. This has downward implications on the economy...”
 

11.24.14
"It is all about services."

~~:  "We are investing in a paperless society where everyone in the world is becoming either a banker, a fund manager, or a hairdresser - it's all about services. A non-productive society reigns supreme in most developed countries."  Saxo Bank.

 

11.24.14
Necessary Nine of the Global Success Marketplace Lending Industry

11.24.14
Mobile Is Eating the World

Benedict Evans, partner at Andreessen Horowitz

11.24.14
The Gap Between Silicon Valley and Washington

Founders Fund Partner Peter Thiel 

11.23.14
The E-Payment Revolution

CFPB Director Richard Cordray discusses the need for a safer, faster payment system

 

11.23.14
The Strategic Direction of Apple
11.23.14
Technology and Globalization

:  American entrepreneur Marc Andreessen

 

11.23.14
The Gap Between Silicon Valley and Washington

American entrepreneur Marc Andreessen

 

11.23.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the November 23, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • FHFA released its strategic plan for 2015 through 2019.  FHFA states that it reflects the strategic goals established in the agency’s 2014 strategic plan.  The strategic goals are:
    • Ensure safe and sound regulated entities
      • Assess the safety and soundness of regulated entity operations 
      • Identify risks to the regulated entities and set expectations for strong risk management 
      • Require timely remediation of risk management weaknesses 
    • Ensure liquidity, stability and access in housing finance
      • Ensure liquidity in mortgage markets 
      • Promote stability in the nation’s housing finance markets 
      • Expand access to housing finance for qualified financial institutions of all sizes and in all geographic locations and for qualified borrowers 
    • Manage the GSEs’ ongoing conservatorships
      • Preserve and conserve assets 
      • Reduce taxpayer risk from GSE operations
      • Build a new single-family securitization infrastructure.
  • FHFA released its fiscal 2014 Performance and Accountability Report.  It discusses the agency’s success under a number of goals as met, partially met, or unmet.  Most were met.  Partially met goals include: maintaining the rate of HARP refinances; completing the common securitization platform; and completing plans to standardize data.  Goals not met include:  increasing single-family g-fees; completing beta-testing for the national mortgage database; and establishing mortgage insurer standards.
  • FHFA released its annual report on g-fees, showing that g-fees more than doubled from 2009 through 2013, and increased at a higher annual rate in 2013 than in the prior four years.  
    • G-fees increased to an average of 51 basis points in 2013 compared to an average of 36 in 2012 and 22 in 2009;
    • The g-fee increases in 2012 reduced pricing differences between small and large lenders in 2013; 
    • The percentage of loans sold to the GSEs by extra-large lenders decreased from 60 percent in 2010 to 49 percent in 2013 while the percentage of loans sold by extra-small lenders increased from 8 percent to 19 percent over the same time period;
    • The 2012 fee increases substantially reduced the pricing difference between 30-year fixed rate and 15-year fixed rate loans.
  • The Federal Reserve Board announced two reviews to ensure that its examinations of large banking organizations are consistent, sound, and supported by all relevant information.  At the request of the Board, its Inspector General is examining whether there are adequate methods for decision-makers to obtain all necessary information to make supervisory assessments and determinations, and whether channels exist for decision-makers to be aware of divergent views among an examination team.  The Board is reviewing whether its decision-makers receive the information needed to ensure consistent and sound supervisory decisions regarding the supervision of the largest, most complex banking organizations, and whether adequate methods are in place for those decision-makers to be aware of material matters that required reconciliation of divergent views related to supervision of those firms.
  • GAO released a report on FSOC entitled Further Actions Could Improve the Nonbank Designation Process.  GAO found key areas in which FSOC could enhance the accountability and transparency of its designation process.  The report states:
    • Tracking and monitoring.  FSOC has not centrally recorded key processing dates, tracked the duration of evaluation stages, or collected information on staff conducting evaluations, such as the number or type of staff contributed by member agencies. Without such data, FSOC’s ability to effectively monitor the progress and evaluate the quality and efficiency of determination evaluations is limited.
    • Disclosure and transparency.  FSOC’s transparency policy states its commitment to operating transparently, but its documentation has not always included certain details.  For example, FSOC’s public documents have not always fully disclosed the rationales for its determination decisions. 
    • Scope of evaluation procedures.  FSOC has evaluated how companies might pose a threat to financial stability using only one of two statutory determination standards (a company’s financial distress, not its activities).  By not using both standards when appropriate, FSOC may not be able to comprehensively ensure that it has identified and designated all companies that may pose a threat to U.S. financial stability.
  • GAO released a report on bank capital entitled Initial Effects of Basel III on Capital, Credit, and International Competitiveness.  The report states:
    • The U.S. Basel III capital requirements likely will have a modest impact on lending activity, as most banks may not need to raise additional capital to meet the minimum requirements.  GAO estimated that less than 10 percent of the bank holding companies collectively would need to raise less than $5 billion in total additional capital to cover the capital shortfall.  Banks with a shortfall tended to be small, with less than $1 billion in assets.  According to officials from the eight community banks GAO interviewed, they do not anticipate any difficulties meeting the capital requirements but expect to incur additional compliance costs.  Officials from the 10 global systemically important banks that GAO interviewed said they have been incurring significant costs to comply with the new requirements, but three said that U.S. minimum capital ratios for Basel III tend not to be the binding capital constraint. 
    • Jurisdictional differences in the implementation of the Basel III capital standards have arisen, but their competitive effect on internationally active banks is unclear.  For example, some jurisdictions are subjecting certain of their banks to capital or leverage requirements above the Basel III minimums or exempting banks from certain capital requirements.  In addition, other factors can affect the competitive position of internationally active banks, such as differences in accounting treatment, cost of capital, and tax rules across jurisdictions.
  • Treasury announced results of its auctions of CPP shares in three institutions.  Treasury had announced it would also auction its shares in Liberty Shares, Inc. (Hinesville, GA) but it did not because it did not receive sufficient bids above its required minimum.
    • First United Corporation (Oakland, MD), for $30,060,300; Treasury paid $30,000,000;
    • Lone Star Bank (Houston, TX), for $2,000,881; Treasury paid $3,072,000; and
    • Porter Bancorp, Inc. (Louisville, KY), for $3,500,000; Treasury paid $35,000,000.  Measured by the investment amount outstanding, this was the third-largest remaining institution in CPP at the end of October 2014.

 

 

 

11.21.14
Washington Regulatory Round-Up (11/21/14)
11.21.14
Fair Lending in the Indirect Auto Finance Market

AFSA’s study, Fair Lending: Implications for the Indirect Auto Finance Market, found that the disparity alleged by the CFPB between the amount of dealer reserve charged to minorities and non-minorities is not supported by data.  There is little evidence that dealers systematically charge different dealer reserves on a prohibited basis, according to the study.  Instead, variations in dealer reserves across contracts in the study could be largely explained by objective factors other than race and ethnicity.

11.21.14
The Ultraconnected Age of Automobile
Me, my car, my life
11.20.14
GSE Conservatorship Is Not a Long-Term Solution

“We believe that the government conservatorship of Fannie Mae and Freddie Mac is not a long-term solution to provide access to mortgages, and that Congress should enact comprehensive housing finance reform,” wrote Senators Warner and Warren in a letter to FHFA Director Watt. At the Senate Banking Committee’s oversight hearing for FHFA, Chairman Tim Johnson (D-SD) added, “…[I]f Congress cannot agree on a smooth, more certain path forward, I urge you, Director Watt, to engage the Treasury Department in talks to end the conservatorship."

11.19.14
What Now for Fannie and Freddie?

The Election is over...

11.19.14
Non-Direct Auto Lending: Is the CFPB Asserting Jurisdiction over the Capital Markets?
11.19.14
The FSOC’s Extreme Hubris Nearly Ensures Its Failure

"A fatal flaw of a government committee like FSOC is that governments themselves are major creators of systemic risk, including of course the U.S. government, with its huge financial activities," wrote AEI's Alex Pollock. "This is especially true of central bank money printing blunders, like those which set off the enormously destructive Great Inflation of the 1970s, or which stoked the U.S. housing boom as it turned into a bubble in the 2000s. Indeed the Federal Reserve, the central bank to the world, is itself the greatest creator of systemic risk of them all."

11.18.14
FHA’s Insurance Fund Is Back in the Black


FHA’s Mutual Mortgage Insurance Fund (MMIF) had an economic value of $4.8 billion, up from negative $1.1 billion for FY2013, according to the fund's FY2014 audit. The MMIF’s capital-reserve ratio grew to 0.41%, below the 2% statutory requirement. The report concluded that FHA’s reserves will not hit the 2% threshold until 2016—a year later than previously estimated.

11.18.14
Low Inflation by End of 2016 Is Twice As Likely as High Inflation,

“[I]nflation is not expected to surge in the near future,” according to the Federal Reserve Bank of San Francisco. “…[T]he risks to the inflation outlook remain tilted to the downside.”

 

11.17.14
Midterm Elections
11.17.14
The Lame Duck
11.17.14
The Banking Industry Recovery
11.17.14
Obamacare

Supreme Court to review court tax fight.

11.17.14
Keystone XL Pipeline
11.17.14
Japan Slips into a Recession

Markets traded lower as the Japanese economy unexpectedly slipped back into a recession. “The big question is has Abenenomics failed?” asked Patrick Chovanec, Silvercrest Asset Management. “It was always clear that QE was not going to be enough to get the Japanese economy back on tract. You needed substantive reform—…labor markets, immigration, trade, agriculture—and that just didn’t happen. In the mean time, they were trying to walk the line with the fiscal situation.  …I think it’s good that they are talking about postponing the [second tax] increase.”

 

11.16.14
Roadmap to Financial and Housing Market Stabilization Plans

This is the November 16, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • Treasury announced that it intends to auction all of its CPP shares in four institutions:
    • First United Corporation (Oakland, MD);
    • Liberty Shares, Inc. (Hinesville, GA);
    • Lone Star Bank (Houston, TX); and
    • Porter Bancorp, Inc. (Louisville, KY).

 

 

 

11.16.14
The Election Is Over: Now What for Fannie and Freddie?
11.14.14
Washington Regulatory Round-Up (11/14/14)
11.13.14
Lame Duck: Finding Areas of Agreement
11.13.14
Change Is in the Air

“[T]he Supreme Court agreed to review a challenge to …whether Obamacare can only provide subsidies in states that run their own exchanges,” wrote First Trust economists. “It’s hard to exaggerate the significance of this legal case. If the Court rules against the Obama Administration’s interpretation of the law – and we think it probably will – it would, in effect, free each state to decide whether it will be an Obamacare state or not as written. Without all the states involved, we doubt the law can survive. Those who support freer markets would be poised to move the health system in that direction.”

11.12.14
"We’re Fine Happy and Will Stay Fine Happy"

The regulator are still trying to make up for what they think they missed.....

11.12.14
A Closer Look at the Lame Duck


With the 2014 election largely behind them, Congress returns today to the Nation’s Capitol to begin the Lame Duck session to finish the uncompleted business of the 113th Congress. While the bulk of the legislative work is not expected to begin until December 1, following the Thanksgiving recess, there will be ongoing negotiations in the meantime, where the Members will decide the items that will get done before the 113th Congress adjourns sine die.

 

11.12.14
Budget Highlights Fiscal Issues Facing U.S.

" We have to get a budget in place wthin the next few months and year.... Let's  make some real policy choices."

11.11.14
The Party of the Future

“The Party that recognizes that the government needs to embrace new technologies, allowing innovation and commerce to “bubble-up,” thrive and move the economy and our society forward, will be the Party of the future. Such an agenda would include revising the regulatory structure, which is currently throttling the economy, by eliminating those requirements that are out-of-date while ensuring that those that remain serve their intended purpose – protecting consumers, not fostering litigation. It would rethink our educational systems and allow for newer technologies ..[that give] students …the education and skills necessary [to compete].

11.10.14
A Word from the Central Bankers
11.10.14
Recap of the Midterms

Americans have entrusted Republicans with control of both the House and Senate.

11.10.14
U.S. Labor Force Market Not as Healthy as It Looks
11.10.14
Judge Approves Detroit Bankruptcy
11.10.14
The Supreme Court Takes Up Obamacare’s Subsidy
11.10.14
A Closer Look at Sovereign Debt
11.10.14
President Obama Faces the Nation
11.10.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the November 9, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • The GSEs announced David Applegate as Chief Executive Officer for the GSEs’ common securitization platform.  They also announced appointments to the board – David Lowman and Jerry Weiss of Freddie Mac, and Terry Edwards and Rick Sorkin of Fannie Mae. 
  • Fannie Mae announced results for the third quarter of 2014, showing net income of $3.9 billion and a net worth of $6.4 billion as of September 30.  Fannie Mae will pay $4 billion in dividends to Treasury for the third quarter.
  • Freddie Mac announced results for the third quarter of 2014, showing net income of $2.1 billion and a net worth of $5.2 billion as of September 30.  Freddie Mac will pay $2.8 billion in dividends to Treasury for the third quarter.  
  • The Federal Reserve finalized a regulation that prohibits mergers of banking organizations if the ratio of the resulting company's liabilities exceeds 10 percent of the aggregate consolidated liabilities of all financial companies.

 

 

11.10.14
Supreme Court to Hear Obamacare Subsidies

“The Supreme Court’s surprise decision to hear King v. Burwell poses a significant risk to a core economic pillar of the [Affordable Care Act] and therefore the law as a whole,” wrote Compass Point’s Isaac Blotansky. “…[A] victory by plaintiffs would strike a blow at a core economic pillar of the ACA and strengthen Congressional calls for significant legislative changes. …[T]he repercussions to the ACA would be so dramatic that we believe the law would have to be reopened, an unsettling proposition for the White House given that the GOP will control both chambers of Congress.”

11.07.14
Washington Regulatory Round-Up (11/07/14)
11.07.14
The Evolving Roles of FHA in an Uncertain Housing Climate
11.06.14
FinCEN Continues Scrutiny of Virtual Currency Companies
11.06.14
It's Very Dangerous to "Tamper" with Fed, Says Dallas Fed President Fisher

“We [the Fed] are necessary but not sufficient,” said Dallas Fed president Richard Fisher. “We need to have a fiscal partner. …Let’s hope the fiscal authorities will do their job so it’s no longer dependent upon the monetary authority to carry the ball. ...We have some people who feel very strongly [about the Fed’s independence.]  …Think about this, we have a Congress that can’t even get its own budget together—do we want them to run a central bank?  …Most people realize if you gave them the power of the central bank directly that then they would put the country in jeopardy.”

11.05.14
The American People Sent a Message: Get the Job Done

"The point is, it’s time for us to take care of business,” said President Barack Obama. 

11.05.14
Is It Time for Compromise?


“There some places where we can make some progress,” said Mike Feldman, former senior advisor to Vice President Al Gore. “I think corporate tax reform, infrastructure. There are some low-hanging fruit out there—things people agree on more Ebola funding, cybersecurity. …I think we have a narrow window. And, I think it’s possible. Success and progress will, I think, bring about more of that. So let’s get started.”

11.05.14
2014: The Wave Election
11.04.14
The Global Economy and Financial Markets Are “Insecurely Grounded”

“[M]uch of our 21st century economy has been planted in the sandy loam of finance as opposed to the concrete foundation of investment and innovation,” wrote Janus Fund’s Bill Gross. “The real economy needs money printing, yes, but money spending more so, and that must come from the fiscal side—from the dreaded government side—where deficits are anathema and balanced budgets are increasingly in vogue. ...[D]eflation remains a growing possibility—not the kind that creates prosperity but the kind that’s the trouble for prosperity.”

11.03.14
How Have Things Changed on Wall Street?

Is Wall Street being disrupted by technology?

 

11.03.14
Billion Dollar Unicorns
Many entrepreneurs, and the venture investors who back them, seek to build billion-dollar companies.
11.03.14
The Enormous Gulf Between Silicon Valley and Washington, D.C.

It’s very hard to get reasonable science, reasonable and technology policy when people understand these areas as poorly as they do in D.C.

 

 

11.03.14
The Tech Revolution Has Not Begun
11.03.14
The Line Between Tech Rules and Customer Protection
11.03.14
Where Are the First Time Homebuyers?

...only 1/3 of buyers are first time buyers....

11.03.14
Reading the Tea Leaves on Election Eve
11.03.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the November 2, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • SIGTARP released a quarterly report highlighting SIGTARP’s escalated efforts to seek individual and corporate accountability for TARP-related crime.  
    • The report shows $24.7 billion remains available to be spent on housing programs.  SIGTARP continues to recommend that Treasury ensure that HAMP servicers have sufficient resources to review applications, and that Treasury do more to ensure HAMP applications are transferred when loan servicing transfers.
    • SIGTARP analyzed some of the interconnections between six of the largest TARP recipients (JPMorgan, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley) in 2008 through 2014, and how the interconnections contributed to the financial crisis and TARP.  SIGTARP states, “The institutions themselves must continue to assess how interconnectedness caused the crisis, whether those same connections exist today, and whether they still pose excessive risk.  In order to address too big to fail, regulators must understand, monitor, and address any interconnection that could spiral one institution’s troubles into a threat to the entire country.”
  • The Federal Reserve announced amended management standards for financial market utilities that have been designated as systemically important, and that it is replacing two sets of risk-management standards for payment systems and for central securities depositories and central counterparties with a common set of risk-management standards for all types of designated financial market utilities.  The new management standards are based on the Principles for Financial Market Infrastructures developed by the Committee on Payment and Settlement Systems and the Technical Committee of the International Organization of Securities Commissions and published in April 2012.  The revised standards include separate standards to address credit risk and liquidity risk, new requirements on recovery and orderly wind-down planning, a new standard on general business risk, a new standard on tiered participation arrangements, and heightened requirements on transparency and disclosure.

 

  • The European Commission approved Portuguese plans for a development financial institution, supervised by the Bank of Portugal, to manage specialized funds to provide small and medium sized businesses with access to funding on a co-investment basis with private investors.  The institution will not take deposits.  It will have starting capital of €100 million, fully subscribed by the Portuguese state. 

 

  • The European Commission announced partnership agreements with BelgiumCroatiaItalyLuxembourgMaltaSloveniaSpainSweden, and the United Kingdom that enable the countries to receive €92 billion in European funding through 2020.  They will also receive €30 billion for rural development and fisheries and the maritime sector.

 

11.03.14
GOP Win Could Wake Up Obama

“Democrat [midterm election] strategy for the cycle was predicated on three things,” said Mark Halprin, managing editor for Bloomberg Politics. “Eliminate Republican candidates as unacceptable choices, too extreme. Change the debate to not be about President Obama but to be about economic issues. And, three, the turnout game. They basically failed on two out of the three. The debate is about the president and they have not eliminated the Republicans. So the turnout is all they have…”

 

10.31.14
Washington Regulatory Round-Up (10/31/14)
10.31.14
The Banking Industry Needs a Sustained Period of Higher Rates, Dunne Says

“So what we need is a sustained period of higher interest rates,” said James Dunne, senior managing partner of Sandler O’Neill & Partners. “They are too low. Everybody knows they’re too low, but unfortunately it’s going to take awhile to get there. And that will take time and that is not as good a news for the banks. …I think at least 18 months [before rates go up]. It’s going to take much longer than you thought.”

10.31.14
Will the global slowdown derail the U.S. economy?

We are getting better but the increase is from Government spending.  New construction and consumer spending has still not 'broken through'.

10.29.14
Most Litigation Overhang Is “Behind Us,” said BofA’s Moynihan
10.29.14
TEST
10.29.14
The CFPB’s Efforts to Clean Up Deception in the Marketplace


“The fourth [deception] we are taking on, perhaps the most damaging of them all, is discrimination,” said CFPB Director Richard Cordray, in a speech to the University of Michigan Law School. “The greatest challenges some consumers face are rooted in unlawful treatment based on prohibited characteristics like race or national origin. So we are seeking economic justice and the right to equal treatment in the financial marketplace based on individual merit and responsibility."

10.28.14
The Stairway to Share Prosperity

Labor Secretary Thomas E. Perez is the odds-on favorite to succeed outgoing Attorney General Eric Holder, according to the New York Times.

10.28.14
Regulation by Prosecution

Nonprosecution and deferred prosecution agreements (N/DPA’s) have become a staple of the Justice Department’s disposition of corporate criminal investi­gations. “[Justice’s] practice of using N/DPAs as a vehicle to force a corporation to make contributions to third parties designated in the agreement… [enables the agency] …to disburse to third parties of their own choosing funds that properly should be paid into the federal treasury,” wrote Heritage Foundation’s Paul Larkin. “Congress either should prohibit this practice altogether or should require that a magistrate judge review [N/DPA’s].”

10.27.14
Wake Up Europe

Europe is facing a challenge from Russia to its very existence. Neither the European leaders nor their citizens are fully aware of this challenge or know how best to deal with it. 

10.27.14
The Centennial Moment in Financial Services

CHIP REGISTER, Executive V.P.

Sapient Corporation 2014

10.27.14
Transforming and Redefining Banks

Global Banking Outlook 2014-2015

10.27.14
Is Silicon Valley the Future of Finance?

Kevin Roose, New York Magazine June 1, 2014

10.27.14

Crowdfunder Insider, October 17, 2014.

10.27.14
The Payment EcoSystem

Payfirma Abdallah El Chami, September 11, 2014.

10.27.14
25 Banks Failed the ECB Stress Tests

Capital shortfall of €25 billion detected at 25 participant banks.

10.27.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the October 26, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • Six agencies released a final risk retention rule that largely retains the risk retention framework contained in the proposed rule of August 2013, and generally requires ABS sponsors to retain five percent of the credit risk of the assets collateralizing the ABS issuance.  The rule also sets prohibitions on transferring or hedging the credit risk that the sponsor is required to retain.  The final rule aligns the QRM definition with that of a QM definition.  The agencies will review the QRM definition within four and every five years thereafter, and allows each agency to request a review of the definition at any time.  The final rule exempts commercial loans, commercial mortgages, or automobile loans that meet specific underwriting standards.  
  • The federal banking agencies released the supervisory scenarios for the 2015 capital planning and stress testing program.  The program includes the Comprehensive Capital Analysis and Review (CCAR) of 31 bank holding companies with $50 billion or more of total consolidated assets, and banks over $10 billion.  The scenarios are baseline, adverse, and severely adverse.  The baseline scenario is similar to the average projections from surveys of economic forecasters.  This year’s adverse scenario is characterized by a global weakening in economic activity and an increase in U.S. inflationary pressures that, overall, result in a rapid increase in both short- and long-term U.S. Treasury rates.  The severely adverse scenario features a substantial weakening in global economic activity, accompanied by large reductions in asset prices. 
  • The European Commission adopted a delegated act and a proposal on calculating bank contributions to the national bank resolution funds established under the Bank Recovery and Resolution Directive (BRRD).  The BRRD, which became effective in July 2014, provides authorities with a common set of powers for dealing with failing banks, such as requiring resolution plans.  It has a target resolution fund level of at least 1% of covered deposits by the end of 2024.  

 

 

 

10.27.14
The Productivity of Debt, Declining Money Velocity and Sluggish Growth

“[W]hen assessing the type of debt currently being employed (unproductive, at best) the risks are for lower growth levels,” wrote Dr. Lacy Hunt. “2014 has witnessed a resurgence of consumer auto and mortgage lending that was achieved by a lowering of credit standards. The percentage of subprime consumer auto loans (31%) returned to the peak levels reached prior to 2008. Such lending has historically turned counterproductive. If this were to occur again, velocity would accelerate to the downside, resulting in a sub 3% path for nominal GDP.”

10.24.14
Washington Regulatory Round-Up (10/24/14)
10.24.14
Financial Market Cognitive Dissonance


“[T]he financial markets are confronted with two conflicting pricing structures: a USD yield curve that anticipates a significant increase in interest rates over the medium term, and an options market that offers “rate insurance” at a historically low cost,” wrote PIMCO’s Harley Bassman. “...[I]t  may be possible [for the Fed] to land a jumbo jet onto a football field, it is still highly unlikely.”

10.23.14
Emerging Trends in Real Estate

United States and Canada 2015.

10.23.14
Divergence Is Monetary Policy Will Shake Up Markets

“…[W]hen the training wheels come off the market in central bank land, macro becomes functionally much more relevant [and creates more volatility in the currency markets], “ said Kyle Bass. “This policy divergence is going to be something between …U.S. Japan and Europe. Europe is going to have to go all-in to arrest their deflationary environment over the next 12 months … And Japan is actually going to have to print more money than they ever have,” as the Federal Reserve winds down QE.

10.22.14
Urban Institute of FHFA’s Proposed Housing Goals

“Setting [the proposed housing] goals requires FHFA to walk a fine line to meaningfully expand lending to all qualified applicants without encouraging lending to borrowers who cannot sustain mortgage payments,” wrote Urban Institute in comment letter.   Specfically, UI critiques FHFA’s proposed housing goals for 2015-2017 and examines (i) how the goals interact with other policy issues; (ii) should FHFA apply both benchmark (prospective) and market (retrospective) goals; and  (iii) if FHFA set its benchmark goals appropriately.

10.21.14
The Regulators Finalize the Credit Risk Retention Rule
10.21.14
FHFA Plans Looser Mortgage Rules

The U.S. government is considering changes to mortgage lending standards as the FHFA is set to unveil plans to encourage banks to lend to buyers.

10.21.14
FHFA Director Watt Announces Changes to Mortgage Buyback Rules

 FHFA Director Mel Watt announced changes to the GSEs’ life-of-loan exclusions to provide clarity on what they are and when they apply to loans for mortgage repurchases.The buy-back exclusions fall into six categories, including (i) misrepresentations, misstatements and omissions; (ii) data inaccuracies; (iii) charter compliance issues; (iv) first-lien priority and title matters; (v) legal compliance violations; and (vi) unacceptable mortgage products. “This is a straightforward clarification, [which] will reduce confusion and risks to lenders,” said Watt.



 

10.20.14
The Global Slowdown


10.19.14
The Future of Cypercurrencies
10.19.14
Interpreting Innovation: Impact on Productivity, Inflation and Investing
10.19.14
Roadmap to Financial and Housing Market Stabilization Plans Update
10.19.14
Blackrock’s Sovereign Risk Index

Drawing on a pool of more than 30 quantitative measures spanning financial data, surveys and political insights, the BlackRock Sovereign Risk Index (BSRI) provides investors with a framework for tracking sovereign credit risk in 50 countries.

10.19.14
Going Dark: Are Technology, Privacy, and Public Safety on a Collision Course?

"The law has not kept pace with technology, and this disconnect has created a significant public safety problem we have long described as 'Going Dark,'" said FBI Director James Comey.

 

10.19.14
Device Democracy: Saving the Future of the Internet
10.19.14
Could Bitcoin Be as Transformational as the World Wide Web?
10.17.14
The Federal Reserve's Mission Creep

“[T]he Federal Reserve has a rich history of bureaucratic mission creep," wrote Cato’s Norbert Michel. "Today’s Fed is very different from the institution created in 1913, and it has morphed into something that many of the original sponsors of the Federal Reserve Act never intended it to become. …The Fed has always had trouble fulfilling its main responsibilities, and Congress has continuously responded to those difficulties by expanding the Fed’s reach into the economy. Dodd-Frank is no exception to this long-term historical trend.”

10.16.14
The Fed Should Consider Delaying the End of QE, Says Bullard
10.16.14
Bank of America’s Earnings Surprise After Record Settlement


Bank of America posted a third quarter loss of $0.01 per share, excluding preferred dividends, on $168 million of net income. The Bank’s loss was largely due to its $16.65 billion settlement with the federal government, which drove litigation costs up to $5.6 billion—up five-fold from $1.1 billion for the year-ago period. To date, Bank of America has agreed to pay approximately $70 billion to resolve legal matters.

10.16.14
The Pressure Is on for Better Fiscal Policy

“The Federal Reserve cannot do much more,” said Columbia University dean Columbia University dean, Glenn Hubbard. “…I still expect the Fed to begin normalizing in 2015.”

 

10.15.14
Support for Economic Growth: Bank Lending Improves

“[D]espite growth in the M1 money supply in this recovery, the velocity of money has continued to trend lower and is at levels last seen nearly 30 years ago,” wrote Wells Fargo’s John Silvia. “As long as velocity continues to decline, the impact of the money supply should be relatively muted when it comes to the rise in. Easing lending standards, as evidenced by the Fed’s Senior Loan Officers’ Opinion survey and recently-strong growth in both revolving and non-revolving consumer credit should be a boon for lending and spending, and may be what is needed to reverse the downward trend in money velocity...” 

10.14.14
Big Banks Report Third Quarter Results
10.13.14
A Snap Shot of the Global Crowdfinance Marketplace
10.13.14
Silicon Valley’s View of the Industrial Internet
10.13.14
Momentum and Outcome
10.13.14
Economies of Scale
10.13.14
Transforming the Mindset of IT
10.13.14
What’s Next? Autonomous Systems
10.13.14
Staying Alive

“Picture perfection or fairy tale endings do not describe the global economy or even its financial markets more than five years after its Minsky/Lehman moment,” wrote Janus Capital's Bill Gross. “While U.S. bond and equity markets have been thrust into a seemingly safe outer orbit, the same cannot be said for other developed and developing nations. Many economies in turn have entered or are bordering on recessions with limited monetary firepower remaining to promote real growth. ...Financial markets are artificially priced. ...We have had our Biblical seven years of fat."

10.12.14
Peer-2-Peer Lender Offers Mortgages in Select States

Existing SoFi borrowers may not have to show any documentation at all, if they have recently applied for a student loan.

 

10.12.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the October 12, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • The International Swaps and Derivatives Association (ISDA)announced that 18 major global banks (G-18) have agreed to sign a new ISDA Resolution Stay Protocol, which has been developed in coordination with the Financial Stability Board to support cross-border resolution and reduce systemic risk.  The protocol will impose a stay on cross-default and early termination rights within standard ISDA derivatives contracts between G-18 firms in the event one of them is subject to resolution action in its jurisdiction. The stay is intended to give regulators time to facilitate an orderly resolution of a troubled bank.  The protocol essentially enables adhering counterparties to opt in to certain overseas resolution regimes by changing their derivatives contracts.  While many existing resolution frameworks impose stays on early termination rights, these stays might only apply to domestic counterparties trading under domestic law agreements.  Participating firms are:  Bank of America Merrill Lynch, Bank of Tokyo-Mitsubishi UFJ, Barclays, BNP Paribas, Citigroup, Crédit Agricole, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan Chase, Mizuho Financial Group, Morgan Stanley, Nomura, Royal Bank of Scotland, Société Générale, Sumitomo Mitsui Financial Group, and UBS.
  • GAO released a TARP report, Treasury Could Better Analyze Data to Improve Oversight of Servicers’ Practices.  GAO recommends that Treasury evaluate why servicers differ in their reasons for denying HAMP trial modifications and in their HAMP redefault rates.
  • GAO released a report titled Housing Finance System—A Framework for Assessing Potential Changes.  GAO developed a draft framework that it shared with seven discussion groups composed of government officials, experts from academia and research organizations, and interested parties such as consumer advocates and industry representatives.  The discussants provided input on market developments and the framework.  The framework contains 9 elements:
    • Clearly defined and prioritized housing finance system goals;
    • Policies and mechanisms that are aligned with goals and other economic policies;
    • Adherence to an appropriate financial regulatory framework;
    • Government entities that have capacity to manage risks;
    • Mortgage borrowers are protected and barriers to mortgage market access are addressed;
    • Protection for mortgage securities investors;
    • Consideration of the cyclical nature of housing finance and the impact of housing finance on financial stability;
    • Recognition and control of fiscal exposure and mitigation of moral hazard; and
    • Emphasis on implications of the transition. 
  • FSOC held a closed meeting to discuss the asset management industry, with an open session at which the council heard a presentation from Richard Berner, Director of the Office of Financial Research, on data gaps and data quality. 
  • The European Commission adopted detailed standards for:
    • Solvency II standards for insurance regulation, including rules on asset valuations for capital purposes, governance standards, equivalence assessments of third-country solvency regimes, the internal model framework. and rules related to insurance groups;
    • liquidity coverage ratio for all 8000 EU banks, requiring sufficient liquid assets to last a 30-day stress period, applicable both at an individual and at a consolidated level.  It includes as eligible assets some covered bonds and certain ABS, including auto-loan backed ABS.
    • bank leverage ratio that is not directly binding, but indicates whether a bank’s supervisor should require more capital.

 

 

10.12.14
Dodd-Frank Act Rulemakings, Studies, and Reports

Attached please find an updated Roadmap to the Dodd-Frank Act Rulemakings, Studies, and Reports.

  • The Federal Insurance Office released its second annual report on the insurance industry, discussing consumer protection and access to insurance, including affordability of personal auto insurance; portability of auto insurance for servicemembers; force-placed insurance for homeowners; and topics concerning life insurance and annuities.  The Report also addresses a range of regulatory developments over the past year.
  • The NCUA repealed its regulations governing unfair or deceptive acts or practices because the Dodd-Frank Act repealed the agency’s rulemaking authority under the FTC Act.  The NCUA noted it still has supervisory and enforcement authority regarding unfair or deceptive acts or practices, as violations of the Dodd-Frank Act or FTC Act, which could include the practices previously addressed in its repealed rule.

 

Regards,

Canfield Press

 

10.10.14
Washington Regulatory Round-Up (10/10/14)
10.10.14
Bond Investors May Lose $3.8 Trillion on “Flare-Ups,” as Rates Rise


The International Monetary Fund warned that the Federal Reserve’s rocky exit from its zero interest rate policy could result in $3.8 trillion in losses to global loan portfolios in its latest financial stability report. A rapid adjustment would cause term premiums to go back to historic norms and credit risk premiums to normalize would trigger losses by more than 8%, which could “trigger significant disruption in global markets,” wrote the IMF.

10.09.14
Economic Growth May Never Return to Pre-crisis Levels, Says IMF

The low potential output growth and “secular stagnation” threaten global growth, according to the IMF. 

10.09.14
The Three Phases of Bank Annihilation


“[T]hree key events [will] alter the course of banking FOREVER, shifting us away from archaic models imposed upon society today,” wrote Scott Bales. “Those three phases [include]:  (1), the Paradigm Shift; (2) the evolution of intelligent money, and (3) the rise of the voting digital native.”

10.08.14
Justice Department’s Approach to Going after American Companies
10.08.14
AIG's Elephant in the Room

John Levin, CEO of Levin Capital Strategies on CNBC.

10.07.14
Treasury Could Better Analyze Data to Improve Oversight of Servicers' Practices for TARP Housing Programs

“Through June 2014, …Treasury had disbursed about one-third of the $38.5 billion in [TARP] funds allocated to housing programs,” wrote GAO. “...Treasury monitors HAMP denial and redefault rates, but its evaluation of data to help explain the reasons for differences among servicers is limited. …Without more fully evaluating servicer data, Treasury may miss opportunities to identify and address servicer weaknesses and assist and retain as many borrowers as possible.”

10.06.14
Governor Perry Appoints Task Force to Prepare for Pandemic
10.06.14
Generational Conflicts
10.06.14
Financial Inclusion and Why We Should We Care?
10.06.14
Future of Money
10.06.14
The Regulatory Avalanche
10.06.14
Innovation in Banking
10.06.14
FBI Director Comey Discusses the Threat of ISIS and Cybercrime

“Cybercrime is becoming everything in crime," said FBI Director James Comey. "[I]t's an epidemic for reasons that make sense. I think of it as kind of an evil layer cake. At the top you have nation state actors, who are trying to break into our systems. Terrorists, organized cyber syndicates, very sophisticated, harvesting people's personal computers, down to hacktivists, down to criminals and pedophiles. But the top of the list is the Chinese."

10.05.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the October 5, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • The Federal Reserve Bank of New York published Community Credit Profiles, an interactive tool of information about single-family home prices, distressed sales, delinquencies, and foreclosures at the national, state and county levels.  Users can view the categories from 2006 to the present, and compare categories across all three geographic levels.  The Bank expects semi-annual updates.
  • Treasury announced that, of the $1 billion it has disbursed under the State Small Business Credit Initiative, enacted with the 2010 Small Business Jobs Act, states have spent $590 million, which leveraged more than $4 billion in new loans and investments to approximately 8,500 businesses through 2013.  Business owners have reported that more than 95,000 jobs will be created or saved.  Additionally, 80% of SSBCI supported loans or investments went to businesses with ten employees or less.  This program provides funding to states that demonstrate $10 in private lending for each dollar of federal funding.
  • The Federal Reserve announced that it will study the potential effects of its revised regulatory capital framework on insurance holding companies (thrift holding companies and nonbank financial companies The Federal Reserve supervises that are substantially engaged in insurance underwriting activity).  In July 2013, the Federal Reserve finalized its Basel III capital rules for bank holding companies, certain thrift holding companies, and state member banks.  Thrift holding companies substantially engaged in insurance underwriting were excluded to provide more time to appropriately tailor the capital rules for those firms.
  • Canada’s Financial Institution’s Supervisor published draft guidance on derivatives for dealers and end-users to reflect the over-the-counter (OTC) derivatives market reforms initiated by G-20 leaders, to improve transparency, mitigate systemic risk, and protect against market abuse.  It reflects supervisory expectations for central clearing of standardized OTC derivatives and for reporting derivatives data to a trade repository.  It also reflects current practices with respect to the risk management of derivatives activities.
  • On September 30, 2014, the European Commission announced adoption of regulatory technical standards for credit rating agency standards.  The standards set:
    • The disclosure requirements for issuers, originators and sponsors on structured finance instruments;
    • Reporting requirements to credit rating agencies (CRAs) for the European Rating Platform; and
    • Reporting requirements for CRAs on fees for supervision by the European Securities and Markets Authority.

The European Parliament and the Council now have a review period of up to three months before the standards can be final.  The standards do not need to be made into law by individual countries. 

 

 

10.05.14
The Digital Revolution Comes to the Unbanked

“Banks are going to have to change their business model," said Bill Gates. 

10.03.14
Washington Regulatory Round-Up (10/03/14)
10.03.14
How Can Bankers Defend Against Apple?‏

The global mega-banks will eventually appeal for protective relief from regulators to protect them from disruptors.

 
10.03.14
Realtor.com Is Now “Rupert.com,” According to Zillow's Rascoff

“I think what it means is realtor.com is no longer the Realtor’s website,” said Zillow CEO Spencer Rascoff. “And I think the real estate industry will now realize that it’s Rupert.com and that makes them more likely to want to partner directly with Zillow, based on the size of our traffic and our business model. And I think that’s good for us. …We did consider buying realtor.com. We did. And, we did consider buying Trulia.  …It’s very difficult to turnaround a brand online.”  

10.02.14
The GSE Report

"The international order is literally fraying at the seams."

"All's changed, changed utterly."

New barriers and practices are challenging the principles of an open, fair, economic competition.  And in a globalized world, threats as diverse as terrorism and pandemic disease cross borders at blinding speeds. The sheer rapidity and magnitude, the interconnectedness of the major global challenges demand a response—a different response, a global response involving more players, more diverse players than ever before.

This has all led to a number of immediate crises that demand our attention from ISIL to Ebola to Ukraine—just to name a few that are on our front door…

The international order that we painstakingly built after World War II and defended over the past several decades is literally fraying at the seams right now.

…The truth is we will likely be dealing with these challenges of social upheaval not just in Iraq and Syria, but across the Middle East in the wake of the Arab Spring, which will take a generation or more to work itself out.

10.02.14
DC Federal Judge Rules on Fannie & Freddie

“What’s really notable about Judge Lambert’s decision ...in the GSE preferred case was that it effectively came out of nowhere,” said Isaac Boltansky, an analyst at Compass Point Research & Trading LLC. “There was very little market focus on Judge Lambert’s court and most of the attention was actually in a different court—the U.S. Court of Federal Claims, where Fairholme was the chief plaintiff… There was a higher market expectation for this push. There was a belief that this case in Judge Lambert’s court was incrementally stronger than the effort in Judge Sweeny’s court..."

10.01.14
Gilbertville: A Billionaire's Drive To Rebuild The Motor City‏

Billionaire Dan Gilbert sits down with Forbes' Joann Muller to discuss his historic effort to rebuild the Motor City.

 

10.01.14
A Better Way to Budget for Federal Lending Programs

Student loans, mortgage guarantees, and other lending programs create special challenges for federal budgeting. Under official budget rules, these programs are projected to bring in $200 billion over the next decade. Under an alternative, favored by many analysts, they appear to lose $100 billion—creating a $300 billion disparity that confuses policy deliberations. In a new report, Donald Marron proposes a new budgeting approach, known as expected returns, which would eliminate this confusion.

10.01.14
The $300 Billion Dollar Question.

URBAN INSTITUTE, Donald B. Marron

09.30.14
How Should We Budget for Federal Lending Programs?‏
09.30.14
Roadmap to Dodd-Frank Act Amendments Update

The President signed the Examination and Supervisory Privilege Parity Act, amending the Dodd Frank Act.  This law does two things:

 

1)     It amends Dodd Frank § 1024 (CFPB supervision of nondepositories) to require the CFPB to coordinate its supervisory activities with state agencies that license, supervise, or examine those who offer consumer financial products or services.  Before this amendment, the CFPB was only required to coordinate with prudential regulators and state banking regulators.

 

2)     It provides that when someone shares information with all those same state regulators, or with prudential regulators and state banking regulators, that sharing does not waive privileges.  This covers information a financial services provider provides to a regulator, or that one regulator shares with another regulator.  Typically, if information is subject to the attorney-client privilege, and it goes to anyone other than the attorney or client, the privilege is waived as to all persons.  As a result, financial services providers may be reluctant to provide information to regulators.  Regulators also assert supervisory privilege over information they obtain, and can be reluctant to share the information with each other, for fear of waiving their privileges. 

 

This amendment is limited to nondepositories because Congress earlier enacted an analogous protection for depositories, by amending the Federal Deposit Insurance Act.  That was Public Law No. 112-215, enacted December 20, 2012.

 

Canfield Press

09.30.14
Pending Home Sales Fall

The number of signed contracts to buy existing homes fell 1%t in August and is down 2.2% from the year ago period, according to the National Association of Realtors. "Fewer distressed homes at bargain prices and the acknowledgement we're entering a rising interest rate environment likely caused hesitation among investors last month," said Lawrence Yun, NAR’s chief economist. "With investors pulling back, the market is shifting more towards traditional and first-time buyers who rely on mortgages to purchase a home."

09.29.14
Do Goldman Tapes Unmask Firm-Friendly Regulators?

"We're expecting too much of regulators these days." 

09.29.14
Patience Is a Virtue When Normalizing Monetary Policy

“I am very uncomfortable with calls to raise our policy rate sooner than later," said Charles Evans, president of the Federal Reserve Bank of Chicago. "I favor delaying liftoff until I am more certain that we have sufficient momentum in place toward our policy goals. And I think we should plan for our path of policy rate increases to be shallow in order to be sure that the economy’s momentum is sustainable in the presence of less accommodative financial conditions.”

09.28.14
Bruce Berkowitz's Investments in G-SIFIs

This is a franchise—a moat—that are important institutions…”  

 

09.28.14
The Sick Man Of Europe Is Europe

Joel Kotkin, executive editor of NewGeography.com

09.28.14
The “Japanization” of the Eurozone

Tyler Durden, ZeroHedge.com 

09.28.14
Bringing Back U.S. Productivity Growth
09.28.14
America Stalled?

Hoover Institution Journal’s Defining Ideas, Morton Keller.
 

09.28.14
The Fastest Growing Cities in 2014
09.28.14
Roadmap to Financial and Housing Market Stabilization Plans

This is the September 28, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • Treasury, HUD, and the Ad Council announced public service advertisements (PSAs) for Making Home Affordable.  The ads encourage homeowners to call a HUD-approved housing counseling agency about solutions for struggling homeowners who may be current on their payments. 
  • OCC released a Mortgage Metrics report for the second quarter of 2014.  The report shows:
    • At quarter-end, 92.9% of mortgages were current and performing, compared with 93.1 percent at the end of the previous quarter and 90.6 percent a year earlier. 
    • Seriously delinquent mortgages—60 or more days past due or held by bankrupt borrowers whose payments are 30 days or more past due—decreased 17.0% from a year earlier.
    • The percentage of early-stage delinquencies – 30 to 59 days past due – decreased 17.3% from a year earlier to 2.4% of the portfolio.
    • The number of mortgages in foreclosure fell to 391,591, a decrease of 47.4% from a year earlier.
    • Servicers initiated 79,781 new foreclosures during the quarter, a decrease of 47.0% from a year earlier.
    • Servicers implemented 208,150 home retention actions during the quarter, a decreased of 12.5% from the previous quarter and 34.1% from a year earlier.  
    • More than 91% of modifications in the quarter reduced monthly principal and interest payments; 56.1% reduced payments by 20% or more.  Modifications reduced payments by $252 per month on average, while HAMP modifications reduced monthly payments by an average of $269.
    • Servicers implemented 3,525,913 modifications from the beginning of 2008, through March 31, 2014.  At the end of the second quarter of 2014, more than 59% of these were active and almost 41% had exited the portfolios of the reporting institutions, through payment in full, involuntary liquidation, or transfer to a non-reporting servicer.  
    • Of the 2,084,292 modifications that were active at the end of the second quarter of 2014, approximately 69% were current and performing at the end of the quarter, 25% were delinquent, and 6% were in the process of foreclosure.
    • Transfer of loans to servicers not included in the report contributed to the decline in foreclosure activity.
  • FHFA released a Foreclosure Prevention Report for the second quarter of 2014.  The report shows:
    • The number of 60+ days delinquent loans declined 5% to the lowest level since the start of the GSE conservatorships.
    • The serious delinquency rate fell to 2.1% at the end of the second quarter compared with 6.2% for FHA loans, 3.4% for VA loans, and 4.8% for all loans.
    • As of June 30, 2014, about 13% of loans modified in the second quarter of 2013 had missed two or more payments one year after modification.
    • Approximately 37% of all permanent loan modifications helped to reduce homeowners’ monthly payments by more than 30% in the second quarter.
    • Approximately 25% of borrowers who received permanent loan modifications in the second quarter had portions of their mortgage balance forborne.
    • Approximately 14,500 short sales and deeds-in-lieu were completed in the second quarter, bringing the total to more than 581,400 since the start of the conservatorships.
    • Third-party sales and foreclosure sales fell 10% to 42,800 while foreclosure starts increased slightly in the second quarter.
    • The GSEs’ REO inventory declined 10% during the quarter to approximately 131,500.

 

 

09.26.14
Washington Regulatory Round-Up (9/26/14)
09.26.14
Ebola Could Push African Countries into Civil War

“In the three most affected countries—Liberia, Sierra Leone and Guinea—the Ebola epidemic has exposed citizens’ lack of trust in their governments and the grave potential for deep unrest in these already fragile societies,” according to the International Crisis Group. “In all three countries, past civil conflicts fuelled by local and regional antagonisms could resurface.” Walter Russell Mead added, “This is why Ebola is so scary: not only because the death tolls could climb rapidly if it spreads farther...,  but also because it could collapse entire states in an already dangerous and unstable region."

09.25.14
Money Is the New Digital Divide
09.24.14
The Amazon of Real Estate: Redfin

Redfin’s market presence will expand from 40% to 70% of the U.S in four months.

 

09.24.14
The First Online Full-Service Brokerage: LevelRE

 “LevelRE is a full service real estate brokerage that has decoupled the individual pieces to buying and selling real estate so customers only pay for what they actually need,” said Todd Seigle, LevelRe CEO. “We are licensed brokers available in most major locations reaching 90% of the US population. At LevelRE, we combine experience, fairness, and technology with a passion for customer service to level the real estate playing field.” LevelRE charges sellers a 1% commission on home sales. 

09.24.14
Corporate Bond Market: The Time for Reform Is Now

“We believe the secondary trading environment for corporate bonds today is broken, and the extent of the breakage is masked by the current environment of low interest rates and low volatility, coupled with the positive impact of QE on credit markets,” according to BlackRock. “The current environment also breeds complacency— for issuers and investors alike. When any of these factors change, the extent to which today’s fixed income markets are not ‘fit for purpose’ will be exposed.”

09.24.14
America’s Emerging Market: The Underbanked

A paradigm shift from poor people … to America’s emerging market.”

09.23.14
Disinflation Moves Back to the U.S.

09.22.14
Home Prices Rising at Slower Rate
09.22.14
The Battle Between Good and Evil

“The difference with ISIS, I think, compared to any other organization, is that they are self-financing,” said King Abdullah II of Jordan. “They can produce within a year, in a year cycle, up to almost a billion dollars worth of oil derivatives... Which means they can pay a lot of foreign fighters come to their country. They can buy weapons. …[I]t’s time for all of us to make up our minds on the battle between good against evil. And this brings all of us together from all religions on different sides of the divide are we going to fight the good fight.”

09.21.14
CFPB Proposes New Rule to Oversee Nonbank Auto Finance Companies

Consumer Financial Services Watch
Melanie Brody and Anjali Garg
September 19, 2014

09.21.14
Dodd-Frank Act Rulemakings, Studies, and Reports Update

Attached please find an updated Roadmap to the Dodd-Frank Act Rulemakings, Studies, and Reports.

  • The CFPB issued a final rule defining a larger participants in the remittance transfers market.  The rule defines a nonbank covered person as a larger participant if it has at least one million aggregate annual international money transfers.
  • The CFPB proposed a rule to define larger participants of a market for automobile financing.  The rule would define the market to include auto purchase loans, refinances of such loans, leases, and purchases or acquisitions of these loans or leases.  The rule would define certain automobile leases as a “financial product or service” over which the CFPB would have regulatory authority.  The rule would define a nonbank covered person that engages in automobile financing as a larger participant of this market if the person has at least 10,000 aggregate annual originations, and is not predominantly engaged in the sale and servicing of motor vehicles, the leasing and servicing of motor vehicles, or both.
  • The CFPB extended a temporary provision that permits insured institutions to estimate certain remittance transfer pricing disclosures by five years from July 21, 2015, to July 21, 2020.
  • The CFTC proposed a rule to address margin requirements for uncleared swaps entered into by swap dealers or major swap participants.  The rule would not apply to those regulate by a prudential regulator.  The rule would impose margin requirements on trades between a covered swap entity and a swap dealer or major swap participant, and trades between a covered swap entity and financial end users.  There would not be a margin requirement on commercial end users.  The rule would permit $65 million threshold below which margin need not be collected.
  • The CFTC finalized a rule that amends the definition of the term “swap dealer” to permit a person to exclude certain types of swaps entered into with special entities that are utilities from the $25 million special entity de minimis threshold above which a person dealing in such swaps must register as a swap dealer.

Regards,

Canfield Press

09.21.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the September 21, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • GAO testified that FSOC lacks a comprehensive, systematic approach to identify emerging threats to financial stability.  In 2012, GAO reported that FSOC’s approach might not help identify new risks or threats that member agencies had not already identified.  GAO testified that the Office of Financial Research (OFR) has made some progress in developing data tools to support FSOC since 2012, but GAO’s observations of two of these tools suggest that one tool does not focus on risks to the financial system, while another remains in a prototype phase.  FSOC has taken steps to improve its communication with the public but, according to GAO, could do more to improve transparency and accountability.  FSOC has taken steps to improve collaboration and coordination among member agencies but, GAO stated, does not plan to act on some of GAO’s recommendations on coordination.  In May 2014, FSOC approved one formal mechanism that supported coordination—bylaws for the Deputies Committee of senior officials from member agencies that describe its role in coordinating FSOC activities.  According to GAO, FSOC does not plan to clarify the roles and responsibilities of FSOC, OFR, and member agencies because the overlapping responsibilities for monitoring systemic risk had not been problematic.  GAO stated that FSOC would not adopt practices to coordinate rulemaking across member agencies, as it does not have the authority to direct independent agencies.  GAO maintains that action is needed as its past work has shown that the lack of clear roles and coordination can lead to duplication, confusion, and regulatory gaps.

 

 

 

09.21.14
Autonomous Vehicles, Connected Cars and the Future of the Automobile
09.21.14
The Robots Are Coming!
09.21.14
Human Robot Partnerships
09.21.14
Cyborg Future Law Policy Implications
09.21.14
The Case for a Federal Robotics Commission
09.19.14
Washington Regulatory Round-Up (9/19/14)
09.19.14
FHFA Reps and Warrants Policies Have “Significant and Unresolved” Risks

Differences between Version 1 and Version 2.

09.19.14
The Disruption Report

[The] waves [of change] are going to come at us even faster in the next 20 years, resulting in what I call the Age of Transformation. Literally, our lives will be transformed, and at an ever-increasing pace of change.

The Gartner Group has developed a cool paradigm that they call the “hype cycle.” They basically see every technology through the lens of five different phases in this hype cycle: the innovation trigger, the peak of inflated expectations, the trough of disillusionment, the slope of enlightenment, and theplateau of productivity.

09.18.14
And the Bank Plays On

 "There is little likelihood that the U.S. can escape the rising global deflationary pressures."

09.18.14
Federal Reserve Details New Exit Strategy, Keeps Record-Low Rate

The Federal Reserve renewed its pledge on Wednesday to keep interest rates near zero for a “considerable period of time” after its quantitative easing program ends next month. The FOMC also reiterated that a “significant” amount of slack remains in the labor market. "While the much analyzed phrase 'considerable time' remained in the FOMC statement, the newly announced scheme for interest rate normalization shows that higher rates are in the cards," said John Kilduff, a partner at Again Capital LLC.

09.17.14
Expanded U.S. and EU Sanctions Increase the Pressure on Russia

“On September 12, 2014, the United States and European Union both announced expanded sanctions related to Russia and Ukraine.,” according to Morrison Foerster’s Client Alert. “...The reinforced EU and U.S. sanctions will further impede Russia’s struggling economy. Counter-reactions such as import bans for EU products (already in effect) and a potential closure of the airspace above Siberia for EU airlines (threatened potential reaction) could further limit EU companies' business opportunities as is already the case due to the boomerang effects of the EU sanctions regime."

09.16.14
Real Estate's Changing Landscape
09.16.14
Roadmap to Fair Credit Reporting Improvement Act Discussion Draft
09.16.14
Will the U.K. Go Scot-Free?
09.16.14
An Hour with Apple's Tim Cook


“The hardest decisions we make are all the things not to work on, frankly,” said Tim Cook, Apple CEO in an interview on the Charlie Rose Show. “Because there’s lots of things we like to work on that we have interest in. But we know we can’t do everything great. …There are products that we’re working on that no one knows about … that haven’t been rumored about.”

09.15.14
Nondisclosure Agreement Creates Two Classes of Bondholders for Puerto Rico Electric Power Authority

"Puerto Rico Electric Power Authority, known as PREPA, has entered into arrangements with certain hedge funds and is in confidential dialogue with some bondholders, at the exclusion of others," wrote Cumberland Advisors' David Kotok. "PREPA says it will comply with the publically required reporting under its contracts with all bondholders... Suddenly, we now have a new class: those bondholders who are under the NDA versus those who are not. That is a new game in the Puerto Rico debt saga."

09.15.14
Tim Cook Talks iCloud Hack, iPhone 6, and the Apple Future

“The hardest decisions we make are all the things not to work on, frankly,” said Tim Cook, Apple CEO in an interview on the Charlie Rose Show. “Because there’s lots of things we like to work on that we have interest in. But we know we can’t do everything great. …There are products that we’re working on that no one knows about … that haven’t been rumored about.”

09.15.14
Justice Shouldn’t Be About Who Can Buy Their Way Out of Charges
09.15.14
Scotland Independence Vote Is Too Close to Call
09.15.14
U.S., Europe expand sanctions against Russia
09.15.14
Interest Rate Expectations in the U.S.
09.15.14
Apple Pay: The Mobile Payment Jumpstart
09.15.14
TILA-RESPA Integrated Disclosures
09.15.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the September 14, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • Treasury announced it completed the first pre-defined written trading plan for Ally Financial common stock.  Treasury sold 8,890,000 shares for $218.7 million.  Treasury now holds 66.2 million common shares, or 13.8%, of Ally.  Treasury will sell additional Ally common stock through a second pre-defined written trading plan.
  • Treasury announced that it would sell common stock in First BanCorp, Puerto Rico, through its first pre-defined written trading plan.  Treasury currently holds 19,680,441 shares, or 9.2%, of First BanCorp. common stock.  Treasury did not indicate the number of shares or the price.  Its original investment in the company was $400 million.  Treasury reports its outstanding investment in the company is worth $239 million, and is its largest remaining CPP investment.

 

 

09.12.14
Washington Regulatory Round-Up (9/12/14)
09.12.14
Where the Financial Services Industry Goes from Here


“The financial sector in general, and banks in particular, will never be the same,” according , written by Angel Berges, Mauro F. Guillén, Juan P. Moreno, and Emilio Ontiveros. The authors argue that financial institutions need to transform from traditional banks into information hubs to ensure their survival in the digital age.

09.11.14
Should Regulation Cost $2 Trillion in the Manufacturing Sector?

Federal regulations compliance costs $2.028 trillionor 12% of GDP. 

09.11.14
Pandora’s Box: An Independent Scotland


"It's certainly a disaster for Scotland, first and foremost, it's going to be a horrible adjustment," said Harvard economist Kenneth Rogoff, who previously served as the IMF’s chief economist and director of research. "Even if it doesn't pass people are not going to want to invest there because they might do it again. People will migrate out of there. …Other places in Europe (will) say, 'Hey, we can do that too'. So it's certainly quite a wild card there."

09.10.14
The ECB's Liquidity Boost

“In aggregate, G4 central [banks’] balance sheets started rising rapidly from the end of 2010 driven by the Fed’s QE2 followed by the BoE’s QE, ECB’s LTROs, Fed’s QE3 and BoJ’s QE,” wrote JPMorgan’s Nikolaos Panigirtzoglou. “As a result of these central bank actions, G4 central bank balance sheets expanded by almost $4tr over 4 years… With the ECB aiming at a €1tr expansion of its balance sheet, this $1tr per year pace in G4 central bank balance sheet expansion is likely to increase rather than decrease from here, despite the Fed’s tapering."

09.09.14
U.S Rate Hike Cause Fears of Deflation
09.09.14
The Next Creative Leap: iWallet

Mobile payments are the next creative leap.

09.09.14
Director Mel Watt Outlines the Issues FHFA Is Evaluating


“[FHFA’s proposed ban on captives’ membership in the Federal Home Loan Bank System] has generated significant discussion within the industry, and I encourage stakeholders to submit their views during the comment period,” said Director Mel Watt. “In our role as regulator, FHFA has a responsibility to ensure that the banks are fulfilling their mission to support housing finance and that they are doing so in a safe and sound manner that complies with their statutory requirements.”

 

09.08.14
Warning Lights Are Flashing Again

“I am guessing [the Federal Reserve] can [manage a smooth exit from QE], but there are possible nasty consequences,” said Nobel Prize winning economist Robert Shiller. “'If the property market tumbles again and the value of their portfolio of mortgage securities tumbles, then the Federal Reserve could become balance sheet insolvent. And then you could say, well so what? They're just the government. In effect, they can get bailed out. They can bail themselves out by printing money.”

 

09.07.14
ECB Move `Last Shot Before Bazooka': Bini Smaghi
09.07.14
CFTC Focused on Fine Tuning Financial Rules
09.07.14
U.S. Economy Not Yet at `Escape Velocity'
09.07.14
Weaker Euro Amid ECB's Policy Easing
09.07.14
Europe Goes "All In": Will Sanction Rosneft, Gazprom Neft And Transneft

This is what is known in game theory terms as a major defection round.

09.07.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the September 7, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • The FSOC voted to make a proposed determination that MetLife is systemically important, and should be subject to Federal Reserve Board supervision.  The meeting was closed, but MetLife said it disagrees with this determination.  MetLife has 30 days to request a written or oral hearing before FSOC, after which FSOC would make a final determination.  MetLife said it is not ruling out any of its Dodd-Frank remedies to contest any designation.  The FSOC has 30 days after any hearing to make a final determination.  If FSOC makes a final determination that the company should be subject to Federal Reserve Board supervision, the company has 30 days to appeal to a federal district court, which may only determine whether the determination was “arbitrary and capricious.” 
  • The banking agencies finalized a supplemental leverage ratio rule that revises how off-balance sheet items are included in the denominator of the supplementary leverage ratio.  It also requires institutions to calculate total leverage exposure using daily averages for on-balance sheet items and the average of three month-end calculations for off-balance sheet items.  It applies to all banking organizations subject to the advanced approaches risk-based capital rule.

 

 

09.05.14
Washington Regulatory Round-Up (9/5/14)
09.05.14
The GSE Report

Terrorism knows no border and its danger could affect several countries outside the

Middle East. If we ignore them, I am sure they will reach Europe in a month and America

in another month. You see how they carry out beheadings and make children show the

severed heads in the street. It is no secret to you, what they have done and what they

have yet to do. I ask you to transmit this message to your leaders: “Fight terrorism with

force, reason and speed.”

King Abdullah of Saudi Arabia

Al-Arabiya [Saudi Television]

August 30, 2014

09.05.14
Confidence in Central Banks' Unconventional Monetary Policy

“The central banks around the world, in general, are being led by people with very strong academic and intellectual backgrounds,” said Abby Joseph Cohen, president of Global Markets Institute and senior investment strategist at Goldman Sachs. “…The thing that makes me most confident [that they’ll be successful] is that they’re all very skeptical cynical people and they don’t believe that they know everything that there is to know. And so they are watching things very closely and …are keeping their eyes on backburner issues…”

09.04.14
Dodd-Frank Act Rulemakings, Studies, and Reports Update

Attached please find an updated Roadmap to the Dodd-Frank Act Rulemakings, Studies, and Reports.

  • The banking agencies, FHFA, and the Farm Credit Administration reproposed a rule that would establish margin requirements for swap dealers and major swap participants.  Initial and variation margin would not be required for nonfinancial end users.  The proposed rule would also not require posting collateral below a $65 million threshold.  The agencies reproposed the rule because it differs significantly from their 2011 proposal.

 

  • The banking agencies finalized a liquidity coverage ratio rule that requires a company subject to the rule to maintain an amount of high-quality liquid assets that is at least 100% of its total net cash outflows over a prospective 30 calendar-day period.  The rule applies to large and internationally active banking organizations.

 

  • The SEC finalized a rule to enhance NRSRO governance, to protect against conflicts of interest, and increase transparency.  It requires disclosure of credit rating performance statistics, procedures to protect the integrity and transparency of rating methodologies, disclosures to promote the transparency of credit ratings, and standards for training, experience, and competence of credit analysts.  The requirements provide for an annual certification by the CEO as to the effectiveness of internal controls and additional certifications to accompany credit ratings attesting that the rating was not influenced by other business activities.  The rule requires issuers, underwriters, and third-party due diligence services to promote the transparency of the findings and conclusions of third-party due diligence regarding asset-backed securities.

 

Regards,

Canfield Press

 

09.04.14
The 12 Things You Need to Know about the Housing Market

A free economy depends upon a free and vibrant financial system to allocate scarce capital."By Ed DeMarco/Milken

09.04.14
Countrywide’s Mozilo Shocked by Subprime Lawsuit Plans

“Countrywide didn’t change. I didn’t change. The world changed.”

09.04.14
Eurozone Economy Stuck in a Long Malaise


“Mario [Draghi] is the marriage counselor, whose job is to prevent [the Eurozone from] collapsing, said Martin Wolf, author of The Shifts and the Shocks. “He cannot deliver on his own growth to Europe…The result is unfortunately a long malise. The Eurozone economy is still close to 3% smaller than it was before the crisis in 2008. Real demand is now down 5% to 6%. It’s basically stagnant.” 

09.03.14
Dodd-Frank Act Rulemakings, Studies, and Reports Update

Attached please find an updated Roadmap to the Dodd-Frank Act Rulemakings, Studies, and Reports.

  • The SEC finalized rules governing the disclosure, reporting, and offering process for ABS.  The rules require loan-level disclosure for certain assets, such as residential and commercial mortgages and automobile loans.  The rules provide more time for investors to review and consider a securitization offering, revise the eligibility criteria for using shelf offerings, and revise reporting requirements.

 

Regards,

Canfield Press

09.03.14
A Mortgage Crisis on the Horizon?

 
A toxic brew is bubbling in the housing market that will lead to a mortgage crisis this winter, warns banking analyst Dick Bove. “[When quantitative easing ends,] …there will be less money available to fund housing, and the terms of the available funds will be considerably more onerous than what was available under 30-year, fixed-rate loans," wrote Bove. "This means higher monthly payments and lower housing prices. It means a crisis in the mortgage markets—and the economy."  

09.02.14
The Future of Banking

The smartphone will redefine the very nature of banking.

 

09.02.14
A Closer Look at the Bank of America Settlement

"…Buried in the fine print of the [Bank of America settlement], which includes $7 billion in soft-dollar consumer relief, are a raft of political payoffs to Obama constituency groups," wrote Investors Business Daily. "In effect, the government has ordered the nation's largest bank to create a massive slush fund for Democrat special interests. …If there are leftover funds in four years, the settlement stipulates the money will go to Interest on Lawyers' Trust Account ...and NeighborWorks of America."

09.01.14
Where is the Bank of America Settlement Money Going?
09.01.14
Labor Market Dynamics and Monetary Policy
09.01.14
The Federal Reserve’s Magic Dust
09.01.14
Is Abenomics failing?

Bill Witherell, Cumberland's Chief Global Economist

09.01.14
European bank officials weigh QE 'shock and awe'
08.31.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the August 31, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • Treasury released documents relating to the 2015 Financial Sector Assessment Program (FSAP) review.  This is a joint IMF-World Bank program that began in 1999 following the financial crisis in Asia.  Treasury describes it as including financial sector analysis, stress testing, and an assessment of the observance and implementation of international standards and codes.  The IMF selects 29 major jurisdictions to undergo an FSAP review every five years.  The review will conclude in 2015.  The documents include financial sector self-assessments that review U.S. observance and compliance with:
    • Core Principles for Effective Banking Supervision issued by the Basel Committee on Banking Supervision;
    • Insurance Core Principles issued by the International Association of Insurance Supervisors; and
    • Objectives and Principles of Securities Regulation issued by the International Organization of Securities Commissions.
  • The European Commission announced a partnership agreement with Hungary that enables the country to receive €21.9 billion in European funding through 2020.  Hungary also receives €3.45 billion for rural development and €39 million for fisheries and the maritime sector.

 

 

08.29.14
Regulatory Round-Up (8/29/14)
08.29.14
Russia and Ukraine Are Now at War
08.28.14
AIG’s Benmosche Is Unsung Hero of Financial Crisis

A great deal of credit for the AIG's rescue belongs to retiring CEO Robert Benmosche, who convinced his troops to believe the company has a future. "When you give professional, hard-working people enormous freedom to act, and they accept that freedom and act responsibly, then it's amazing what they can do,” said Benmosche. “We can make this company the largest and most valuable insurance company in the world again. People realized there was hope and it was up to them to get us here." 

08.27.14
CBO Projects U.S. Economy Will Grow 1.5% in 2014
08.26.14
Deflation Fears

"Out of 32 OEC countries, more than 2/3 have domestic inflation rates that fall short of 1%."

08.26.14
French Government Resigns


“If there were any lingering doubts about the seriousness of the crisis hanging over the future of the Euro—and potentially of the European Union itself—the shock announcement of the dissolution of the French government should remove them” wrote The Guardian’s John Palmer.”…What is new and potentially very alarming, however, is the prospect of time rapidly running out [of time] for the French government – and, indeed, the Eurozone as a whole – to avert disaster.”

08.25.14
ECB Quantative Easing Could Be Implemented in 2015
08.25.14
The Internet of Everything

John Chambers, Cicso CEO

08.25.14
A Guide to the Internet of Things

How billions of objects are making the web wiser.

08.25.14
The Public Sector’s $4.6 Trillion Internet of Everything
08.25.14
The Private Sector’s $14.4 Trillion Internet of Everything
08.25.14
The Internet of Things Will Be Vulnerable to Cyberattacks

VentureBeat News, Michael Coates 

08.25.14
Election Year ATMs


“These huge bank settlements are election-year ATMs for the Obama administration” wrote  Larry Kudlow. “It was $12 billion for JP Morgan, another $7 billion for Citigroup, and on and on. It's a real shakedown.. In fact, no one even remotely knows how these penalty-payment numbers are calculated. And the federal government's disbursement of these funds is equally mysterious.  …But this shakedown isn't isolated to banks. In spirit, it extends to all businesses. It's the Team Obama way.”

 

08.24.14
Bank of America Settlement: Justice or Extortion?

Dick Kovacevich, former Wells Fargo chairman and CEO.

08.24.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the August 24, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following

  • The European Commission announced a partnership agreement with the Netherlands that enables the Netherlands to receive €1.4 billion in European funding through 2020.  The Netherlands also receives €607 million for rural development and €102 million for fisheries and the maritime sector.

 

 

08.22.14
Washington Regulatory Round-Up (8/22/14)
08.22.14
The Impact of the ATR and QM rules

According to Fannie Mae’s survey of lenders:

  • 80% of lenders surveyed say they “do not plan to pursue non-QM loans.”
  • 84% of lenders expect at least 90% of their single-family mortgage origination dollar volume to meet the rquirements of the QM rules.
  • 74% of the lenders expect their operational costs to increase as a result of QM rules.
  • 36 % of the lenders expect to tighten their credit standards as a result of QM rules.
08.21.14
Bank of America's $17 billion settlement with the Justice Department
08.21.14
The Multi-Speed World


“How can we address monetary policy in this multi-speed world?” asked Virginie Maisonneuve, deputy chief investment officer at PIMCO. In an interview on Bloomberg Television’s The Pulse, Maisonneuve  discusses the Federal Reserve's monetary policy, weakening growth in the Eurozone, the implications of Russia's sanctions on the EU, recent trends in the Chinese economy and turmoil in Iraq.”

08.20.14
Reading the Monetary Policy Tea Leaves.

Nobel Laureate Robert Shiller, Carl Riccadonna, senior U.S. economist at Deutsche Bank Securities, and Priya Misra, Bank of America rate strategist, discuss Federal Reserve policy .

08.20.14
Fannie Mae and Freddie Mac: Bright Shining Failures


“…The primary lesson to be learned from [Timothy] Howard’s book [Mortgage Wars] is the absolute bastardization and distortion of financial housing policy caused by the GSE structure,” wrote Vern McKinley on Liberty of Law Library. “This informative book adds to the evidence that Fannie Mae and Freddie Mac are politicized methods of credit allocation that should be entirely privatized.”

08.19.14
The Disruption Report

Digital is changing the world.  

Cloud server and storage capacity has fundamentally changed  computing.

90% of the world’s total data has been created in the last two years.

Mobile Internet access will surpass desktop access in 2014.

There will be 50 billion connected devices by 2020, up from 10 billion today.

Mobile banking has increased 50% since 2012.

82% of U.S. 18-25 year olds owned a smart phone in the fourth quarter 2014, while 61% of this age group is engaged in mobile banking.

 

 

08.19.14
Just How Healthy Is the U.S. Housing Market?

Slow gradual process......

08.19.14
Mortgage Q&A with the Consumer Financial Protection Bureau
08.19.14
A Realistic Assessment of Housing Finance Reform

"The current state of the GSEs can best be summed up in a single word: limbo,” wrote Urban Institute’s Laurie Goodman. “Despite the fact that Fannie Mae and Freddie Mac were placed in conservatorship in 2008, with the clear intent that they not emerge, there is little progress on a new system, with a large role for private capital, to take their place. Legislators have realized it is easy to agree on a set of principles for a new system but much harder to agree on the system’s design. It is unclear whether any legislation will emerge from Congress before the 2016 election; there is a good chance there will be none."

08.18.14
Intelligent Mobility Redefine the Mobile User Experience
08.18.14
The Uberfication of Real Estate
08.18.14
Zillow Will Innovate the Entire Real Estate Transaction
08.18.14
Consumer Experiences Will Drive “The Next Big Thing”
08.18.14
Digitally Native
08.18.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the August 17, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • FHFA solicited public input on its 2015 – 2019 strategic plan.  FHFA’s strategic plan sets forth three goals for the agency:
    • Ensure safe and sound regulated entities;
    • Ensure liquidity, stability, and access in housing finance; and
    • Manage the GSEs’ ongoing conservatorships.
  • FHFA solicited public input on a proposed structure for a single security that would be issued and guaranteed by the GSEs.  FHFA is especially focused on issues regarding the transition from the current system to a single security.  Specific questions FHFA asks relate to TBA eligibility, legacy Fannie Mae and Freddie Mac securities, potential industry impact of the single security, and the risk of market disruption. 
  • The Federal Reserve and FDIC released reporting requirements and an optional template for resolution plans.  The plans must describe a company’s plan for rapid and orderly resolution in the event of material financial distress or failure of the covered company, including analysis of the company’s interconnections and interdependencies.
  • The Administration released its July housing scorecard.  It shows that new home sales fell in June while sales of existing homes rose.  Foreclosure starts and completions were down in June.  There is no servicers report because those will now be released quarterly rather than monthly.  
  • Treasury announced that it would continue to sell its common stock in Ally Financial through a pre-defined written trading plan.  Treasury currently holds 75,065,340 Ally common shares, or approximately 16%. 

 

 

08.18.14
What’s the Deal With the CFPB and Bitcoin?

Consumer Financial Services Watch,   David L. Beam
August 14, 2014

08.18.14
The Future of College?

Minerva is an accredited university that offers students a proprietary online platform. “The Minerva boast is that it will strip the university experience down to the aspects that are shown to contribute directly to student learning,” wrote Atlantic’s Graeme Wood. “Lectures, gone. Tenure, gone. Gothic architecture, football, ivy crawling up the walls—gone, gone, gone. What’s left will be leaner and cheaper. ...Can a school that has no faculty offices, research labs, community spaces for students, or professors paid to do scholarly work still be called a university?"

08.15.14
Washington Regulatory Round-Up (8/16/14)
08.15.14
A Closer Look at the Subprime Auto Lending Market


“[S]ubprime auto lending is definitely on the rise in absolute terms, although the increase in prime auto lending over the same period makes the relative increase in the subprime share less pronounced,” according to the New York Fed’s Liberty Street Economics. "This resurgence in subprime loans is stronger among auto finance loans, where subprime lending is—and always has been—more prevalent than bank loans.”

08.14.14
Housing Finance: What Happens if Nothing Happens on GSE Reform?
08.14.14
Rolling Depression in the EU

Where is the growth?

08.14.14
The Unintended Consequences of Monetary Policy

“My sense is that monetary policy can only do so much and beyond a certain point if you try to use monetary policy it does more damage than good,” said Raghuram Rajan, governor of India's central bank. “A number of years over which we, as central bankers, have convinced markets that we continuously come to their rescue and that we will keep rates really low for long—that we do all kinds of ways of infusing liquidity into the markets—has created markets that tend to push asset prices probably significantly beyond fundamentals, in some cases, and make markets much more vulnerable to adverse news.”

08.13.14
Monetary Policy Isn't the Answer

"We are beginning to discover that the reason the world recovery is so slow is that monetary policy isn't the answer now, and other policies need to be put in place to rebalance the world economy," said Mervyn King, the former governor of the Bank of England. "No one country on its own will find it easy to do this. It will require a recasting of relationships between different major economies and that requires an acceptance that trade surpluses will have to diminish in order to allow the countries that previously borrowed a great deal to reduce their trade deficits, and gradually reduce their indebtedness."

08.12.14
The Uberfication of Real Estate

Uberfication means bridging the gap between the consumer and the product.

08.12.14
Fed's Vice Chairman Fischer Calls the Global Recovery Disappointing

"With few exceptions, growth in the advanced economies has underperformed expectations ...as economies exited from recession," said Stanley Fischer, vice chairman of the Federal Reserve. “…[R]esearch …suggests that, even conditional on the depth and duration of the Great Recession and its association with a banking and financial crisis, the recoveries in the advanced economies have been well below average. …[I]t is also possible that the underperformance reflects a more structural, longer-term, shift in the global economy..."

08.11.14
Currency Wars: A Race to the Bottom.

Foreign countries have begun to fight back against U.S.-caused inflation through subsidies, tariffs and capital controls; the currency war is expanding fast.” – Jim Rickards, Currency Wars

08.11.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the August 10, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • Fannie Mae announced results for the second quarter of 2014, showing net income of $3.7 billion, and a net worth of $6.1 billion as of the end of the quarter.  Freddie Mac will pay $3.7 billion in dividends to Treasury for the quarter.
  • Freddie Mac announced results for the second quarter of 2014, showing net income of $1.4 billion, and a net worth of $4.3 billion as of the end of the quarter.  Freddie Mac will pay $1.9 billion in dividends to Treasury for the quarter.
  • The Federal Reserve and FDIC announced shortcomings with resolution plans of Bank of America, Bank of New York Mellon, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley, State Street Corp., and UBS.  The agencies said these include unrealistic or inadequately supported assumptions, such as assumptions about the likely behavior of customers, counterparties, investors, central clearing facilities, and regulators, and a failure to identify the kinds of changes in firm structure and practices that would be necessary to enhance the prospects for orderly resolution.  The agencies will require significant progress in revising the plans by July 1, 2015.  The agencies will require:
    • Establishing a less complex legal structure to improve the firm’s resolvability;
    • Developing a holding company structure that supports resolvability;
    • Amending financial contracts to provide for a stay of certain early termination rights of external counterparties triggered by insolvency proceedings;
    • Ensuring the continuity of shared services that support critical operations and core business lines; and
    • Demonstrating operational capabilities for resolution preparedness, such as the ability to produce reliable information in a timely manner. 

The agencies are committed to finding an appropriate balance between transparency and confidentiality of proprietary and supervisory information in the resolution plans, and will be working with these firms to explore ways to enhance public transparency of future plan submissions.

  • On August 5, 2014, GAO released a TARP report entitled, Government’s Exposure to Ally Financial Lessens as Treasury’s Ownership Share Declines.  The report notes that Treasury reduced its ownership in Ally Financial from 74% in October 2013 to 16% as of June 30, 2014.  It says that in November 2013, with Federal Reserve nonobjection to Ally Financial’s resubmitted capital plan, Ally Financial repurchased preferred shares from Treasury and completed a private placement of common shares.  In December 2013, the Residential Capital (ResCap) bankruptcy proceedings (Ally Financial’s mortgage subsidiary) were substantially resolved.  The Chapter 11 plan broadly released Ally Financial from legal claims by ResCap and, subject to certain exceptions, by other third parties, in exchange for $2.1 billion in cash from Ally Financial and its insurers.  As of June 30, 2014, GAO says Treasury had received $17.8 billion in sales proceeds and interest and dividend payments on its total assistance to Ally Financial of $17.2 billion.  The report makes no recommendations.
  • On August 8, 2014, the European Commission adopted reports on the European System of Financial Supervision (ESFS), including a report on the European Supervisory Authorities (ESAs) – the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA), and the European Securities and Markets Authority (ESMA), and a report on the European Systemic Risk Board (ESRB).  The reports show:
    • The ESAs have overall performed well but need improvement in consumer and investor protection, and in making better use of peer reviews.
    • In the longer term, consideration is needed of ESA governance, in particular to improve the capacity of the Board of Supervisors to make decisions in the interest of the EU as a whole, and of funding arrangements so that the ESAs could fulfill their broad range of tasks.
    • The ESRB has overall performed well but further attention is needed to enhance its visibility and autonomy, streamline decision-making, and expand its toolbox so that it exercises more “soft power” to enhance flexibility and foster early intervention.
  • On August 4, 2014, the European Commission approved a resolution plan for Portuguese Banco Espirito Santo, including the creation of a bridge bank, to allow orderly resolution of the remaining bad bank and provide the bridge bank with the means to maximize the value of its assets in the sale process.  The bank’s deposits and senior debt and most assets are transferred to the bridge bank to stabilize the banking activity  while protecting depositors and other clients.  EU state aid rules do not require any contribution from depositors or other senior debt holders.  All shareholders and subordinated creditors will remain in the original bank, which will be wound down.  Portugal’s Resolution Fund will provide €4.9 billion as capital to the bridge bank and the Resolution Fund will receive a €4.4 billion loan from Portugal, to be primarily reimbursed by the proceeds from selling the bridge bank’s assets. 
  • The European Commission announced a partnership agreement with France that enables France to receive €27.9 billion in European funding through 2020.  It also announced a partnership agreement with Bulgaria that enables Bulgaria to receive €9.9 billion in funding through 2020.

 

 

08.11.14
Pushing the Community Reinvestment Act into Unchartered Territory

“Given the success of several alternative and mixed-use projects involving the CRA, it’s clear that there are bankers and regulators ready to disrupt the tradition of caution and move into previously uncharted territory, wrote Governing’s Jonathan Walters. “[However], the best projects are still the ones that make business sense, something on which regulators and bankers can certainly agree. ‘It has to make sense from a business standpoint,’ says FirstBank’s [Rob] Chaney. ‘It can’t just be about the warm and fuzzy.’”

08.10.14
Millennials Are Delaying Homeownership

Rent or Own?

08.10.14
Credit Availability Tight for First-Time Homebuyers

Limited credit supply hurts housing demand.

08.10.14
Millennials Cash Out of Traditional Banking

33% believe they won't need a bank at all.

08.10.14
Millennials: The Digital Generation
08.10.14
Millennial Generation’s Demand for Housing

Millennials (born 1980-2000) = 82 million born in the US during these years.

08.10.14
Fog of War.

David R. Kotok, Chairman, Cumberland Advisors.

08.08.14
Washington Regulatory Round-Up (8/10/14)
08.08.14
Bank of America to Pay $9 Billion Cash in Mortgage Settlement
08.08.14
A Closer Look at Nonbank Speciality Servicers

“It does not appear that nonbank specialty servicers perform worse as a group than bank servicers; in fact, they may actually provide better service to delinquent borrowers given the difficult loans they tend to service,” wrote the Urban Institute's  Pamela Lee. “It is unclear exactly what steps regulators will take to provide more oversight and regulatory supervision in the nonbank specialty servicer space. The only certainty seems to be that more regulation is coming..."

08.07.14
SFIG Issues Paper on Rebooting the RMBS Market

In an effort to re-energize the private-label RMBS market, the Structured Finance Industry Group has issued the first in a series of “Green Papers” that proposes approaches for legal language investors and sellers can agree on, including when banks would have to buy back defective loans in the bonds. The paper also proposes how to give investors a better view of the bond through due diligence disclosures and data reports than weren't previously provided. RMBS 3.0 seeks to find solutions to create  a “sustainable, scalable and fluid post-crisis RMBS market.”

08.06.14
Artificial Intelligence, Robotics and the Future of Jobs
08.06.14
TBTF Banks' Living Wills Are "Unrealistic"

"...Based on the review of the 2013 plans, the FDIC ...determined that the plans submitted by the first-wave filers are not credible and do not facilitate an orderly resolution under the U.S. Bankruptcy Code,” wrote the Fed and FDIC in a press release. “The Federal Reserve Board determined that the 11 banking organizations must take immediate action to improve their resolvability and reflect those improvements in their 2015 plans.” The firms whose plans were rejected included Bank of America, Barclays, Citigroup, Goldman Sachs, and JPMorgan Chase.

08.05.14
Poverty in Suburbs Is Growing.

Brookings Institution's Elizabeth Kneebone discusses U.S. poverty levels and the impact of poverty on neighborhoods with Mark Crumpton on "Bottom Line." (Source: Bloomberg)

08.05.14
Dodd-Frank Act Rulemakings, Studies, and Reports Update

Attached please find an updated Roadmap to the Dodd-Frank Act Rulemakings, Studies, and Reports.

  • The CFPB proposed expanded HMDA reporting requirements.
  • The CFPB released an interpretive rule that the ability-to-repay rule applies to assumptions when a creditor expressly agrees in writing to accept a new consumer as primary obligor on an existing mortgage loan that finances the acquisition or construction of the consumer’s principal dwelling.
  • The CFPB released Policy Guidance on mortgage brokers and mini-correspondent lending.  The CFPB is concerned about mortgage brokers’ interest in becoming mini-correspondent lenders, thereby possibly altering the application of certain rules.
    • Mortgage brokers’ compensation must be disclosed GFE and HUD-1, but investor payments to lenders for secondary market transactions is excluded.
    • Compensation to a mortgage broker is included in QM points and fees.  Interest paid to a creditor is excluded form points and fees.
    • Mortgage brokers may not receive compensation from a creditor and consumer in the same transaction, and mortgage brokers may not receive compensation based on loan terms.  

The CFPB is concerned that some mortgage brokers are transitioning to mini-correspondent lenders, such as by closing loans in their own names and funding loans through a warehouse line of credit, while effectively continuing as brokers.  It lists questions it will consider in determining whether a correspondent lending arrangement is actually a broker arrangement, such as whether the mini-correspondent acts as a broker in some transactions; how many investors it has to purchase loans; and whether the mini-correspondent, warehouse lender, or investor performs moat of the the origination activities. 

  • The Federal Reserve, FDIC, and OCC finalized a rule that revises the definition of eligible guarantee in their advanced approaches risk-based capital rule, to remove the requirement that an eligible guarantee be made by an eligible guarantor for calculating the risk-weighted assets of an exposure (other than a securitization exposure).
  • The Federal Reserve proposed to amend its capital plan and stress test rules to modify the start date of the capital plan and stress test cycles from October 1 of a calendar year to January 1 of the following calendar year.  The proposal would also amend the capital plan rule to limit a bank holding company’s ability to make capital distributions to the extent that its actual capital issuances are less than the amount indicated in its capital plan under baseline conditions. The proposal would clarify application of the capital plan rule to a bank holding company that is a subsidiary of a U.S. intermediate holding company of a foreign banking organization and the characteristics of a stressed scenario to be included in company run stress tests.
  • The FDIC and OCC proposed to similarly adjust their stress testing cycle dates.  Annual stress test would be for a calendar year rather than for a year ending September 30.  Banks over $10 billion and under $50 billion would submit annual stress test results by July 31 and publish summaries by October 31, a four month delay in each.  Banks with over $50 billion in assets would submit reports by April 7 and publish summaries by July 15, a delay of about four months.  The OCC’s proposal is here, and the FDIC’s is here.
  • The SEC reproposed a rule to remove references to credit ratings from rule 2a-7, the principal rule that governs money market funds, and Form N-MFP, which money market funds use to report on their portfolio holdings.  The proposal would also amend rule 2a-7’s issuer diversification provisions to eliminate an exclusion for securities subject to a guarantee issued by a non-controlled person.  
  • The SEC finalized a rule regarding cross-border swaps that defines when a cross-border transaction must be counted toward the requirement to register as a security-based swap dealer or major participant.  The rule also addresses the scope of the SEC’s cross-border anti-fraud authority.  The rule sets procedures to request substituted compliance, permitting market participants to satisfy certain security-based swap requirements by complying with comparable non-U.S. rules. 
  • The SEC finalized a rule requiring institutional prime money market mutual funds to have floating net asset values. 

Regards,

Canfield Press

08.05.14
Roadmap to Dodd-Frank MORTGAGE Rulemakings
08.05.14
FDIC Revises Its Position on High Risk Industries

In a 2011, FDIC instructed banks to monitor and address risks for the agency’s “high risk” merchant categories. According to a House Oversight and Government Reform Committee report, the Justice Department then launched Operation Choke Point to increase regulatory scrutiny of banks doing business with merchants on the list. On July 28, the FDIC has issued a new  aimed at “clarifying its supervisory approach to institutions establishing account relationships with [TPPPs]” and removing the high risk merchant list.

08.04.14
Trends in Homeownership

Mortgage closing rose 6% over the last year, while origination fees increased 9%.

08.04.14
GSE Report

"Today, the civilized world must deal with the reality of the world’s first terrorist nation state in the middle of what used to be Iraq."

 

Robert L. Ehrlich Jr.

Former Maryland Governor and member of Congress

Baltimore Sun, July 20, 2014

08.04.14
Roadmap to Proposed Regulation C Amendments

Regulation C and its Commentary as Proposed to be Amended.

08.04.14
Interest Rates Liftoff Early Next Year?
08.04.14
Softness in U.S. Employment Numbers
08.04.14
Is the U.S. Monetary Policy Miscalibrated?
08.04.14
The Argentina Wake Up Call
08.04.14
Greenspan: We Don't Know How Fed Policies Will Work
08.04.14
What Is the Economic Impact of the Slowdown in New Business Formation?
08.04.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the August 3, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:    

  • SIGTARP released a quarterly report to Congress, including the following: 
    • SIGTARP analyzed some of the interconnections between six of the largest TARP recipients (JPMorgan, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley) in 2008 through 2013 from publicly available balance sheet information.  The report states that indicators of interconnectedness include total assets – the amount of both trading and available-for-sale securities (because the values fluctuate in unison at different firms) and assets that are illiquid and difficult to value; borrowing; and derivatives.  The report concludes that the six banking organizations remain interconnected. 
    • Aside from housing program subsidies, taxpayers are owed $38.6 billion under TARP, and there are $25.7 billion remaining to spend on housing programs. 
    • Of the 902,713 homeowners who had active HAMP Tier 1 permanent modifications as of May 31, 2014, 88% are scheduled for rate increases after five years.  The median rate for these loans was 6.38% before modification, the median modified rate was 2%, and the median increase will be 2.23%, with a median payment increase of $197.
    • Taxpayers lost $1.3 billion paid to servicers and investors as incentives for 217,098 homeowners who received HAMP permanent modifications and later redefaulted. 
    • The redefault rate for HAMP modifications is 31% and the redefault rate for GSE modifications is 28%.
    • The report discusses servicers that have extended response times to HAMP modifications requests.  SIGTARP suggests Treasury should determine why the response times are slow.  “Treasury must dig into this problem further by first analyzing why these servicers are so slow in getting back to homeowners and then taking strong action,” the report says.  It is not clear whether the response times SIGTARP looked at include the time the servicer waits for borrowers to complete an application.  If borrowers submit information piecemeal, some information may be stale before the application is complete, so the borrower would need to resubmit current information, or the servicer may need information from a third party.
  • GAO released a report entitled Large Bank Holding Companies - Expectations of Government Support. The report examines how financial reforms have altered market expectations of government rescues and the existence or size of funding advantages the largest bank holding companies may have received due to perceived government support.  GAO’s analysis suggests that large bank holding companies had lower funding costs than smaller ones during the financial crisis but provides mixed evidence of such advantages in recent years.
  • The European Commission announced a partnership agreement with Portugal on European funding for the country.  The agreement enables Portugal to receive €21.46 billion in funding through 2020. 

 

 

08.04.14
Portugal Provides Banco Espirito Santo a $6.6 Billion Bailout


Portugal is providing Banco Espirito Santo a $6.6 billion bailout, splitting the institution into a good bank and bad bank. Is this systemic? “No,” said CNBC's Michelle Caruso-Cabrera. “No, in terms of size.” Is it emblematic of something larger in Europe? “Maybe,” said Caruso-Cabrera. “A lot of analysts, who have been looking at Europe for a long time, say they have not come to their day of reckoning when in comes to [dealing with] bad assets in banks in Europe.”

08.01.14
Washington Round-Up (8/3/14)
08.01.14
The Two-Tiered Recovery.

BofA Merrill Lynch Global Economic Research co-head Ethan Harris discusses the U.S. economy and the GDP report on Bloomberg Surveillance.

08.01.14
The Debate Over Subsidies for TBTF Banks Continues

“The GAO report reinforces the case that …in times of crisis, investors will flock to the largest banks—if they think Too Big To Fail still exists,” said Senator Sherrod Brown (D-OH). “…In times of a bad economic crisis, they’re going to go in greater numbers to the larger banks, again getting even bigger subsides than they get now.” Senator David Vitter (R-LA) added, “I think this [GAO] report is further ammunition that this is a continuing issue. TBTF is not dead and gone at all. It exists. The number goes up and down, depending on the state of the economy, the state of risk, but it clearly exists.”

07.31.14
TBTF Banks Are Larger, More Interconnected and Riskier, According to SIG-TARP

“A high level analysis shows that 6 of the largest TARP banks remained as interconnected in 2013 as they were in 2008,” wrote Special Inspector General of TARP Christy Romero in the Quarterly Report to Congress. “Some levels of exposure have decreased, whereas, others, such as short-term funding in commercial paper and the repo market have remained consistent or increased. A deeper dive is required by these companies and regulators that will help determine whether these interconnections pose risk that could potentially threaten the system.”

 

07.30.14
Déjà Vu

Stanley Druckenmiller's analysis of what’s wrong with the current Fed policy.

 

07.30.14
Living in a Bank Settlement World

CNBC video.

07.28.14
Bank 2020
07.28.14
Zillow Bought Trulia Because "the Stars Aligned"

Zillow CEO Spencer Rascoff said his company’s acquisition of Trulia will make online real estate listings more like online dating—not by allowing you to swipe right on properties, but by running multiple brands to saturate a market in a way that attracts as much business as possible, mirroring the consolidation in the online dating industry. With two brands, the combined companies can compete for different audiences and and advertisers, building on the synergy of  Zillow's "Zestimates," which provides homebuyers a baseline for their property's value, and Truilia’s popular tools for home sellers.

07.28.14
Futures Are Once Again Net Short

“…Dealers and Intermediaries 'Net Total/Futures' are once again SHORT," wrote Government Perspectives' Steve Feiss. “They are the shortest they’ve been in just over a year—since early June 2013—which was the original ‘Taper Tantrum.' This is significant not ONLY as a reflection of market sentiment—everyone seems to agree rates are going UP…eventually. It is ALSO a reflection of adverse consequences of various rules such as Dodd/Frank, ‘The Volker Rule’ as well as the latest Basel Accord. Trading volumes are down, hedging activity is becoming increasing more difficult, UST fails have spiked and ‘intermediaries’ are ...less able to ...mediate.”

07.27.14
Purge in China

Kynikos's Jim Chanos on Investing.

07.27.14
Washington Regulatory Round-Up (7/27/14)
07.27.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the July 27, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • Treasury announced that Tunisia issued a $500 million, seven-year sovereign bond supported by a 100% guarantee of principal and interest by the U.S. government, acting through the U.S. Agency for International Development.  The bonds were priced at a coupon rate of 2.452%.
  • The FDIC clarified how it will evaluate requests by S-corporation banks to make dividend payments that would otherwise be prohibited under the Basel III capital conservation buffer, which limits dividends when risk-based capital falls below thresholds.  If an S-corporation bank has income but is limited from paying dividends, its shareholders may have to pay taxes on their pass-through share of the S-corporation’s income from their own resources.  Absent significant safety-and-soundness concerns, the FDIC generally would expect to approve exception requests by well-rated S-corporation banks that are limited to paying dividends to cover shareholders’ taxes on their portion of an S-corporation's earnings.

 

 
07.26.14
Rise of the Rest: Celebrating Entrepreneurship Across America

Steve Case on Rise of the Rest.

07.26.14
Rise of the Rest: Detroit

Winner:  Stikc.com.   Stik.com makes it easy to find the right people by searching your personal Facebook network.

07.26.14
Rise of the Rest: Cincinnati

Winner: Frameri. Eyeware as versatile as you.

07.26.14
Rise of the Rest: Nashville

Winner: Checkd.in.  Empower clients to monetize data.

07.26.14
Rise of the Rest: Pittsburgh

Wiinner:  SolePowerLLC.  SolePower insoles are a power source as mobile as the devices they charge. 

07.25.14
Millennials Are Delaying Homeownership


"This generation has seen the worst recession in this country since the Great Depression," said David Stevens, president of the Mortgage Bankers Association. "They're delaying that decision [to buy their first home] and it's definately having a profound impact on the housing numbers... It's not a question, I think, of necessarily will they all not buy. It's just a matter of will they delay that decision and we're clearly seeing that delay take shape."

07.24.14
The Evolution of Bitcoin

 BitPay Co-Founder and Executive Chairman Tony Gallippi Bloomberg

07.24.14
The Inventory of Low-End Homes Continues To Be Tight


"Tight [housing] inventory is especially pronounced in the lower end of the market, which we define as the bottom third of the housing stock," Svenja Gudell, director of economic research at Zillow. "Of the largest metros, most saw very few for-sale homes come from the bottom tier, and more so from the top tier. This tightness of supply will continue to impact first-time home buyers and others trying to buy a lower-end home."

07.23.14
Mortgage Applications to Buy a Home Down 15% from a Year Ago
07.23.14
Is Peer-to-Peer Lending OnLine the Future?

“In the history of technology based innovation, it’s typically been very hard for the incumbent to drive costs down, adopt new technology and remove all of the legacy systems and legacy cost structure down to the level of a technology innovator,” said LendingClub CEO Renaud Laplanche. Ultimately, Lending Club will be the Amazon of consumer credit, offering all types of credit loans including credit cards, student loans and someday mortgage loans, according to Laplanche. 

07.22.14
Roadmap to GSE Reform
07.22.14
The Recent Decline in Long-Term Unemployment

FRB: FEDS Notes, Tomaz Cajner and David Ratner

07.22.14
Should the USPS Offer Financial Services?

“The traditional banking industry no longer works for about a quarter of the people in this country,"  said Senator Elizabeth Warren (D-MA). "28% of all households—68 million people— rely on nonbank financial services like check cashing or payday lending and the cost of these services is extraordinary. …When more than a quarter of this country is spending about the same amount on banking services as they are on food, we have a market failure.” Warren supports the Postal Service’s proposal to offer basic financial products to more Americans. 

07.21.14
Dodd Frank Act: Four Years Later
07.21.14
The G-Zero World



“Unlike the old days, there is no outside power that can inform, influence, and impose outcomes,” said economist Mohamed El-Erian. “So you get into a situation where lots of things that are uncontrollable on occur. Now if you step back and you look at it, it's a time series, it's getting worse.”

07.21.14
Secretary State Kerry Discusses the Russia-Ukraine conflict and Gaza Incursion
07.21.14
Moment of Truth: How Will Europe React to Downing of Flight MH17
07.21.14
The Middle East Is In Flames
07.21.14
The Middle East Friendship Chart
07.21.14
Ukraine Crisis Remains Unresolved
07.21.14
The Politics of Tax Inversion
07.21.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the July 20, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • SIGTARP announced a guilty plea to one charge of unauthorized access to government servers that hosted a Fannie Mae HAMP website.  Sathish Kumar Chandhun Rajendran, 36, faces a penalty of up to five years in prison when he is sentenced in October.  In the plea agreement, he agreed to refrain from participating as an employee, contractor, or subcontractor in any government contract requiring clearance for three years.  According to a statement filed with the plea agreement, Rajendran worked at Fannie Mae as an Information Technology term employee assigned to developing the www.CheckMyNPV.com website.  After being terminated from employment in August 2013, Rajendran is alleged to have repeatedly used administrator credentials to log into government servers and make unauthorized changes to the CheckMyNPV website, including disabling the website’s online tool for checking HAMP eligibility, resulting in damages to the website of $30,000 to $70,000. 

 

 

07.20.14
Washington Regulatory Round-Up (7/20/14)
07.20.14
The Middle East Is In Flames

“The Mideast is really in flames,” said Hormats. “There’s no effective border between Syria and Iraq anymore. Jordan is vulnerable. We now have Iran playing a stronger role.”

07.18.14
Wells Fargo CEO: The Economy Is Better
07.18.14
Why Do VA Loans Outperform FHA Loans?

 

VA loans have consistently performed better than FHA, according to new white paper by the Urban League. The paper concludes that the residual income test may be a critical differentiating factor for VA underwriting and suggest that regulators evaluate whether the test might be a good supplement to FHA’s current assessment of a borrower’s ability to pay.

 

07.17.14
Fed Policy "Fraught with Unappreciated Risk"


"I am fearful that today our obsession with what will happen to markets and the economy in the near term is causing us to misjudge the accumulation of much greater long term risks to our economy," said Stan Druckenmiller, retired founder of hedge fund firm Duquesne Capital Management. "I hope we can all agree that once-in-a-century emergency measures [by the Fed] are no longer necessary five years into an economic recovery."

07.16.14
Black Credit Card for Millennials
07.16.14
CBO Downgrades Budget Outlook


The nation’s $12.5 trillion of federal debt held by the public will total 74% of GDP in 2014, according to the CBO. By 2039, CBO projects the federal debt will total 106% of GDP, up from its earlier estimate of 102%, reflecting slower labor force and productivity growth. The federal government's obligations are on an “upward path relative to the size of the economy, a trend that could not be sustained indefinitely,” wrote CBO.

07.16.14
The Debate Over Credible Living Wills
07.16.14
The Disruption Report

 While the impact of the internet and computers is evident, what I’m suggesting is that we are going to see multiple technologies go from deceptively hiding in the background, with the pace of change they promise frustratingly slow, to suddenly taking center stage and becoming disruptive. It will be as if the steam engine and electricity and the automobile and telecommunications all appeared at the same time, after having been developed in the background for many decades.

07.15.14
The End of QE and Return to Normalcy
07.15.14
Phoenix Housing Market Cools


“Phoenix is so important to watch, because it was ground zero for the housing boom, then the bust, then the investor fed rental trade recovery,” said CNBC’s Diana Olick. “It was often an indicator of the rest of the nation as well. Now Phoenix is falling again. Home prices, which surged dramatically in 2013 are now flat and weakening. … More color from John Burns Real Estate:  ‘The Phoenix market has been cold for a long time.’” Half of home builders dropped prices in Phoenix last month, according to Burns.

07.14.14
The Future of Home Living Report
07.14.14
The Future of Cities

Vertical farm opens for commercial use in the busy streets of Singapore.

07.14.14
The Future of Wearable Tech
07.14.14
The Future of Health

Google Ventures' contact lenses measures blood sugar levels.

07.14.14
ROADMAP to HAMP, the National Mortgage Settlement, CFPB Servicing Rules, and the Draft Uniform Home Foreclosure Procedures Act

The Uniform Law Commission holds its annual meeting July 11 through 17, 2014.   It will discuss its draft Uniform Home Foreclosure Procedures Act.

07.14.14
Living Within the Internet of Things.

"Wearable and mobile devices are …capturing and broadcasting …capturing key moments to enable a seamless flow of communication…"

07.13.14
OpenDoor: Revolutionizing Home-Buying

Receive an instant offer online and close in 3 days.

07.13.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the July 13, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • The Federal Reserve released a report on the Independent Foreclosure Review describing progress in delivering borrower relief.  The foreclosure review was originally required by April 2011 consent orders against servicers, and, after two years of reviews with much more time needed for individual file reviews, 15 of the 16 orders were converted to payment agreements.  The payment agreements stopped the individual file reviews and instead provide $3.9 billion in direct cash payments to 4.4 million borrowers and $6.1 billion in other foreclosure prevention assistance.  As of April 25, 2014, more than 3.4 million checks, totaling over $3.1 billion had been cashed or deposited, or over 85 percent of the total amount of funds the 15 servicers were required to pay to the borrowers.

The report shows that, of the 103,820 file reviews completed by independent consultants as of December 31, 2012, 4,670 (4.5 percent) identified servicer errors that caused financial injury, most commonly assessment of prohibited or unreasonable fees, violation of SCRA protections, and errors in denying a loan modification.  If the independent file reviews had continued, the Federal Reserve-regulated servicers estimated they would pay between $760 million and $822 million to independent consultants through 2013.  Not all of the consultants expected their file reviews to be completed by year-end 2013.

  • The Administration released its June housing scorecard and May servicers’ report.  They show that foreclosures starts and completion are both down, with foreclosure starts at a 101-month low, although they increased in 12 states.  Foreclosure completions are at the lowest level since July 2007.  This is the last monthly version of the servicers’ report.  It will now be released quarterly. 

 

 

07.11.14
Washington Regulatory Round-Up (7/11/14)
07.10.14
Digital Transformation: Wiring the Responsive City
07.10.14
Reaching the Tipping Point: Tough Fiscal Policy Choices Ahead

“In the current fiscal policy and economic environment we as a nation are standing at a crossroads,” wrote Wells Fargo economist John Silvia. “We can choose to hope for stronger economic growth... The alternative would be to understand the new long-run rate of economic growth, the changing monetary policy environment and the need to address... shortfalls in existing entitlement programs and make the tough choices to reduce the deficit for the benefit of stronger longer-term economic growth. ...[T]he time to begin changing the course of fiscal policy is upon us.”

 

07.09.14
The Fed’s Path: Slow and Steady

UBS's Maury Harris, BofA Merrill Lynch's Michael Hanson and Citi Private Bank's David Bailin discuss the minutes from the Federal Open Market Committee's June meeting.

 

07.09.14
Everyday Bitcoin Use
07.09.14
Crowdfunding, Partnering with the Public
07.09.14
The Hyperloop: Disrupting the Transportation Industry
07.09.14
Understanding the Services Revolution

In developed nations, services represent 70, 75, 80 percent of GDP.

07.09.14
Digitizing the Consumer Decision Journey

“Many ...executives …in banking, retail, and other sectors are still struggling to devise the perfect cross-channel experiences for their customers—experiences that take advantage of digitization to provide customers with targeted, just-in-time product or service information in an effective and seamless way,” wrote McKinsey & Co. “…[D]uring the next five years..., we’re likely to see a radical integration of the consumer experience across physical and virtual environments. By 2016, the web will influence more than half of all retail transactions, representing a potential sales ...of almost $2 trillion."

07.08.14
Washington Regulatory Round-Up (7/4/14)
07.08.14
The Top 50 Residential Rental Markets for Millennials

RealtyTrac has identified the 50 best markets for renting residential properties to the Millennial generation, born between 1982 and 2004. "Investors leveraging demographic trends will often be able to amplify rental returns and home price appreciation, particularly when it comes to trends in the baby boomer and millennial generations, which combined account for approximately 147 million people—more than 60% of the U.S. adult population," said RealtyTrac's Daren Blomquist. 

07.07.14
Energy Independence is "In Sight"
07.07.14
How Algorithms Have Changed the Face of Wall Street

Algorithms have changed the way investors are trading on the stock market and it has made the process incredibly efficient.

07.07.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the July 7, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • Treasury announced it received a full repayment of $946 million from Popular, Inc., the largest bank that remained in the Capital Purchase Program (CPP).  With this repayment, taxpayers recovered $1.22 billion of principal and interest from the original investment of $935 million in Popular.  Treasury still holds warrants to purchase 2,093,284 shares of Popular common stock.
  • The Federal Reserve and FDIC released the public portions of annual resolution plans for 17 financial firms.  Thirteen of the firms previously have submitted at least one resolution plan.  They are: Bank of America Corporation, Bank of New York Mellon Corporation, Barclays PLC, Citigroup Inc., Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group, HSBC Holdings plc, JPMorgan Chase & Co., Morgan Stanley, State Street Corporation, UBS AG, and Wells Fargo & Company.  The agencies also released initial public resolution plans for AIG, Prudential Financial, Inc., General Electric Capital Corporation, and Bankia SA.  The agencies granted requests for extensions until October 1, 2014 for BNP Paribas SA and Royal Bank of Scotland Group plc for their second resolution plan submissions.
  • The European Court of Auditors released a report entitled European Banking Supervision Taking Shape — EBA and its Changing Context.  It reviews the revised regulation and supervision of the banking sector by the European Commission and the newly-created European Banking Authority from 2011 to early 2013.  The report identified shortcomings in cross-border banking supervision, in assessing EU banks’ condition, and consumer financial protection.  It states that the Commission was timely in drafting legislation but public consultation periods were short and there was no overall impact assessment for the legislative package.  The report notes that the EBA does not supervise financial institutions directly.  It says national supervisory authorities’ (NSAs) convergence through the college of supervisors is limited, and colleges spent too much time discussing procedures rather than focusing on risks.  The report recommends clarification of roles and responsibilities.  In the fall of 2014, the European Central Bank (ECB) will supervise the banking sector in all the euro area Member States and other Member States that wish to participate.  This Single Supervisory Mechanism (SSM) will involve cooperation between the ECB and the NSAs, where the ECB will be responsible for the overall functioning of the SSM.  The report recommends clarification of roles and responsibilities.


 

07.07.14
Our Nation's Energy Future


Tom Fanning, CEO of Southern Company, shares his perspectives on our energy future in a wide-ranging interview at The Aspen Institute. Southern is one of the country's largest energy companies with a broad portfolio that includes natural gas, nuclear, coal, and renewables. Southern is constructing the first nuclear power plant in the U.S. in decades.

07.06.14
State of Housing 2014
07.06.14
Anatomy of a SMART CITY
07.03.14
U.S. Auto Sales Hit 8 Year High as Subprime Financing Booms


07.03.14
Crowdfunding: Partnering with the Public
07.02.14
How to Live with Fannie and Freddie


“It is already six years ago that Fannie and Freddie collapsed and went from being 'the envy of the world,' according to their own PR and their congressional backers, to being utterly humiliated and made into the wards of the state they still are," wrote AEI's Alex Pollock. "But during those six years the political chance to close them has come and gone. The stars looked aligned, but as it turned out weren't, and we are still stuck with Fannie and Freddie like a $5 trillion tar baby."

07.02.14
Nonbank Servicers' Rapid Growth Poses Danger to Fannie and Freddie
07.01.14
Central Banks Warned of “False Sense of Security”

The Bank for International Settlements warned that ultra-low interest rates have lulled governments and markets "into a false sense of security." BIA added, "The risk of normalizing too late and too gradually should not be underestimated. …Overall, it is hard to avoid the sense of a puzzling disconnect between the markets' buoyancy and underlying economic developments globally. …Growth has disappointed even as financial markets have roared: The transmission chain seems to be badly impaired."

 

06.30.14
Silicon Valley—Wall Street’s Disruptor
06.30.14
The GSE Report

 While the impact of the internet and computers is evident, what I’m suggesting is that we are going to see multiple technologies go from deceptively hiding in the background, with the pace of change they promise frustratingly slow, to suddenly taking center stage and becoming disruptive. It will be as if the steam engine and electricity and the automobile and telecommunications all appeared at the same time, after having been developed in the background for many decades.

06.30.14
National Family Mortgage Hits $200 Million in Peer-to-Peer Lending

National Family Mortgage, the leading U.S. platform for peer-to-peer mortgage loans, originated $15 million in mortgages in June, bring total originations to $200 million. Approximately 85% of NFM’s mortgages loans are between parents and their adult children. In April, the average loan term was for 20 years with a fixed rate of 3.0%. The P2P lender says the default rate is less than 1% on the loans it manages.

06.29.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the June 29, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • Treasury announced a new financing partnership between Treasury and HUD to support the FHA multifamily mortgage risk-sharing program.  The Federal Financing Bank will finance FHA-insured multifamily mortgages.  FHA will provide mortgage insurance pursuant to a risk sharing agreement with the New York City Housing Development Corporation to reduce the interest rate compared to the cost of tax-exempt bonds.
  • Treasury also announced that the Administration would extend Making Home Affordable at least until December 31, 2016.
  • Treasury requested input on developing a market for private-label mortgage-backed securities. 
  • FHFA announced additional outreach to homeowners who could benefit from HARP refinances.  The campaign will include town hall-style events in targeted cities that have the highest number of “in-the-money” borrowers who have yet to take advantage of a HARP refinance.  Borrowers are considered in-the-money if they meet the basic HARP eligibility requirements, have a remaining balance of $50,000 or more on their mortgage, have a remaining term greater than 10 years, and their interest rate is at least 1.5 percent higher than current market rates.  FHFA released aninteractive online map indicating the number of estimated in-the-money borrowers in every zip code, county, and metropolitan statistical area.
  • FHFA released Foreclosure Prevention Report for the first quarter of 2014, showing the GSEs completed nearly 3.2 million foreclosure prevention actions since the start of their conservatorships, with 88,800 actions in the first quarter.  These measures have helped more than 2.6 million borrowers stay in their homes, including 1.6 million who received permanent loan modifications.  Also noted in the report:
    • Forty-two percent of all permanent loan modifications helped to reduce homeowners’ monthly payments by more than 30% in the first quarter.
    • Approximately 27% of borrowers who received permanent loan modifications in the first quarter had portions of their mortgage balance forborne.
    • Approximately 14,900 short sales and deeds-in-lieu were completed in the first quarter, bringing the total to more than 566,800 since the start of the conservatorships.
    • Third-party sales and foreclosure sales fell slightly to 47,300 while foreclosure starts decreased 25% in the first quarter.
    • While the total number of troubled borrowers continued to decline, 31% of these borrowers remained deeply delinquent at the end of the first quarter.
  • The OCC issued its Risk Perspective for the spring of 2014.  Key findings from the report include:
    • Competition for limited lending opportunities is intensifying, resulting in loosening underwriting standards, particularly in indirect auto and leveraged lending.  Easing in underwriting and increased risk layering is also occurring in commercial loans.
    • The prolonged low interest rate environment continues to lay the foundation for future vulnerability.  Banks that extend asset maturities to pick up yield, especially if relying on the stability of non-maturity deposit funding in a rising rate environment, could face significant earnings pressure and potential capital erosion, depending on the severity and timing of interest rate moves.
    • Many banks continue to re-evaluate their business models and risk appetites to generate returns against the backdrop of slow economic growth and low interest rates.  OCC examiners will focus on banks’ strategic business and new product planning to ensure appropriate risk management processes are established.
    • Cyber-threats continue to evolve, requiring heightened awareness and appropriate resources to identify and mitigate the associated risks.
    • Financial asset prices have experienced very low volatility for an extended period.  As a result, measures of price risk, such as value-at-risk, are at very low levels.  The reduced willingness of dealers to hold securities in inventory, due to capital and other concerns such as a change in monetary policy, could contribute to greater price swings going forward and increased price risk.
    • Bank Secrecy Act and Anti-Money Laundering risks remain prevalent as money-laundering methods evolve, and electronic bank fraud increases in volume and sophistication. Banks work to incorporate appropriate controls to oversee higher risk customers and new products and services.
  • The European Commission published a report following a review of the EU-IMF financial assistance in Ireland.  The report provides an overview of challenges Ireland faces, particularly the high level of public and private debt, the substantial level of non-performing bank loans, and high unemployment.  The report states that economic growth was lower than expected in 2013, but the outlook for 2014 and 2015 is improving.  The review found that the general government deficit narrowed by 1 percentage point of GDP in 2013 to 7.2% of GDP.  Measures needed to meet the 2015 target of 2.9% of GDP are expected to be announced in October.  To boost investment in new housing, the government is studying the introduction of a mortgage insurance scheme for first-time buyers of new homes.  The report also states that water charges will be introduced in the final quarter of 2014. 

 

06.29.14
Detroit's Renaissance

June 27 (Bloomberg) -- As Detroit struggles to get out of bankruptcy and rebuild its economy, the city is trying to attract young educated professionals and cultivate startups. 

06.27.14
Washington Regulatory Round-Up (6/27/14)
06.27.14
U.S. Needs to Exit From 2% Growth

“We need to get a normal looking interest rate curve,” said former Federal Reserve board member Kevin  Warsh. “We need to get interest rates back to normal. How does that work? If that happens, …we'd see an increase in capital going to the right assets… We need the business investment, which will then be matched by labor. We believe then the economy can grow at 3% instead of 2%. If that happens, that is great news for all parts of this economy.”

06.26.14
The repercussions of Quantitative Easing.

Stephen Roach, Yale University senior fellow, says the accommodative monetary policy from the U.S. Federal Reserve could lead the world into another financial "mess."

06.26.14
The Future of Banking?

No credit score? No problem, according to Kreditech, a German-based company, which specializes in developing and marketing advanced underwriting tools that leverage big data—and 10,000 data points per application—to determine creditworthiness "within minutes." The technology means that potential borrowers can apply for loans online or on mobile without having to visit a bank branch. Consumers whose loans are approved can have funds in their accounts in ten minutes.

06.25.14
FHFA Announces New HARP Outreach Efforts

The Federal Housing Finance Agency (FHFA) announced it is taking new steps to reach homeowners who could benefit from the Home Affordable Refinance Program (HARP).

06.25.14
Redfin Redefines Real Estate

Redfin, the technology-powered real estate brokerage firm, is trying to make the nerve-racking process of buying and selling a home a little easier.

06.25.14
The Decoupling of Home Price Gains

06.24.14
Airbnb's Biggest Battle Is in Wall Street's Backyard

Airbnb faces major regulatory hurdles in New York’s real estate industry just ahead of its estimated $10 billion IPO.  

06.24.14
The Rise in Peer-2-Peer Lending for Solar Power
06.23.14
LendIt 2014: Real Estate Crowdfunding Panel
06.23.14
Marketplace Lending Is Here to Stay

We are changing consumer behavior for good.

 

06.23.14
P2P & Online Lending Global Market Overview

Dramatic Growth Marketplace Lending   

 

06.23.14
From Disruption to Revolution

Finance is the next frontier of disruption.

06.23.14
LendIt 2014: Big Data in Credit Decisioning
06.20.14
Washington Regulatory Round-Up (06/22/14)
06.20.14
Unprecedented Cyber Attacks on Business Processes


A new wave of cyber attacks has surfaced “designed to attack the business processes of companies themselves, not just stealing credit card numbers and other easy to exploit data, but actually to get into the companies and manipulate the business itself,” according to CNBC’s Eamon Javers. “That's much more dangerous and threatening …for the companies including hedge funds that are seeing a lot of these attacks.”

 

06.19.14
Housing Finance at a Glance
06.19.14
The Metropolitan Revolution

Brookings’ Bruce Katz and Jennifer Bradley.

06.19.14
A Closer Look at the Single-Family Home Market

Foreign money is flowing into the single-family real estate market—particularly in California, according to John Burns, CEO at John Burns Real Estate Consulting. First-time homebuyers are not participating in the real estate recovery. “The young family (first-time homeowner) is dead…," said Burns. “The 35 to 39 year older right now has got a 7% lower homeownership rate than their parents and grandparents had the exact same age." 

06.18.14
"Liquidity Is Dead"

“The low volatility environment has been accompanied by what is historically low volume,” wrote Alex Merk. “When liquidity in the market is low, it provides fertile ground for more abrupt price moves. One reason why liquidity may be low is due to the [Dodd–Frank Act, which] …has banished a lot of risk taking by financial institutions. That may be a good thing in some ways, but it has also curtailed major liquidity providers. The next sharp correction in the markets may well be an indication of whether the dearth of market participants is a problem...”

06.17.14
FHFA 2013 Report to Congress
06.17.14
Regulations Are Strangling the Internet Economy


“Markets and technology have evolved in ways that serve consumers better, but those benefits are threatened by politics and regulation,” wrote FreedomWorks’ Wayne Brough. “Regulators should work to ensure that regulatory barriers do not impede consumer choice for the benefit of incumbent producers. … Regulators should focus on removing unnecessary impediments to allow the market to serve consumers better using all the latest technologies.”

06.16.14
Three D Printing and How It’s Shaping Business.

This infographic details the ins and outs of 3D printing and its effect on the business world.

06.16.14
Emerging Payment Technologies Will Create New Winners and Losers in the Credit Card Industry

Disruptive technology is changing the landscape for the $4 trillion credit and debit card markets. 

06.16.14
Fundrise in Action
06.16.14
Digital Disruption in Banking
06.16.14
IMF Downgrades U.S. Growth for 2014
06.16.14

Real estate is "the hottest sector" for crowdfunding, according to Richard Swart, who runs the Innovation in Entrepreneurial and Social Finance Program at the University of California at Berkley.

06.16.14
A Grim Outlook for Iraq

"If military developments in Iraq conform to this most likely scenario, they could lead to a protracted, bloody stalemate along those lines," wrote Brookings’ Kenneth M. Pollock Pollack, who served as one of the CIA’s Persian Gulf military analysts during the 1990-91 Gulf War. "In that case, one side or the other would have to receive disproportionately greater military assistance from an outside backer than its adversary to make meaningful territorial gains. Absent that, the fighting will probably continue for years and hundreds of thousands will die."

06.16.14
The Federal Government's Crackdown on Big Banks
06.13.14
Washington Regulatory Round-Up (6/13/14)
06.13.14
Digital Payment Competition Heats Up With Dwolla

Ben Milne, founder and CEO of Dwolla, discusses the company's digital payment system and the future of Bitcoin with Trish Regan on Bloomberg Television's "Street Smart." (Source: Bloomberg)

06.13.14
The Jihad Spring

Chaos in Iraq could spread misery across the Middle East, triggering a deleterious effect on oil production and the global economy. “The Arab Spring is over,” wrote National Review’s Jonah Goldberg. “Welcome to the Jihadi Spring. Across a huge swath of …Iraq and Syria, a transnational movement of Sunni Islamic extremists has taken control. The Islamic State of Iraq and Syria (ISIS) has conquered — without much effort — Mosul, Iraq’s second-largest city, along with most of the province of Nineveh” and is on the march to Bagdadh."

06.11.14
Penny for Your Thoughts
06.11.14
Stopping the Administration's Assault on the Suburbs


Representative Paul Gosar (R-AZ) plans to offer an amendment to the Transportation, Housing and Urban Development Appropriations Bill (H.R. 475), which would bar the use of funding to implement, administer, or enforce the administration’s proposed rule on Affirmatively Furthering Fair Housing (AFFH). The House of Representatives will likely vote on Gosar’s amendment on Wednesday, June 11. 

06.11.14
Financial Stability and Monetary Policy: Happy Marriage or Untenable Union?

John C. Williams, President and CEO, Federal Reserve Bank of San Francisco

06.10.14
The President's Efforts to Limit Student Loan Payments May Harm Housing Market


"For us, this is a modest negative for housing," wrote Guggenheim Partners analyst Jaret Seigerg. "High student loan debt is a major obstacle to getting a mortgage. This suggests that some students will take even longer to repay those student loan debts."

06.09.14
Panel Discussion

Mish, Steen Jakobsen and Chris Martenson

06.09.14
Money, Banks and Lending
06.09.14
State of Flux

Steen Jakobsen, chief economist for Saxo Bank 

06.09.14
Investing in a Rising Interest Rate Environment 2014

Alex Merk, 

06.09.14
Confessions of Ben Bernanke
06.09.14
The War on Deflation Continues Around the World

The single biggest threat to the global economy is the threat of deflation. 

06.09.14
Discovery Request by Fannie, Freddie Shareholders Endangers Housing Market

“The disclosure of forward-looking, non-public information [for Fannie Mae and Freddie Mac] could result in an array of consequences such as sharp spikes or declines in the cost of obtaining credit for borrowers and large shifts in the demand for mortgage-backed securities,” wrote FHFA Director Watt. “This result would undermine FHFA’s ability to direct the conservatorships and detract from Congress’s goal of maintaining stability in the federal housing markets.”

06.09.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the June 8, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • FHFA solicits comment on the GSEs’ g-fees.  In January, FHFA had suspended implementation of a December 2013 proposal to amend g-fees.  FHFA now asks a number of broad questions about g-fees, including what goals FHFA should further in setting g-fees, what level of g-fees would encourage private investors to enter the market, and whether increased g-fees would decrease loan originations without a commensurate increase in private capital.
  • GAO reported on the TARP Community Development Capital Initiative (CDCI) program, designed to help CDFI banks and credit unions maintain their services to underserved communities.  The report states that, as of April 30, 2014, 82% of the Treasury’s $570 million total investment in eligible banks and credit unions was outstanding.  The report states that 16 institutions have exited the program, leaving 29 banks and 39 credit unions, respectively.  Treasury reports having received repayments and investment income of $134.3 million, but has also recorded a $6.7 million write-off based on the failure of one participant’s subsidiary.  As of February 28, 2014, Treasury estimated a lifetime cost of $80 million for CDCI, down from an estimated cost of $290 million in November 2010.  GAO made no recommendations.

 

 

06.09.14
The New Paradigm for Bank Enforcement
06.06.14
Washington Regulatory Round-Up (6/6/14)
06.06.14
Accelerating the Digitization of Business Processes

“Customers …are demanding from companies in many industries a radical overhaul of business processes," wrote McKinsey’s Shahar Markovitch and Paul Wilmott. "Intuitive interfaces, around-the-clock availability, real-time fulfillment, personalized treatment, global consistency, and zero errors—this is the world to which customers have become increasingly accustomed. It’s more than a superior user experience, however; when companies get it right, they can also offer more competitive prices because of lower costs, better operational controls, and less risk.”

06.05.14
Digitizing the Consumer Decision Journey
06.05.14
100 Years Later, What's Become Of Our Federal Reserve?


“...[The Fed] may be willing to trade its independence for additional powers, but Congress must not allow that to happen,” wrote Hester Pierce, a senior research fellow at George Mason University’s Mercatus Center. “If we are to have a central bank, it should focus on monetary stability, refrain from rescuing failing companies, and leave the politicking, fiscal game-playing, and regulating to entities and individuals that don't claim to be independent.”

06.04.14
Should the Fed Have a Financial Stability Mandate?

2013 Annual Report, Federal Reserve Bank of Richmond

06.04.14
Carl Icahn bets $50 Million on Fannie, Freddie

06.04.14
Easy Credit a Big Part of Auto Demand

Kelley Blue Book's Braue

06.03.14
Average Auto Loan Balance and Length Surges in Q1 2014

The average auto loan reached an all-time high of $24,612 in the first quarter of 2014, up $964 from the year-ago period, according to Experian’s State of the Automotive Finance Market. The average monthly payment for a new vehicle loan hit an all-time high of $474, up from $459 a year ago, while the average term reached 66 months—or 5.5 years—for the first time. "As the cost of purchasing a new vehicle continues to rise, consumers clearly are stretching the loan term...," said Experian’s Melinda Zabritski.

06.02.14
Operation Choke Point

Is the Department of Justice’s “Operation Choke Point” illegally choking off legitimate businesses?

06.02.14
The Debate Over Wealth Inequality in America


“Inequality is not bad, per se,” said Thomas Piketty, author of Capital in the Twenty-First Century. “It can be useful to some extent for growth, innovation and fantastic increase in living standards we have seen the past two centuries. Now the question is to what point is it useful? Extreme inequality ...is not useful anymore for growth and it can even become bad for growth.”

06.01.14
A New Bretton Woods?

REMARKS BY PAUL A. VOLCKER 

AT THE ANNUAL MEETING OF THE BRETTON WOODS COMMITTEE 

WASHINGTON, DC – MAY 21, 2014

05.30.14
Washington Regulatory Round-Up (5/30/14)
05.30.14
“A Once In a Lifetime Reevaluation of Assets”

“…[T]he world is pricing in and coming to grips with the fact …that we're on the cusp of emerging from a liquidity trap and that the Fed and other central banks around the world are going to be exceedingly low on short-term interest rates,” said Paul McCulley, Pimco’s chief economist. “It's a brand-new regime. We are calling it here the New Neutral. we had to get this point where the marketplace, all asset classes are accepting that cash, risk-free cash trades at par …that if you want to have a real rate of return, you have to be in assets. So we're having a once-in-a-lifetime reevaluation of assets.”

05.30.14
The Economic Impact of Carbon Regs

Institute for 21st Century Energy-U.S. Chamber of Commerce

05.29.14
Why Long-Term GSE Reform Requires Congress

“Leaving the enterprises in conservatorship permanently is unhealthy for the market and unduly risky for both the enterprises and the taxpayer,” wrote Urban Institute’s Jim Parrot. “Yet bringing them out of conservatorship would be cataclysmic for the enterprises and market alike. We are, as it were, in a box. This, of course, does not mean that that the FHFA can’t provide important reforms of Fannie and Freddie. They can. …What the FHFA and the administration cannot do is overhaul the enterprises in a way that makes the system sustainable over the long term. For that, we have ...to turn to Congress.”

05.28.14
How Millennials Could Upend Wall Street and Corporate America
05.28.14
A Conversation with Timothy Geithner

“[Fannie Mae and Freddie Mac] were the …purest example of moral hazard you could see on the planet,” said former Treasury Secretary Timothy Geithner. “They existed with a system that allowed them to borrow at rates close to the Treasury's cost of funds, almost no capital, and could build a pretty profitable business that their executives and shareholders' could benefit from and they were able to purchase from the political system a lot of protection against regulation very successfully… I think it's a good way to think about the perils of allowing risk to build up as we in this country did in many, many different forms.”

05.27.14
Remarks by TARP's Special Inspector General Christy Romero
05.27.14
Government's Immoral Requirement that Carmakers Lose Money

“The CEO of Chrysler is complaining that government is forcing his company to sell cars at a loss,” wrote Investors Business Daily. “That shouldn't be the cost of doing business in what was intended to be a free economy. … No company should have to make a product at the command of the state. Such coercion does violence to freedom. It's a moral abomination. …At the end of the day, America has lost.”

05.25.14
Update on Residential Real Estate Market

Home sales are stagnating because of (i) lower levels of distressed, cash and investors’ purchases; (ii) lower demand for home purchases due to higher rates; (iii) no mortgage access to 25% of the market; (iii) low median income levels; (iv) weak homebuyer formation; and (v) tight home supply.

05.25.14
Ginnie Mae’s Perspective on the Future of Housing

The U.S. Government has had a significant role in the mortgage market going back at least 30 years.

 

05.25.14

Since the 2008 peak of $11.3 trillion, overall decline in mortgage debt outstanding is $1.1 trillion, of which 67% from charge-offs and remainder prepayments. 

05.25.14
The Evolving Mortgage.

“Change is inevitable. Progress is optional.” MBA President David Stevens

05.25.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the May 25, 2014 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • On May 20, 2014, Treasury announced that it priced a secondary public offering of the remaining 1,085,554 shares of common stock it holds in CommunityOne Bancorp, Charlotte, NC (formerly FNB United), at $9.35 per share for expected proceeds of $10.1 million.  Treasury will continue to hold warrants to purchase 22,072 shares of the company’s common stock.  Treasury originally paid $51.5 million.  The company was the third largest remaining CPP institution as of April 30, 2014.  The largest two are Popular, Inc. and First Bancorp, both of San Juan PR, in which Treasury invested $935 million and $239 million, respectively.

 

 

 

05.25.14
House Finance Reform and Federal Budgeting
05.23.14
Washington Regulatory Round-Up (5/23/14)
05.23.14
Timothy Geithner Extended Interview
05.23.14
The Year of the Recall at General Motors

In 2014, General Motors has recalled 13.8 million vehicles in 29 separate recalls, exceeding the 12.1 million vehicles the auto maker has sold in the U.S. since it filed for bankruptcy in June 2009. Many are asking what is going on at GM and why the government’s bailout of the automaker allowed this crisis in public confidence to occur. In a CNBC interview, Steven Rattner, head of the Obama administration’s auto bailout team, provides his insights.  

05.23.14
Recovery Road? An Assessment of the Auto Bailout and the State of U.S. Manufacturing

As we approach the five-year anniversary of the bankruptcy filings of General Motors, Brookings Institute takes a closer look at the results of the government’s interventions in the auto industry and what is the state of manufacturing and manufacturing policy in the United States.  

05.22.14
The Fed's Blueprint for Financial Control

In a speech to the Chicago Fed Bank Structure Conference, Fed Governor Daniel Tarullo said the central bank must "broaden the perimeter of prudential regulation, both to certain nonbank financial institutions and to certain activities by all financial actors." Tarullo, the Fed’s point man for banking reform, argued that shadow-bank activities can create "systemic risk"—thereby requiring the Fed's macroprudential regulation to ensure financial-system safety and broadening the central bank’s regulation of U.S. capital markets.

05.22.14
Run, Run, Run: Was the Financial Crisis Panic over Institution Runs Justified?
05.21.14
Transcript of the Johnson-Crapo Markup

“For the first time in the nearly six years of the conservatorship of Fannie Mae and Freddie Mac, both the House Financial Services Committee and the Senate Banking Committee will have passed legislation to reform this system,” said Senator Mike Crapo (R-ID) during the markup of Johnson-Crapo. “This is an important milestone….We have the opportunity to fix our flawed system and set up a more sustainable, efficient, permanent housing finance system that will provide future economic opportunities for millions of families and individuals throughout America.”

05.20.14
Campbell University Law School: Jim Whitehurst, CEO Red Hat

Finally, to be leader, you have to be willing and able to just be yourself.

This is especially important in the tough times.

05.20.14
University of South Carolina Commencement: Vice President Joe Biden
05.20.14
Narendra Modi: India's Ronald Reagan?

It’s “hard to exaggerate the degree of change” in India’s recent national elections in which the Bharatiya Janata Party (BJP), led by its prime ministerial candidate Narendra Modi, won a majority on its own.

05.20.14
High Point University Commence Speech: General Colin Powel

"We are still the unique place that inspires the rest of the world, so never, never sell America short,” said Colin Powell.

 

05.20.14
Emerson Commencement Speech: Jay Leno
05.20.14
William & Mary Commencement Address: Sgt. 1st Class Leroy A. Petry
05.20.14
University of Virginia: Peyton Manning
05.20.14
Transcript of Markup of Johnson-Crapo

“For the first time in the nearly six years of the conservatorship of Fannie Mae and Freddie Mac, both the House Financial Services Committee and the Senate Banking Committee will have passed legislation to reform this system,” said Representative Crapo (R-ID) during the May 15 markup of housing finance reform. “This is an important milestone….We have the opportunity to fix our flawed system and set up a more sustainable, efficient, permanent housing finance system that will provide future economic opportunities for millions of families and individuals throughout America.”

05.20.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the May 18, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • FHFA released a 2014 Strategic Plan for the GSE conservatorships.  The three strategic goals are to:
    • Maintain safe and sound foreclosure prevention activities and credit availability to foster liquid, efficient, competitive and resilient national housing finance markets.
    • Reduce taxpayer risk through increasing the role of private capital in the mortgage market.
    • Build a new single-family securitization infrastructure for use by the GSEs and adaptable for use by other participants in the secondary market.

Under Director DeMarco, the strategic plan goals centered on building a new infrastructure for the secondary market, contracting the GSEs’ market dominance while simplifying and shrinking their operations, and maintaining foreclosure prevention activities and credit availability.  FHFA explains that the reformulated goals take into account that the GSEs are no longer generating losses, and that FHFA’s responsibilities do not involve making policy decisions on the future of housing finance reform.

  • FHFA also released a 2014 scorecard of items on which the GSEs will be assessed.  These include:
    • Continued improvements in the representations and warranties framework;
    • Plans to encourage greater mortgage credit by small lenders, rural lenders, and state and local Housing Finance Agencies;
    • Plans for loss mitigation strategies, including those for the post-HAMP marketplace;
    • Credit risk transfers on single family mortgages with at least $90 billion of unpaid principal balances adjusted for the amount of credit risk transferred; and
    • Continued building and testing of the Common Securitization Platform. 

 

 

05.20.14
NY A.G. Schneiderman Launches Statewide Effort To Combat Zombie Properties

New York A.G. Eric Schneiderman has launched a statewide effort to encourage the State legislature to pass the Abandoned Property Neighborhood Relief Act he proposed earlier this year. “Zombie properties threaten neighborhoods across [NY] State...,” said Schneiderman. “Abandoned homes become magnets for crime, drag down property values and drain municipal coffers. Our bill will keep communities safer and lessen the burden of municipalities still struggling to recover from the housing crisis.” 

05.19.14
Newsmakers with Mel Watt

FHFA Director

05.19.14
Federal Reserve of Richmond

~~Ed DeMarco: “We need to find our courage and our creativity to build a new [housing finance] system”

05.16.14
Washington Regulatory Round-Up (05/16/14)
05.16.14
April Housing Starts Up 13.2%


April housing starts surprised to the upside with 1.072 million starts with permits up to nearly 8% to 1.080 units. However, the bulk of starts, again, was in multi-family. New single-family home buying and home-buying intentions among first time homebuyers remains “really low.”

05.16.14
The Housing Market and the Fed
05.15.14
U.S. Is at Risk of "Pre-staged" a Cyber Attack


Hostile nations and groups are laying the ground for crippling attacks, according to Digital Bond CEO Dale Peterson. Nothing is being done to get prepared for these attacks, Peterson argues. "One of the biggest problems is that the CEOs ..in the companies that run the critical infrastructures …don’t understand the risks. They haven’t been informed as they should be… It’s much easier to say it’s never happened—we don’t have to deal with this."

05.14.14
Cyber Security After Snowden

 The damage done by NSA leaker Snowden is much worse than publicly revealed, according to KEYW's CEO and former NSA official Leonard Moodispaw. 
 

05.14.14
What’s the Problem with Sue and Settle?
05.14.14
No Such Thing as “Too Big to Jail”

 

"There is no such thing at 'too big to jail',” said Attorney General Eric Holder. “…To be clear, no individual or company —no matter how large or how profitable—is above the law. ...I am personally monitoring the status of [several important] investigations. I am resolved to seeing them through and in doing so, I intend to reaffirm the principle that no individual, no entity that  does harm to our economy is ever above the law."

05.14.14
Conversation with the Federal Housing Finance Agency’s Mel Watt
05.14.14
CFPB’s “New Normal” of Essential Accountability
05.14.14
$11.65 Trillion of Household Debt Outstanding in the U.S. on March 31st

05.13.14
Alas, There Is Congress

“...[Y]our Federal Reserve does not hold every card to your future in its hand,” said Richard Fisher, President of the Dallas Fed. “No matter how clearly we communicate, no matter how expertly we tailor our supervision of your banks, no matter how we conduct monetary policy, our work is necessary but not sufficient to the success of the …U.S. [economy]. The fiscal authorities—Congress and the executive branch—must do their job to provide the proper tax, spending and regulatory incentives for businesses to take advantage of the cheap and abundant money the Fed has made possible and put it to work to grow ...and let America prosper.”

05.12.14
CFPB’s “New Normal” of Essential Accountability
05.12.14
The CFPB's “New Normal” of Essential Accountability
05.12.14
Ten Thousand Commandments
05.12.14
Policy without Process: Sue and Settle
05.12.14
How HUD’s Latest Fair Housing Rule Could Expand Access to Opportunity

“New rules – currently being finalized by the US Department of Housing and Urban Development (HUD) – could spark new solutions to longstanding problems of exclusion and inequality,” wrote Urban Institute’s Margery Turner. “…If [HUD’s new] regulations are effectively implemented, jurisdictions ...will be held accountable for identifying and addressing the barriers that exclude and isolate lower-income households and people of color and that undermine the well-being of the neighborhoods in which they live.”

05.12.14
A case for looser credit scores.
05.11.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the May 11, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • Fannie Mae reported results for the first quarter of 2014, showing net income of $5.3 billion, and a net worth of $8.1 billion as of the end of the quarter.  Its income includes $4.1 billion in revenue from legal settlements relating to private-label securities.  Fannie Mae will pay $5.7 billion in dividends to Treasury for the quarter.
  • Freddie Mac reported its results for the first quarter of 2014, showing net income of $4.0 billion, and a net worth of $6.9 billion as of the end of the quarter.  Its income includes $4.9 billion in revenue from legal settlements, mostly relating to private-label securities.  Freddie Mac will pay $4.5 billion in dividends to Treasury for the quarter.
  • Treasury announced that it expects to recover $181 million from an Ally initial public offering after the underwriters exercised their option to purchase 7,245,670 shares at the IPO price.  Settlement is expected to occur on May 14, 2014.  After giving effect to this sale, taxpayers would hold 16% of Ally common stock.  This sale would bring the total recovery on Ally to $17.8 billion, of $17.2 billion provided to Ally.
  • The Administration released its April housing scorecard and March servicers’ report.  At 48 months, 43% of HAMP modifications were 90 days delinquent. 
  • The European Commission adopted a report addressed to the European Parliament and the Council, with a staff working paper, on the feasibility of a network of smaller credit rating agencies (CRAs) in the EU.  The report assesses how such a network could strengthen smaller CRAs and facilite their growth to become more competitive.  The report proposes establishing a regulatory dialogue with smaller CRAs.

 

 

05.09.14
Washington Regulatory Round-Up (5/09/14)
05.09.14
A Closer Look at Housing Finance and Private Capital

05.08.14
Credit Markets: What's Next?

Miliken Institute Global Conference.

05.08.14
What Younger Renters Want and the Financial Constraints They See

‘[An] analysis of data from Fannie Mae's National Housing Survey shows that most younger renters prefer owning both for lifestyle and financial reasons,” wrote Sarah Shahdad, a Strategic Planning Analyst for Fannie Mae. “However a large majority ...remained pessimistic ...about their ability to get a mortgage… Younger renters consider down payment and credit score to be top obstacles to getting a mortgage, and the presence of student loans exacerbates down payment and existing debt concerns.”

05.07.14
Pershing Square Presentation on Housing Reform
05.07.14
Housing Finance and Private Capital
05.07.14
Ackman's Presentation on Fannie and Freddie

05.07.14
Crowd Capital and Online Finance
05.07.14
Disruptive FinTech: A Look at Markets in Five Year
05.07.14
Nouriel Roubini and Jason Cummins: Keeping Up with Change
05.07.14
Credit Markets: What’s Next?
05.06.14
Fair Lending Report by CFPB
05.05.14
The Uncertain Fate of GSE Reform


The Senate Banking Committee has the 12 votes needed to pass housing finance reform legislation, according to leadership, but it’s uncertain if they can get the 15 to 16 votes needed to “make it easier to get [the bill] to the Senate floor” for a vote. “Whether or not they can put together a vote on Tuesday or Wednesday [of this week]—that’s the real question,” said American Banker’s Rob Blackwell.

 

05.05.14
Ukraine Unrest Spreads
05.02.14
Washington Regulatory Round-Up (5/02/14)
05.02.14
A Closer Look at Normalizing Monetary Policy


The FOMC’s “Job One” is to “communicate clearly to the markets, politicians, public that real, nonmonetary factors [are] hindering complete recovery,” wrote William Pool, Senior Fellow at the Cato Institute. “[The] Fed cannot fix disincentives that are slowing recovery in investment …[or fix the] growing labor market rigidities. …A candid Fed might reduce political pressure that may lead [the] Fed to overstay monetary ease.”  

04.30.14
"Normalizing” Monetary Policy
04.30.14
Prospects for the U.S. Economy and Dollar through the International Lens
04.30.14
The Current Economy
04.30.14
Housing Policy: Housing, Fannie and Freddie and the Policy Shift
04.30.14
Roadmap to Dodd-Frank MORTGAGE Rulemakings

Attached please find an updated Roadmap to the Dodd-Frank Act Mortgage Rulemakings.  The updates include:

  • The CFPB proposed to provide an alternative small mortgage servicer definition for nonprofit entities that meet certain requirements, to amend the existing exemption from the ability-to-repay rule for nonprofit entities that meet certain requirements.  The proposal would also permit creditors 120 days after closing a QM loan to correct errors in points and fees.  It also solicits comment on a cure for loans that exceed the 43 percent debt-to-income under the QM definition, and on how small creditor origination operations have changed due to the new mortgage regulations.
  • The CFPB released a SBREFA outline of a potential HMDA proposal.
  • Six agencies proposed a regulation to implement registration and supervision requirements for appraisal management companies. 

 

 

 

04.30.14
Dodd-Frank Act Rulemakings, Studies, and Reports Update

Attached please find an updated Roadmap to the Dodd-Frank Act Rulemakings, Studies, and Reports.

 

  • The CFPB proposed to extend by five years an exemption to remittance transfer fee disclosures that permits estimates of third-party fees. 
  • The FDIC finalized a rule that requires those who purchase receivership assets to certify that they have not contributed to the failure of a covered financial company.
  • The FDIC proposed to transfer certain OTS regulations and to amend its enforcement procedural rules.

Regards,

Canfield Press

04.30.14
Perfect Storm Is Forcing Bankers to Police Morality
04.30.14
U.S.Homeownership Rate Falls to a 19-Year Low

04.30.14
Freddie Mac CEO Layton's Overview of Housing Finance Reform
04.28.14
Russia Will Retaliate Against Sanctions

"Europe is a major trading partner of Russia--40% of Russan trade is with Europe," said Mohamed El-Erian, Allianz chief economic adviser. "....If we do this [implement energy and financial sanctions], Russia will retailiate with its own sanctions, disupting the supply of energy to Europe." Russian state-controlled energy giant Gazpromm supplies more than 25% of the EU’s gas needs—with 80% of the region’s gas supplies flowing through Ukrainian pipelines.

04.28.14
Tale of Two Housing Markets
04.27.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the April 27, 2014 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This updates include the following:

  • The FDIC finalized without substantive change what had been an interim final risk-based and leverage capital rule, and that is substantially similar to Federal Reserve and OCC rules.  This rule defines regulatory capital, implements a common equity tier 1 minimum capital requirement, a minimum tier 1 capital requirement, and, for institutions subject to the advanced approaches risk-based capital rules, a supplementary leverage ratio that incorporates a broader set of exposures in the denominator.  In addition, the rule establishes limits on a banking organization’s capital distributions and certain discretionary bonus payments if the banking organization does not hold a specified amount of common equity tier 1 capital. 

 

 

04.25.14
Regulatory Round-Up (4/25/14)
04.25.14
How to Bring Private Investors Back into Mortgage Market?


“Mistrust of the sell side …runs deep among MBS investors,” wrote Reuters’ Alison Frankel. “So how can the securitization industry—the mortgage originators, issuers, rating agencies, lawyers and accountants who are counting on the revival of the mortgage finance market—woo back private capital?”

04.24.14
March New Home Sales Drop 14.5%

The housing market has been slammed by an unusually cold winter, higher mortgage interest rates and a shortage of properties that is limiting options for potential buyers.

04.24.14
CFPB Pushes for eClosings

“Over the next 15 months before our Know Before You Owe rule goes into effect, we are proceeding deliberately by launching [an eClosing] pilot project,” said CFPB Director Richard Cordray. “The pilot program will assess and advance electronic closings and test our vision for additional educational tools that can be incorporated to benefit consumers. …This is not a rulemaking process. Instead it is a potential ‘win-win’ effort to work with all stakeholders …[to achieve] a more transparent, efficient, and effective [loan closing] process.”

04.22.14
Cloud computing could be at risk in Aereo ruing
04.22.14
Typical Crazy Government Math


“On today’s [National Real Estate Post] …is this whole matter of the government not being able to agree on what Fannie and Freddie has made, or cost, the American people. On the one side their saying it’s come at a cost of $19 billion. On the other side it’s come at a profit of $181 billion. Only our American Government can come up with this stuff while keeping a straight face. It’s math man. …We’ll let you tune in and see for yourself.”

04.22.14
Housing Finance At A Glance: A Monthly Chartbook
04.22.14
Tracking the Perfect Storm

“[I]f the demand for money continues to decline, then the Fed will need to increase the pace of its tapering and sooner or later begin to 1) reduce the supply of bank reserves and 2) increase the level of short-term interest rates,” wrote Scott Grannis, former chief economist Western Asset Management. “If they don't do this in a timely fashion, then we could begin to see inflation move higher.”

 

04.21.14
Structural Weaknesses in Johnson Crapo Discussion Draft
04.21.14
National Mortgage Settlement Lessons Learned
04.21.14
OASIS: A Securitization Born from MSR Transfers
04.21.14
Where Have All the Loans Gone?
04.21.14
Home Price Appreciation (%)
04.21.14
China’s First Buildings Made with 3D Printing

“We can print the whole walls in the factory, and then deliver them to the construction site. It’s very simple to do,” said Ma Yihe

04.21.14
Factory-Built Prefab Mansions That Fold Into Place

The latest innovation in prefab construction:  High end, high quality homes for $155,000 to $665,000 that take four to six weeks to complete.

04.21.14
A Road Map for a More Effective Regulatory Architecture


The current U.S financial regulatory system, created in response to financial crises over the last 150 years, is highly fragmented and complex. Moreover, inefficient overlap exists in both the supervision of individual institutions, and in the regulation of key financial activities.  The Bipartisan Policy Center has developed a plan to rationalize the regulatory system, leading to greater financial stability and economic growth.

04.20.14
Housing Finance At A Glance: A Monthly Chartbook
04.18.14
Washington Regulatory Round-Up (4/18/14)
04.18.14
Underwater Mortgages Fall to Lowest Level in Two Years

On March 31, 9.1 million U.S. residential properties were seriously underwater — where the combined loan amount secured by the property is at least 25% higher than the property’s estimated market value — representing 17% of all properties with a mortgage, according to RealtyTrac. An additional 8.5 million properties were on the verge of resurfacing in the first quarter, with between 10% negative equity and 10% positive equity, representing 16% of all properties with a mortgage, according to RealtyTrac.

04.18.14
Funding for Michigan homeowners going to Detroit unions?
04.17.14
Monetary Policy and the Economic Recovery

“Because the course of the economy is uncertain, monetary policymakers need to carefully watch for signs that it is diverging from the baseline outlook and then respond in a systematic way,” said Fed chairman Janet Yellen. In a speech before the Economic Club of New York, Yellen outlined three questions will “likely to loom large in the FOMC's ongoing assessment of where we are on the path back to maximum employment and price stability.”

04.16.14
The IMF is Dead Wrong on Low Interest Rates
04.16.14
Signs of Softening in Housing Market

Shiller on Health of Housing.

04.16.14
How Important Are Hedge Funds in a Crisis?

"Before the 2007–09 crisis, standard risk measurement methods substantially underestimated the threat to the financial system," wrote Terint Gropp in the San Francisco Fed's Economic Letter. "One reason was that these methods didn’t account for how closely commercial banks, investment banks, hedge funds, and insurance companies were linked. ...A new method that more accurately accounts for these spillover effects suggests that hedge funds may have been central in generating systemic risk during the crisis."

04.15.14
Do Fannie/Freddie Speculators Like Plan C?


In an April 7th commentary in The Hill, AEI’s Alex Pollock proposed a seven-step “fix” for Fannie Mae and Freddie Mac, leading some hedge funds to claim, “See now AEI agrees with us!” Pollock cautioned, “But note well: point 7 says that if and only if points 1 through 6 [that remove the enterprises’ subsidies] are implemented, then an adjustment of the dividend on the Treasury’s senior preferred stock would be reasonable.”

04.14.14
The Fed Is Not the Instrument of Economic Recovery
04.14.14
Competitive Monetary Easing: Is It Yesterday Once More?

“The current non-system in international monetary policy is ...a source of substantial risk, both to sustainable growth as well as to the financial sector,” said Reserve Bank of India Governor Raghuram Raja. “It is ...a problem of collective action. We are being pushed towards competitive monetary easing. …A first step to prescribing the right medicine is to recognize the cause of the sickness. Extreme monetary easing ...is more cause than medicine. The sooner we recognize that, the more sustainable world growth we will have.”

04.13.14
Disruptors in the Healthcare Industry
04.13.14
Disruptors in the Manufacturing Industry
04.13.14
Disruptors in the Transportation Industry
04.13.14
Disruptors in the Financial Services Industry
04.13.14
Disruptors in the Telecom Industry
04.13.14
U-Turn in Detroit's Bankruptcy

Cumberland Advisors Commentary

04.11.14
Washington Regulatory Round-Up (4/11/14)
04.11.14
The Next Bubble Is In Mortgage Servicing

“[M]ortgage servicing, especially the mark-up on mortgage servicing rights, or ‘MSRs,’ is currently subsidizing what is overall an unprofitable mortgage lending market,” wrote Chris Whalen. “But since the Fed is currently withdrawing support for mortgage bonds via QE and has also stopped selling the ‘roll’ from the current month into forward months, mortgage lending is becoming even less profitable—and this even with the offset of higher valuations for the mortgage servicing business.”

04.11.14
The Grey Side of Dark Pools
04.10.14
Tight Credit Standards’ Impact on Spring Housing Market

“So far, word on the street is this spring’s housing market is underwhelming,” said CNBC’s Diana Olick. The move-up buyers are buying, but first time buyers and those with lower credit scores—more than half of potential buyers—are not due to tight lending standards. "Easing of credit standards is not happening – it’s not on the table,” said Susan Wachter, Wharton School real estate professor. “And, it’s really still that threat of what happens to a mortgage if the mortgage goes bad [that's restricting mortgage credit].”

04.09.14
The Tollbooth on the Bankster Turnpike

Retiring SEC trial attorney veteran James Kidney.

04.09.14
Top Disruptors in the Financial Services Sector

CircleUp, Kickstarter, Lending Club, Square, Wealthfront are among the 50 companies recognized by CNBC, as the next generation of disruptors, who are changing the way we spend, fund, transfer, save and invest money.
 

04.09.14
GSE Reform Bill Won’t Become Law in 2014, Says Senator Brown
04.08.14
New Mortgage Applications Hit 14-Year Low

“[Mortgage] refinances are burning out a lot faster than anticipated, but the real culprit is purchase," said Paul Miller, a FBR Capital Markets analyst. "The purchase market has not picked up at all. It's not that the buyers are not there, it's that there is nothing to buy, and everyone is trying to figure out why." Herb Blecher with Black Knight added, "Credit standards have shown little sign of easing—only about 30% of 2013 loans went to borrowers with credit scores below 720—which indicates that significant opportunity to expand mortgage origination activity is available, if risk appetites allow."

04.07.14
A Simple Fix for Fannie and Freddie

On The Hill Blog, Alex Pollock

04.07.14
Innovation Will Make Bitcoin Meaningful

"Bitcoin is primarily—first and foremost—a payment network,” said Gil Luria, managing director at Wedbush Securities. “It will be the technology of the future for transactions. …The money and remittance companies need to look out—Western Union, Moneygran Zoom—need to look out… Later on, this technology is probably going to fuel actual payment networks in a broader sense, especially online. Visa [and] Mastercard have to look out and Ebay needs to react. If Ebay doesn’t move quickly, Paypal will be in danger of being disrupted by Bitcoin.” 

 

04.07.14
The Too Big To Fail Subsidy Debate Is Over

Is there a subsidy, is it large, and how much damage could it end up causing to the broader economy?  Simon Johnson, Baseline Scenario

 

04.04.14
Regulatory Round-Up (4/4/14)
04.04.14
Back to Trend in Employment


Total nonfarm payroll employment increased by 192,000 in March, 4% below the market’s expectation of 206,000. The unemployment rate remained unchanged at 6.7% in March, as 500,000 re-entered the work force in March, according to the BLS. The Labor Force Participation Rate ticked up 2 basis points to 63.2% in March, well below the normal 66% to 67% rate over the last 20 years.  

04.03.14
There's No Place Like (a Second) Home

As temperatures in much of the country finally rise above freezing, thoughts are turning to summer, to summer vacations and of course to vacation homes.

04.03.14
Dodd-Frank Act Rulemakings, Studies, and Reports Update

Attached please find an updated Roadmap to the Dodd-Frank Act Rulemakings, Studies, and Reports.

  • The CFTC released an interim final regulation providing that, for a swap executed anonymously on a swap execution facility or designated contract market, and cleared in accordance with the CFTC’s straight-through processing requirements, the information maintained by a registered repository that may be accessed by either counterparty does not include the identity of the other counterparty or its clearing member, or its or its clearing member’s legal entity identifier.
  • The CFTC solicits comment on a review of its swap data reporting rules regarding reporting challenges, data field standardization, and consistency in reporting.
  • The Federal Reserve released a final rule implementing prudential standards, including capital and liquidity standards, for bank holding companies and foreign banking organizations with total consolidated assets of $50 billion or more.
  • The SEC proposed a rule that would establish standards for the operation and governance of certain types of registered clearing agencies that meet the definition of a covered clearing agency. 

Regards,

Canfield Press

 
 
04.03.14
QE Comments Ease Eurozone Deflation Risks

"Recent comments suggesting that quantitative easing is becoming a less contentious policy option in the eurozone reduces the risk of deflation in the region," wote Fitch Ratings analysts. "...[I]f  [Bundesbank president Jens] Weidmann's comments do signal a more open stance to QE, it would reinforce our view that [EU] authorities and policy-makers are alive to the continuing risks to the bloc's long-term recovery.. [including] deflation or an extended period of low inflation across the eurozone, which would put pressure on debt dynamics in highly indebted countries..."

04.02.14
Feds Warn Banks of Cyber Attacks on ATMs

A recent attack netted thieves more than $40 million using just 12 debit card accounts," according to the Federal Reserve.

04.02.14
Google’s E-Money System: Gmail


In May 2013, Google soft-launched a straightforward way to send money that allows its customers, who have a Gmail account with a Google Wallet feature, to send money for free to a friend (with a linked bank account) or for a small fee (from a credit card). Google is now launching a major marketing push for its e-money system, positioning the tech giant to take a bite out of the global credit-card payment system with its trillions of dollars in annual transactions.

04.01.14
What Happened to Fannie Mae and Freddie Mac?

Counfounded Interest.  Anthony B. Sanders, finance professor at George Mason University

04.01.14
Ten Thousand Commandments

The costs for Americans to comply with federal regulations totaled $1.863 trillion in 2013—more than the GDP of Canada or Australia, according to the Competitive Enterprise Institute’s Clyde Crews. “Regulatory costs amount to an average of $14,974 per household – 23% of the average household income of $65,596 and 29% of the expenditure budget of $51,442,” wrote Crews. “This exceeds every item in the household budget except housing – more than health care, food, transportation, entertainment, apparel, services, and savings.”

03.31.14
The Fed Reserve Is Short Of Reaching Employment And Inflation Goals

Fed Chairman Janet Yellen’s Remarks at the  2014 National Interagency Community Reinvestment Conference on March 31. 

03.31.14
Is the U.S. Stock Market Rigged?


“What's the headline here?” asked 60 Minutes’ reporter Steve Kroft. “[The] stock market's rigged [by high frequency trading],” responded Michael Lewis, author of Rigged. “The United States stock market, the most iconic market in global capitalism is rigged” by a group of high-speed traders, who legally front-run trades using computerized trading.

03.30.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the March 30, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • The Federal Reserve announced that it approved the capital plans of 25 bank holding companies participating in the Comprehensive Capital Analysis and Review.  The Federal Reserve objected to the plans of the other five participating firms--four based on qualitative concerns and one because it did not meet a minimum post-stress capital requirement.  The 30 companies that are part of this review hold 80% of the total assets of all U.S. bank holding companies.
  • Treasury announced that it has commenced an underwritten initial public offering of Ally common stock to sell 95,000,000 shares, and that it has granted the underwriters an option to purchase an additional 14,250,000 shares.  Treasury currently holds 177,311,010 shares, or 37%, of Ally common stock.
  • Treasury announced it intends to sell all of its preferred stock and subordinated debt in the following five institutions:
    • Community First, Inc. (Columbia, TN);
    • Freeport Bancshares, Inc. (Freeport, IL);
    • Great River Holding Company (Baxter, MN);
    • Marine Bank & Trust Company (Vero Beach, FL); and
    • Patriot Bancshares, Inc. (Houston, TX).

 

 

03.30.14
Why millennials love apartments.

CNN Money.

03.30.14
The dangerous future of Putin's regime.

Leon Aron, Resident Scholar, AEI

03.30.14
Is Russia Slowly Turning Off Its Supply of Natural Gas to the EU?
03.30.14
The Next Russian Military Intervention

Russia’s late-February invasion of Ukraine’s Crimea province stands as part of a long history of Russian interventionism in Moscow’s former Soviet sphere.

03.30.14
Ukraine Crisis Is "Wake-Up Call" for Europe, Says George Soros
03.28.14
Washington Regulatory Round-Up (3-28-14)
03.28.14
OECD Warns of Market Turmoil as Central Banks Unwind

“Expectation about imminent [QE] exits could…rock government securities markets by pushing up longer-term rates in government bond markets more strongly than desirable or warranted," warned the Organization for Economic Cooperation and Development. “…There is an apparent gap between the reality of investors seeking to price final destinations on the one hand, and the desire of central bankers to minimize the scope for disorderly shocks, on the other. Central banks are facing extraordinary expectation-formation challenges."  

03.28.14
Fed Rejects Several Banks Capital Plans.
03.27.14
Has Housing Really Recovered?

Mortgage Bankers Association president David Stevens

03.27.14
NY Fed: Big Banks Do Get All the Breaks

“Even the pro-megabank New York Federal Reserve has finally acknowledged what most research has already demonstrated—the megabanks receive much more favorable borrowing terms,” said Senator David Vitter (R-LA), who is co-sponsoring a bill to require large banks maintain more capital. “Eliminating the megabanks’ federal handouts—and addressing the problem of ‘too big to fail’ financial institutions—is a simple matter of common sense."

03.26.14
Have the GSEs Fully Repaid Treasury?
03.26.14
The Housing Recovery Staggers Forward

03.25.14
Are the Long-Term Unemployed on the Margins of the Labor Market?

In “Are the Long-Term Unemployed on the Margins of the Labor Market?” Alan B. Krueger, Judd Cramer, and David Cho of Princeton University find that even after finding another job, reemployment does not fully reset the clock for the long-term unemployed, who are frequently jobless again soon after they gain reemployment: only 11 percent of those who were long-term unemployed in a given month returned to steady, full-time employment a year later.

03.24.14
The Economy’s Biggest Problem

The millions of workers unemployed for long stretches represent the "most serious problem" the economy faces right now, former White House economist Alan Krueger told CNBC on Monday

03.24.14
Revised Stress Tests by the Federal Reserve Bank
03.24.14
Stress Test for Dummies

"The participating banks [in stress tests] have noted in public comments on the DFA stress tests that the Fed and other agencies 'do not have a strong record of identifying emerging risks in the past, and that the scenario variables were not sufficiently plausible to be useful as a risk management tool'," wrote Chris Whalen. "These comments are well founded and illustrate the silly nature of this exercise.  The fact that the Fed has required bank management to spend time on this idiocy while closing year-end financial statements is just another piece of evidence that nobody at the Fed is living in the real world."

03.21.14
Washington Regualtory Round-Up (3-21-14)
03.21.14
Chairman Yellen’s Challenges at the Fed
03.21.14
2014: The Transition Year

“Janet Yellen is about promises …about keeping interest rates low for longer,” said Blackstone’s Jeffery Rosenberg.

03.21.14
Housing’s Big Pop Has Gone Out

We’re a bit player in a massive, massive market,” said Blackstone CEO Steve Schwarzman.

 

03.20.14
DFA Stress Tests, March 2014
03.19.14
Federal Reserve Reduces Bond Purchases and Lays Groundwork for First Interest Rate Hike
03.18.14
Regulating Systemic Risk in Insurance

Insurance Companies and Systemic Risk

By James Kwak

03.18.14
Minorities Continue to Lose with Frank Dodd Act-National Real Estate Post

~~The data keeps pouring in on the consequences of the Frank Dodd Act.  Minorities are literally getting pushed out of the housing market. 

03.17.14
The Global Economic War is Escalating

by KEVIN D. FREEMAN on MARCH 16, 2014

03.17.14
2008 Was Worse Than Buffett Realized


"If the [Federal Reserve] hadn't guranteed money market funds like they did [in 2008] , it would have alll been over," said Warren Buffett in a CNBC interview. "...The Fed became the last resort lender to the world."

03.16.14
Every Chart You Should Be Tracking But Were Too Afraid To Find
03.16.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the March 16, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

  • The European Commission adopted regulatory technical standards to implement its Basel III capital requirements.  The standards:
    • Require a credit valuation adjustment to reflect deterioration in counterparty credit risk, based on either a credit spread or, if unavailable, a proxy.
    • Specify how banks investing in securities must ensure that the originator, sponsor, or original lender retains a material net economic interest in the instrument (“skin in the game”).
    • Specify the classes of instrument that banks can use when awarding bonuses, to ensure that the instruments adequately reflect the credit quality of the institution and are appropriate for use in bonuses.
    • Specify how institutions should assess whether changes or extensions to internal capital models are material enough that they require prior permission.
    • Strengthen the cooperation between competent authorities of home and host Member States by specifying the information to be exchanged about noncompliance and supervisory actions.
    • Define the term “market” as the Eurozone, or otherwise by jurisdiction, for purposes of the requirement to hold capital against the market risk of the equity instruments.  For market risk purposes, the institution must add together equity instruments trading within the same market.
    • Specify three alternatives to calculate the “non-delta risks” of options and warrants to calculate the capital requirement for market risk.
    • Define the material exposures to specific risk and large numbers of material positions in debt instruments of different issuers, to encourage use of internal specific risk assessment.
    • Set common rules on when a close correlation exists between the value of the covered bonds issued and the value of the underlying assets, so that gains and losses on fair-valued liabilities can be reflected in capital reserves.

The European Parliament and the Council have up to three months to review the standards. 

 

 

 

03.14.14
Washington Regulatory Round-Up (03/14/14)
03.13.14
Crapo: 'Good Chance' Housing Revamp Bill Will Pass Out of Committee

U.S. Senator, Mike Crapo, Republican from Idaho

03.13.14
Is the U.S. housing market in a price bubble?

03.12.14
Private Credit and Public Debt in Financial Crises

~~FRBSF Economic Letter, March 10, 2014

03.11.14
A Single-Family Real Estate Recovery or a Wall Street Recovery?

Blackstone to MSNBC

03.11.14
The Fed’s Forward Guidance Creates Financial Stability Risks


“In the end, the reputational and financial stability risks associated with forward guidance have to be weighed against the risks associated with less forward-looking information," wrote the Bank for International Settlements in the BIS Quarterly Review. “The cost-benefit calculus will depend on the particular situation in each economy and is likely to change over time.”

03.10.14
Tax Changes to the Administration’s 2015 Budget Proposal
03.10.14
Who Gets More, Who Gets Less

InTheCapital's Tess VanderDolder.

03.10.14
U.S. Debt Remains Historically High and Projected to Grow

~~Analysis of the President’s Fiscal Year 2015 Budget, prepared by the Peter G. Peterson Foundation.

 

03.10.14
Roadmap to Financial and Housing Market Stabilization Plans

This is the March 9, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • Treasury announced action results for CPP shares in the following institutions:

o BNCCORP, Inc. (Bismarck, ND), for $21,120,957; Treasury paid $20,093,000;
o Chicago Shore Corporation (Chicago, IL), for $7,287,700; Treasury paid $7,000,000;
o IA Bancorp, Inc. (Iselin, NJ), for $6,051,511; Treasury paid $5,976,000; and
o Meridian Bank (Malvern, PA), for $10,593,202; Treasury paid $12,535,000.

Treasury did not auction shares in Maryland Financial Bank (Towson, MD) or Rising Sun Bancorp (Rising Sun, MD), which had both been included in the original (February 22, 2014) announcement of this group of auctions. 

  • The European Commission adopted regulatory technical standards setting criteria to identify categories of staff at banks and investment firms whose roles have a material impact on an institution’s risk profile.  For performance from January 1, 2014 onwards, such employees may not receive variable compensation (bonuses) of over 100% of their fixed compensation.  Under certain conditions, shareholders can increase this maximum to 200%.  The European Parliament and the Council have up to three months to review the standards.
  • The European Commission proposed conflict mineral regulations that would require those who import tin, tantalum, tungsten, or gold into the EU to:

o Certify their adherence to supply chain due diligence obligations;
o Communicate their supply chain policy to suppliers and the public, and incorporate it into supply contracts;
o Establish a company-level grievance mechanism, provide such a mechanism through collaborative arrangements with other companies, or facilitate recourse to an external expert or body;
o Implement a strategy to identify and respond to risks;
o Obtain an annual third-party audit of the importer’s activities, processes, and systems used to implement supply chain due diligence; and
o Submit information annually to the Member State competent authority, including contract details.
 

 

03.10.14
Budget “Small Ball” Leads to Big Trouble

“Play small-ball and 10 to 15 years from now your country will be sucking canal water and that's the way it is," said former Senator Alan Simpson (R-WY) on "Squawk on the Street." "It's called the debt. It's $17.3 trillion, heading for 20, and at some point the people who have loaned us 20 trillion bucks will say you've got a dysfunctional government and you've got a Congress that doesn't work. We want more money for our money and interest rates will go up."

 

 

 

 

03.09.14
Millennials in Adulthood

PewResearchCenter

03.07.14
Washington Regulatory Round-Up (3/07/14)
03.07.14
Fed's Plosser 'Very Worried' About QE Consequences
03.05.14
Banks Are Retreating From Housing Market

Chris Whalen, a fellow at the Networks Financial Institute at Indiana State University. 

03.05.14
Obama Administration's $3.9 Trillion Budget

New spending....new taxes.....

03.05.14
A Closer Look at the President’s Budget

“The Obama budget shows a bottom line for 2015 of $3.9 trillion in spending and $3.3 trillion in revenues,” wrote New York Times’ Jackie Calmes. “But of the total spending, less than a third — under $1.2 trillion—goes to so-called discretionary programs, domestic and military, for which the president and Congress directly control spending levels. The rest is called mandatory spending, mainly for the fast-growing entitlement benefit programs Medicare, Medicaid and Social Security; for interest on the federal debt, and for benefits to federal retirees and veterans."

03.03.14
Fairholme Capital requests corporate governance actions by Fannie and Freddie
03.03.14
Freddie Mac FY2013 Results
03.03.14
Investor Fed Housing Bubble Has Burst

Confounded Interest, George Mason University finance professor Anthony Sanders

03.03.14
The Critical Juncture of Housing


“Investors, supplied by Fed liquidity over the past two years, have acted much like Ma and Pa speculator from 2003 to 2007,” said Mark Hanson. “They were able to …basically buy with reckless abandon. As they exit the market and housing has to go back to end user fundamentals, we're going to have a tough time. Unless rates come down now, back to 3 1/4% on a 30-year fixed you're going to see forward looking house indicators …go negative by May.”

03.03.14
Housing 'Nirvana' Took a Pause
03.03.14
A Year in Review-Fannie Mae 2013

Timothy J. Mayopoulos
President and Chief Executive Officer, Fannie Mae

03.03.14
"We're Witnessing The Most Seismic Geopolitical Events Since 9/11"

Ian Bremmer, Business Insider.com March 2, 2014

03.01.14
Washington Regulatory Round-Up (03/01/14)
02.28.14
Banks’ New Competitors: Starbucks, Google, and Alibaba

 
“Accenture estimates that competition from non-banks could erode one-third of traditional bank revenues by 2020,” wrote Wayne Bush and Juan Pedro Moreno on Harvard Business Review’s Blog. "…[While] many believe that regulatory barriers will dampen disruption[,] …new entrants already pose a threat to banks by raising service expectations and creating distance between banks and their customers.”

02.27.14
The Decline of US Small Banks (2000–2013)

Mercatus Center, George Mason University

02.24.14
Wall Street--America's New Farmer

An estimated 400 million acres of farmland in the United States will likely change hands over the coming two decades as older farmers retire...

02.24.14
Detroit Files Plan for Fixing Debt and Emerging from Bankruptcy

Kevyn Orr, Detroit's Emergency Manager

02.23.14
Affordability Shock for Home Prices in 2014
02.23.14
Investors Slow Down Buying Homes
02.23.14
High End-Homes Sales Growth Strong
02.21.14
Washington Regulatory Round-Up (02/21/14)
02.21.14
A Bitcoin Primer


02.21.14
Delinquency and Foreclosure Rates Decline to Lowest Level in Six Years

MBA - 49 States Saw Drop in Foreclosure Inventory Rates over Previous Quarter
 

02.20.14
CFPB's Antonakes Vows to Crack Down on Mortgage Servicers

~~"[B]usiness as usual has ended in mortgage servicing," said CFPB's Steven Antonakes. "Groundhog Day is over."
 

02.19.14
Housing Starts Plunge Most In 3 Years

Housing Starts dropped 16% month-over-month from upwardly revised December data—the biggest MoM drop in 3 years. Building Permits also plunged 5.4%, missing expectations by the most since June. Permits for the West fell 26%, while most other regions improved. Concurrently, homebuilders’ sentiment experienced the largest drop in 30 years, due to harsh weather, and shortages of lots, building materials and labor, according to NAHB.

02.19.14
A Look At What They’re Saying About myRA Across the Country
02.17.14
Roadmap to Financial and Housing Market Stabilization Plans Update

~Attached please find the February 16, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:
FHFA released its November Refinance Report, showing that Fannie Mae and Freddie Mac have completed more than 18 million refinances since the start of their conservatorships, including the 3 million through HARP.  Year-to-date through November 2013:
Borrowers with LTV ratios greater than 105% accounted for 40% of the volume of HARP loans;
20% percent of HARP refinances for underwater borrowers were for 15- and 20-year loans;
HARP refinances represented 55% of total refinances in Nevada and 49% in Florida, more than double the 22% of total refinances nationwide over the same period.
The OCC issued supervisory guidance regarding secured consumer debt discharged in Chapter 7 bankruptcy proceedings.  The guidance describes the analysis necessary to clearly demonstrate and document that repayment is likely to occur, which would preclude any charge-off, when a bank may consider post-discharge payment performance as evidence of collectability, and when this performance demonstrates both capacity and willingness to repay the full amounts due.  Immediate charge-off of amounts exceeding collateral value is not required if an analysis indicates that orderly repayment is likely to occur after the bankruptcy discharge.  Loans returned to accrual that had been discharged in a Chapter 7 bankruptcy proceeding should be monitored and considered separately for loan loss allowance purposes and generally charged down to the fair value of the collateral less costs to sell if
Regards,

Canfield Press

02.14.14
Virtual Currency Commerce and Consumer Protections
02.14.14
Virtual Currencies and Regulation in an Evolving Landscape
02.14.14
Washington Regulatory Round-Up (2/14/14)
02.14.14
Weather Isn't Driving Weak Home Sales

“While weather makes for a fair argument, it is not the full picture of this winter's housing slowdown,” wrote CNBC’s Diaan Olick. “Sales are weaker across the nation, but they are falling hardest in the West [particularly in California], where weather is less of a factor.” While the economy is growing, "[in] southern California home sales have fallen on a [y-o-y] basis for four consecutive months now...,” said DataQuick president John Walsh. “Why? We're still putting a lot of the blame on the low inventory. But mortgage availability, the rise in interest rates and higher home prices matter, too."

02.14.14
A Closer Look at Digital Currencies

Bitcoin is an experiment that needs to remain in the laboratory until it can meet the basic standards required to become a beneficial transactional currency.

02.13.14
Investors Slow Down Home Buying

“Investor demand …put a floor on home prices after the housing crash and ignited a recovery,” wrote CNBC’s Diana Olick. “The concern now is what will happen if and when they decide to pull out? …With home prices still rising at a faster-than-normal pace, higher mortgage rates and less investor demand, this spring's usually busy housing season will arguably be key to understanding where the housing recovery is headed. …As housing re-enters the real world, demand and credit will be the wild cards to keep sales and prices in the positive.”

02.13.14
Bullard: We've Got Momentum for 2014
02.12.14
"Very Unusual Times," According to Yellen

02.12.14
Housing Chartbook, February 2014

Wells Fargo Economics Group Special Commentary

02.11.14
Better Markets Files Lawsuit

Challenging the $13 Billion Settlement Agreement Between the Justice Department and JP Morgan Chase

02.10.14
GSE Report

QE has distorted the prices of all traditional asset classes to such an extent that none currently promises a fair return with modest risk.... Because the dominant force in securities-price movements today is government policy, particularly the governmental buying of bonds and stocks, there is a vulnerability to all trading and investing prospects that cannot be assessed or measured with confidence...

Since there is no history of Americans losing confidence in the basic soundness of their currency and their government, and since monetary policy today is so manipulative and large, it will be hard to parse the reasons for any particular market moves in 2014.

02.10.14
Completely Unchartered Waters

02.10.14
The United States’ Very Distorted Labor Market
02.09.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the February 9, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • GAO released a TARP report entitled More Efforts Needed on Fair Lending Controls and Access for Non-English Speakers in Housing Programs.  Treasury requires MHA servicers to develop internal control programs that monitor compliance with fair lending laws, but GAO found that Treasury has not assessed the extent to which servicers are meeting this requirement. Treasury noted that it does share HAMP loan-level data with the responsible federal agencies.  GAO’s analysis of HAMP loan-level data for four large MHA servicers identified some statistically significant differences in the rate of denials and cancellations of trial modifications and in the potential for redefault between populations protected by fair lending laws and other populations.  The report notes that such analysis by itself cannot account for all factors that could explain the differences.  GAO states that reviewing the fair lending internal controls of MHA servicers could give Treasury additional assurance that servicers are complying with fair lending laws.

Treasury only recently developed written guidelines and procedures for the MHA programs related to limited English proficiency (LEP) persons.  Treasury has taken measures to reach out to these borrowers and requires servicers to have a policy for “effective relationship management” with LEP borrowers. However, the report says Treasury has not provided any clarifying guidance to servicers on what such a policy should contain or assessed servicer compliance.  Housing counselors have noted that LEP borrowers continue to encounter language related barriers in obtaining access to MHA program benefits.

GAO recommends that Treasury: assess the extent to which servicers have established internal control programs to monitor compliance with fair lending laws; issue guidance to servicers on working effectively with LEP borrowers; and monitor servicers’ compliance with the guidance.

  • FHFA released a quarterly report on the performance of the housing GSEs.  It shows the GSEs’ seriously delinquent loan count declined by 8% to approximately 724,000 loans as of September 30, 2013 compared to approximately 783,000 loans as of June 30, 2013.  Since September 30, 2012, the number declined by 25%, or approximately 245,000 loans.  The average credit score for new single-family business volume was 754 for Fannie Mae and 750 for Freddie Mac, down from the scores reported at the end of 2012 of 761 and 756, respectively, driven by reduced refinance activity.
  • The Administration released its January housing scorecard and December servicers’ report, including quarterly redefault rates for permanent HAMP modifications.  At 42 months, the oldest modifications have 60-day delinquency rates of 42% and 90-day delinquency rates of 40%.  Overall, 90-day delinquency rates are 13% after 12 months, 26% after 24 months, and 37% after 36 months.  The scorecard shows 2013 foreclosure starts and the lowest level since 2005, and completed foreclosures in 2013 at the lowest level since 2007. 

 

 

 

 
 
02.06.14
Ralph Nader Sponsors the Shareholder Respect Round Table on the Future of the GSEs
02.05.14
Puerto Rico Won't Default, according to PIMCO's Gross
02.04.14
Standard & Poor’s Lowers Puerto Rico GO To 'BB+', Warns About $1 Billion Collateral Call

The negative CreditWatch reflects uncertainties relating to the Commonwealth's constrained access to the market, as well as our assessment of the size and timing of potential additional contingent liquidity needs.

02.04.14
Coming to a Post Office Near You: Payday Loans You Can Trust?

Senator Elizabeth Warren (D-MA) 

02.03.14
No Bank Is “Too Big” to Indict, Says U.S. AG Holder

“There are no institutions that are too big to indict,” said Attorney General Eric Holder during an MSNBC interview. 

02.03.14
Four Oaks Bank Reaches $1.2 Million Settlement with DOJ for "Operation Choke Point"
02.03.14
Ally Financial Reaches $98 Million Settlement to Resolve Allegations of Discrimination Through Indirect Auto Lending
Settlement is department’s third largest fair lending agreement ever and largest ever auto lending agreement.

 

02.03.14
Justice Department Demands $2.1 Billion Penalty for Bank of America's Mortgage Fraud

All told, the six largest banks in the U.S. have paid $85.8 billion in settlements tied to the credit and mortgage crisis from 2010 through December 5, 2013. 

02.03.14
RBI Governor Rajan Warns of Global Policy Breakdown

"In case you don't know him – and most people don't – Raghuram Rajan is one of the brightest economists in the world and one of the few academics who accurately predicted the 2007-2008 global financial crisis."  John Mauldin

02.03.14
CFPB's Litigation Against PHH for Illegal Mortgage Insurance Kickbacks

The CFPB is seeking a civil fine, a permanent injunction to prevent future violations, and victim restitution.

01.31.14
Year-End & Q4 2013 Home Flipping Report

Homes flipped in 2013 accounted for 4.6 percent of all U.S. single family home sales during the year, up from 4.2 percent in 2012 and up from 2.6 percent in 2011. RealtyTrac.com

01.30.14
Fed Wants Out of QE

“.. and that means …a continuous $10 billion reduction [in QE],” said PIMCO’s Bill Gross. “…[W]e’re seeing an end of QE in October, early November of this year…”

 

01.30.14
Fed Taper Leaves EM to Twist in the Wind

“From the viewpoint of domestic U.S. economic conditions, the [FOMC] Statement is completely anodyne,” wrote Citi’s Steven Englander. From the point of view of [Emerging Markets], the Fed has just said ‘hasta la vista, baby.’ The comment on U.S. growth was a not surprising upgrade in the growth assessment…, but very little else changed other than the expected USD 10 billion additional tapering. On these asset market conditions look to JPY, CHF and EUR to do well, commodity currencies and EM to do poorly.”

01.29.14
Margin Debt: Different This Time?

01.29.14
Can the Post Office Deliver?

The USPS proposal raises questions about whether the Obama administration is trying to circumvent Congress and replace payday lenders with a government entity.

01.28.14
A plague on all emerging market currencies.

"The question is one of contagion and risk," said HSBC’s David Bloom.
 

01.27.14
Fears of Inflation Prevalent in Global Business Community

"The risks associated with emerging markets remain high, but the way in which QE tapering is applied can play a role in either enabling growth or throwing currencies and economies into turmoil," wrote FTI Consulting. Inflation destabilization and the rising costs of borrowing are possible threats to emerging economies should the central banks give poor responses,  added the company.

01.27.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the January 26, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • The Federal Reserve provided additional information on its expectations for the recovery and resolution preparedness of certain large bank holding companies.  The guidance discusses the importance of having robust systems to manage collateral, information, and payments, clearing, and settlement activities; it stresses the importance of adequate liquidity and funding arrangements during times of stress; management information systems capability to produce key data on a legal entity basis; and arrangements for continued provision of shared or outsourced services needed to maintain critical operations. The guidance is applicable to Bank of America Corporation; Bank of New York Mellon Corporation, PLC; Citigroup Inc.; Goldman Sachs Group, Inc.; JPMorgan Chase & Co.; Morgan Stanley; State Street Corporation; and Wells Fargo & Company.
  • GAO released a report on Strategies for Increasing Private Sector Involvement in flood insurance.  Stakeholders identified National Flood Insurance Program strategies the could promote private flood insurance, including charging full-risk rates, providing residual insurance, or serving as a reinsurer.  GAO reiterated its 2011 suggestion that Congress consider eliminating subsidized rates, charge full-risk rates to all policyholders, and appropriate funds for premium assistance to address affordability issues.
  • Treasury announced details of its first auction of notes with a floating rate that resets daily, and that pays quarterly dividends. In the initial auction, Treasury will offer $15 billion of floating rate notes with a two-year maturity. Treasury expects to auction additional floating rate notes quarterly in April, July, and October with two reopenings in the subsequent months of each quarter.  Details about the notes are here.
  • Treasury announced it intends to sell all its CPP shares in the following institutions:
    • AB&T Financial Corporation (Gastonia, NC);
    • Atlantic Bancshares, Inc. (Bluffton, SC);
    • Centrue Financial Corporation (Ottawa, IL);
    • Community First Bancshares, Inc. (Harrison, AR);
    • Georgia Primary Bank (Atlanta, GA);
    • Pacific Commerce Bank (Los Angeles, CA).

 

 

01.26.14
Global Economic Outlook for 2014

What should be at the top of the agenda for the global economy in the year ahead?

01.26.14
U.S. Economic Outlook

With a provisional two-year budget agreement in place, is the American economy back on track for a strong recovery?

 
01.26.14
"The Path From Crisis To Stability"

Special address by Mario Draghi, President, European Central Bank

 

01.26.14
The Future of Monetary Policy

Central banks around the world took extraordinary measures to reboot the global economy. What are efficient and responsible options for ending monetary stimulus?

01.26.14
Rebuilding Trust in Finance

More than five years after the Lehman Brothers collapse, what steps are still needed for the financial sector to regain society's trust?

01.26.14
Study Proposes New Tool for the Fed for Setting Rates
01.26.14
Washington Regulatory Roundup (01-26-14)
01.24.14
Mobile Money by T-Mobile

Un-carrier brings its revolution to personal finance with Mobile Money by T-Mobile.

01.24.14
All Cash Home Purchases Continued to Dominate the Housing Market

01.23.14
Remarks of the Counselor to the Secretary for Housing Finance Policy

Dr. Michael Stegman's speech to

the ABS Vegas 2014 Conference

01.23.14
The CFPB in 2014

01.22.14
IMF: Is the Tide Rising?

"In sum, global growth is projected to increase from 3 percent in 2013 to 3.7 percent in 2014 and 3.9 percent in 2015,"  wrote the IMF. 
 

01.22.14
Roadmap to GSE Reform

Attached please find an updated Roadmap to GSE Reform.  This update reviews all of the pending GSE reform bills that have been introduced in the U.S. Congress to date.

 

Best regards,

Anne Canfield

01.22.14
SIFMA’s Economic Outlook at Year End 2013


SIFMA's Economic Advisory Roundtable forecast that the U.S. economy grew at a 1.9% in 2013 and is projected to grow 2.7% percent in 2014. Those surveyed expressed concerns about rising interest rates, job growth and spending in this end-year 2013 outlook, which is little changed from the Roundtable's mid-year prediction of 1.7% and 2.6% growth rates for 2013 and 2014, respectively.

01.21.14
Bloc Buster: HSBC’s analysis of Sovereign CDS

Redrawing the world's map using cluster analysis.

01.20.14
Are new FHA loan limits a cause for concern?
01.20.14
How Sustainable is the Current Housing Recovery?
01.20.14
Home construction up in 2013!
01.20.14
Housing Is Softer Than People Think.
01.20.14
Predictions for 2014

Rob Cox is joined by Kevin Warsh, Tony James, and Paul Taubman to discuss what to expect in the year ahead from global markets, economies and corporate finance.

01.17.14
Washington Regulatory Round-Up (01/17/14)
01.17.14
QE: A Basic Monetarist Principle

01.17.14
What a Difference a Year Makes.
01.16.14
Housing Recovery Finally Gains Traction

“After a period of sharply declining house prices and a very slow pace of new construction at the end of the past decade, U.S. housing activity has begun to recover,” wrote John Duca, vice president and associate director of research in the Research Department at the Federal Reserve Bank of Dallas. “Americans, who endured an unprecedented housing collapse, have reason for cautious optimism about the outlook over the next few years, following the appearance of several hopeful indicators.”

01.15.14
The Long-Awaited Housing Recovery
What's Next? Factor's Determining the Housing Recovery's Pace
01.15.14
Richard W. Fischer, Fed Reserve Bank of Dallas
“…QE [quantitative easing] puts beer goggles on investors by creating a line of sight 
where everything looks good…”
01.14.14
Truth in Settlements Bill Introduced by Senator Warren

 

"I want to make it clear that the government lawyers work for us, they work for the public," said Senator Elizabeth Warren (D-MA). "They don't work for the companies they're supposed to be regulating. This is really and truly about transparency and about good government. ...The key point is to make these settlements public." 

01.13.14
Are We In Another Housing Bubble?


“[A] historically high bar for creditworthiness and a below average ratio of mortgage payments to rents does not seem like a bubble,” wrote Urban Institute’s Taz George and Binb Bai.

01.12.14
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the January 12, 2014 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • Melvin Watt, confirmed as the new FHFA Director, directed the GSEs to delay the g-fee increases and the revised upfront g-fee grid, and the elimination of the 25 basis point adverse market fee, in all but four states, that has been assessed on all mortgages purchased by Fannie Mae and Freddie Mac since 2008.  These were firstannounced December 9, 2013.  Director Watt intends to conduct a thorough evaluation of the proposed changes and their likely impact as expeditiously as possible, and would give not less than 120 days’ notice after completing the evaluation before implementing any changes.
  • The Federal Reserve and FDIC released the public sections of resolution plans for 116 institutions that submitted plans for the first time in December 2013.  These institutions generally have less than $100 billion in qualifying nonbank assets.  The FDIC also released the public sections of resolution plans of 22 insured institutions, mostly institutions that are subsidiaries of bank holding companies that concurrently submitted resolution plans.  The FDIC requires a covered insured depository institution with assets greater than $50 billion to submit a plan under which the FDIC, as receiver, might resolve the institution.
  • The Administration released its December housing scorecard and Novemberservicers’ report, showing that homeowners’ equity increased $418 billion, or 4.5%, to $9.669 trillion, in the third quarter of 2013, which is slightly higher than its value at the end of 2003 and up $3.4 trillion or 55%, since the end of 2011.  There have been 1.2 million permanent HAMP modifications, while the FHA has offered 2.1 million loss mitigation and early delinquency interventions through November.  HOPE Now lenders have offered 3.9 million proprietary modifications through October.
  • GAO released a report on government support for bank holding companies during the financial crisis.  The report states that government entities generally sought to set prices for assistance to be less expensive than prices available during crisis conditions but more expensive than prices available during normal market conditions.  GAO found that emergency lending and guarantee programs were generally priced below estimated market alternatives that may have been available during the crisis, consistent with the programs’ policy goals.  Based on analyses of emergency equity support programs, GAO found that Treasury purchased equity in financial institutions at prices that were higher than estimated market prices.  In 2014, GAO will examine any funding or other advantages the largest bank holding companies have received as a result of implied government support.

 

 

01.12.14
Consumer Finances
01.12.14
The Good And The Bad News For The Future Of America's Jobs
01.12.14
Economic Growth and Composition of GDP
01.12.14
After the Housing Bubble
01.12.14
Employment
01.12.14
Alternative Measures of Labor Utilization
01.10.14
Washington Regulatory Roundup (01/12/14)
01.09.14
Yellen: The Sixteen Trillion Dollar Woman

The January 20th issue of TIME features Janet Yellen's first and only interview since being confirmed as Federal Reserve Chair.

01.09.14
The GSE Report

The majority of the top global risks in 2014 are in the Middle East region (40%) and the Asia-Pacific region, specifically China, and North Korea (30%), with the balance in the U.S., Eurozone and Russia (30%), according to Oxford Analytica.

GLOBAL RISKS IN 2014

Source: Global Risk Monitor, Oxford Analytica

“There are now nine countries with nuclear arsenals, including Pakistan, a fractious if not failing state, and North Korea, which has proved itself as reckless as it is repressive. Depending on whether Iran gets the bomb, numerous other states—including Japan perhaps— are likely to exercise their own nuclear options. That would make for a very dangerous world indeed, which could lead to a recreation of the kind of tinderbox that exploded in the Balkans a hundred years ago—only this time with mushroom clouds.”

“...While history does not repeat itself precisely, the Middle East today bears a worrying resemblance to the Balkans then [before World War I]. A similar mix of toxic nationalisms threatens to draw in outside powers as the U.S., Turkey, Russia, and Iran look to protect their interests and clients.”

University of Cambridge Professor Margaret MacMillan

The Rhyme of History: Lessons of Great War

December 16, 2013 

01.09.14
Financial and Sovereign Debt Crises: Some Lessons Learned and Those Forgotten

IMF Working Paper, Carmen M. Reinhart and Kenneth S. Rogoff

01.09.14
Breaking and Entering: Housing's Big Business


Today, Atlanta is one of the hotter investor markets, where thousands of foreclosed homes are being auctioned each month in the greater Atlanta metro area. Key Property Services is among the small investors, buying hundreds of homes at auction.  "We think that our value-add is to buy properties and get them through the renovation and leasing cycle, because we think we can do that faster with our experience," said Simon Frost, chief financial officer of KPS.

01.08.14
Best Performing Cities in 2013

Milken Institute study conducted by Ross C. DeVol, Minoli Ratnatunga, and Armen Bedroussian

01.07.14
The Mortgage Loan Market for 2014
01.07.14
Cash Sales Make Up 37% of Total Home Sales in September


"Cash sales made up 37.4 percent of total home sales in September 2013, down from 40.2 percent a year ago," wrote Molly Boesel on CoreLogic's Insights Blog. "Prior to the housing crisis, the cash sales share of total home sales averaged approximately 25 percent." 

01.06.14
Labor Force Participation and Unemployment Rates
01.06.14
Revolutionary Change

 Louis-Vincent Gave. “To Different for Comfort"

01.06.14
U.S. Debt Held by the Public
01.06.14
U.S. Employment Cycles
01.06.14
Household Debt Delinquencies
01.03.14
Washington Regulatory Round-Up (01/03/14)
01.03.14
The Second Housing Bubble.

Political Calculations.

01.02.14
Is the Housing Market Boom Fading?


“Home prices increased again in October, … up 13.6% in the year ending in October” said David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “However, monthly numbers show we are living on borrowed time and the boom is fading. …The key economic question facing housing is the Fed’s future course to scale back [QE] and how this will affect mortgage rates. ...Most forecasts for home prices point to single digit growth in 2014.”
 

01.01.14
Gensler: Regulators Struck `Right Balance' on Rules

Bloomberg TV 'Market Makers'

12.31.13
Federal Reserve Balance Sheet vs. S&P 500 Index
12.31.13
Facing the Headwinds of 2014.

Alhambra Investment Partners.

12.31.13
Real Estate Predictions for 2014


Home prices and mortgage rates will continue to rise in 2014, according to CNBC’s Diana Olick. Also, investors are here to stay in the buy-to-rent space, as rents continue to increase for single-family and multi-family properties.  

12.30.13
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the December 29, 2013 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This update includes the following:

The OCC released its Mortgage Metrics Report for the third quarter of 2013.  It shows:
o At quarter-end, 91.4% of mortgages were current and performing, compared with 90.6% at the end of the previous quarter and 88.6% a year earlier.
o Seriously delinquent mortgages—60 or more days past due or held by bankrupt borrowers whose payments are 30 days or more past due—decreased to 3.6% compared with 3.8% at the end of the previous quarter and 4.4% a year earlier. The percentage of mortgages that were seriously delinquent decreased 16.8% from a year earlier.
o The percentage of early stage delinquencies, mortgages that were 30-59 days past due, was 2.6%, down 8.4% from the previous quarter and down 15.5% from a year ago.
o The number of loans in the process of foreclosure at the end of the third quarter fell to 604,763, a decrease of 47.8% from a year earlier.
o Servicers initiated 130,592 new foreclosures during the third quarter, a 48.3% decrease from a year earlier. Compared to a year ago, the number of completed foreclosures fell 27.8% to 82,841.
o Servicers implemented 311,660 home retention actions in the quarter compared with 116,214 home forfeiture actions (completed foreclosures, short sales, and deed-in-lieu-of-foreclosure actions). The number of home retention actions servicers implemented decreased by 0.9% from the previous quarter and 18.6% from a year earlier.
o In the third quarter, 92.4% of modifications reduced monthly principal and interest payments, and 62.5% of modifications reduced payments by 20% or more. Modifications reduced payments by $365 per month on average, while HAMP modifications reduced monthly payments by an average of $509.
o Servicers have modified 3,288,717 mortgages from the beginning of 2008 through the end of the second quarter of 2013. At the end of the third quarter of 2013, 45.5% of these modifications were current or paid off. Another 6.3% were 30 to 59 days delinquent, and 11.1% were seriously delinquent. Another 5.1% were in the process of foreclosure, and 7.8% had completed the foreclosure process.
 

12.30.13
Roadmap to Dodd-Frank MORTGAGE Rulemakings

~~Attached please find an updated Roadmap to the Dodd-Frank Act Mortgage Rulemakings.  The updates include:
• The CFPB released its final KBYO rule, effective August 1, 2015.
• The Federal Reserve Board, the CFPB, the FDIC, the FHFA, the NCUA, and the OCC, issued a final rule supplementing their January 2013 interagency appraisal rule, which requires appraisals with interior inspections in some cases.  The amendment exempts certain refinances and transactions secured by a new manufactured home.  QM loans are exempt.
• HUD finalized its definition of QM loan.

 

12.29.13
Worst Loan Growth coming out of this recession....

Confounded Interest

12.27.13
Washington Regulatory Round-Up (12/28/13)
12.26.13
Holiday highs for U.S. stocks

Thomson Reuters: Reuters Insider
 

12.24.13
Dodd-Frank Act Rulemakings, Studies, and Reports Update

Attached please find an updated Roadmap to the Dodd-Frank Act Rulemakings, Studies, and Reports.


• The banking agencies, CFTC, and SEC released final Volcker rules, and the banking agencies released FAQs on CDOs backed by trust preferred securities.  The Federal Reserve announced that banking entities will be required to fully conform by July 21, 2015, and that the other agencies will apply the rule accordingly.  This extension does not apply to recordkeeping and reporting of Appendix A to certain banking entities with significant trading activities.  The CFTC’s rule is similar but separate.
On December 23, the American Bankers Assocciation, CB&T Bancshares, Inc., Citizens Bank & Trust Company, MBT Financial Corporation and Monroe Bank & Trust Company sued the banking agencies in the D.C. Circuit Court of Appeals challenging a portion of the rule.  They next day, they filed an emergency motion for a stay of the definition of “other similar interests” in § _.10(d)(6) of the rule, pending the appeal.  The motion states, “To the shock of community banks, the Final Rule unexpectedly requires banks to divest their holdings in a commonly held debt instrument known as a ‘TruPS-backed CDO’ by July 2015 and, under Generally Accepted Accounting Principles (‘GAAP’), to take an immediate and irrevocable hit to earnings and capital as a result.” 
• The FDIC published for comment a notice of its Single Point of Entry strategy for orderly SIFI liquidations, under which the FDIC would be appointed receiver only of the top-tier U.S. holding company, and subsidiaries would remain open and continue operations.
• The Federal Insurance Office (FIO) released a report entitled “How to Modernize and Improve the System of Insurance Regulation in the United States.”  The report includes recommendations for “near-term reform for the States” concerning safety and soundness and capital adequacy, insurance company resolution practices, and marketplace regulation.
• The Federal Reserve Board, the CFPB, the FDIC, the FHFA, the NCUA, and the OCC, issued a final rule supplementing their January 2013 interagency appraisal rule, which requires appraisals with interior inspections in some cases.  The amendment exempts certain refinances and transactions secured by a new manufactured home.  QM loans are exempt.
• The Federal Reserve finalized what had been an interim final rule clarifying the § 716 treatment of uninsured U.S. branches and agencies of foreign banks.  This implements a restriction on federal assistance, such as discount window lending and deposit insurance, to swaps entities. Insured depository institutions that are swaps entities are eligible for a transition period of up to 24 months.  The final rule clarifies that uninsured U.S. branches and agencies of foreign banks are treated as insured depository institutions.  The final rule also sets the process for state member banks and uninsured state branches or agencies of foreign banks to apply for the transition period.
• GAO released a report on regulatory analyses by agencies during Dodd-Frank rulemakings.  The report says that OMB, in coordination with the agencies, may not be consistently determining which rules are considered major rules, which permits Congressional review before a rule can become effective if the rule will have an annual effect of $100 million or more.  GAO found that some independent agencies submitted all their rules to OMB, but others did not.  GAO also found inconsistencies in how these agencies applied the underlying criteria. For example, GAO found rules issued by different agencies that had similar economic impacts but were not similarly classified as major.  Also, in 2011, GAO recommended that the regulators determine how they will measure the impact of Dodd-Frank regulations in their plans to conduct retrospective reviews, but they have not done so to date. GAO recommends that OMB issue guidance to help standardize the processes.  OMB disagreed such guidance is needed.
• GAO released a report on the SEC’s financial statements for the fiscal years ended September 30, 2013 and 2012, including statements for the SEC’s investor protection fund, and found them presented fairly in all material respects.     
• GAO released a report on the CFPB’s financial statements for the fiscal years ended September 30, 2013, and 2012, and found them presented fairly in all material respects.
• The Office of Financial Research released a 2013 annual report analyzing threats to U.S. financial stability. 

  • The report finds the chief threats are vulnerabilities in markets for securities financing transactions and credit, vulnerabilities to an increase in interest rates and volatility, operational risks, and uncertainty about the U.S. fiscal policy outlook. 
  • The report presents a prototype Financial Stability Monitor tool to track threats and the interplay among them.  The monitor addresses five components of financial stability risk: macroeconomic, market, credit, funding and liquidity, and contagion. 
  • The report states that while regulators have expanded their macroprudential tools, gaps remain.  The report states that bank stress testing could be improved by incorporating funding risks, potential spillovers, and feedback effects.  OFR maintains an inventory describing the data that FSOC member agencies purchase or collect.
  • OFR is standardizing the types and formats of data reported and collected, such as working with the CFTC and global regulators to standardize derivatives reporting.   

Regards,
Canfield Press

12.24.13
NORAD Tracks Santa History and Technology

For children of all ages....since 1955.

12.23.13
Flash Mob at the National Air and Space Museum
12.23.13
Lest We Forget

 

12.22.13
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the December 22, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • The Federal Reserve Board advised large financial institutions to carefully evaluate transactions intended to reduce risk to ensure that, if risks are shifted to a thinly capitalized counterparty or affiliated entity of the firm, any residual risk is effectively captured in the firm’s internal capital adequacy assessment.  The Board issued the guidance to clarify that while efforts to reduce risk can be positive, certain transactions can result in residual risks to the firm that may not be accounted for in risk-based capital measures.  It said institutions should be able to demonstrate that the residual risks are fully reflected in their internal assessment of capital adequacy and that they maintain sufficient capital to account for such risks.
  • The OCC issued its Risk Perspective about for the fall of 2013, showing:
    • Strategic risk remains elevated as many banks re-evaluate their business models and risk appetites to generate returns against the backdrop of slow economic growth and low interest rates. OCC examiners will focus on banks’ strategic business and new product planning to ensure banks maintain appropriate risk management processes.
    • Cyber threats are growing in sophistication and frequency, and require heightened awareness and appropriate resources to identify and mitigate the associated risks.
    • Competition for limited lending opportunities is intensifying, resulting in increased risk tolerance and loosening underwriting standards, particularly in new or unfamiliar loan products. The recent rise in long-term interest rates underscores the vulnerability for banks that reach for yield, as they could face significant earnings pressure, possibly to the point of capital erosion, if interest rates increase further.
    • Bank Secrecy Act and Anti-Money Laundering risks continue to rise as money laundering methods evolve, electronic bank fraud increases in volume and sophistication, and banks fail to incorporate appropriate controls into new products and services.
    • Price volatility has been very low for a long time.  Light securities dealer inventories suggest limited risk appetite for market making, raising the possibility of more significant market volatility and price risk as quantitative easing policies change.
  • The Council of the European Union agreed on a general approach to a single bank resolution mechanism.  The Council called on the presidency to start negotiations with the European Parliament with the aim of agreeing on a regulation by May 2014. This agreement would include arrangements for national contributions to the fund reaching a target of 1% of covered deposits over a 10-year phase.  The single resolution fund would be financed by bank levies raised at national level.  It would initially consist of national compartments that would be gradually merged over 10 years. During this period, mutualization between national compartments would progressively increase.  A common backstop will be developed, which would become fully operational at the latest after 10 years. The backstop would facilitate borrowings by the fund. It would ultimately be reimbursed by the banking sector through levies, including ex-post.
  • The European Commission announced its approval of aid for five Slovenian banks.  The Commission approved restructuring plans for Nova Ljubljanska banka d.d. (NLB) and Nova Kreditna Banka Maribor d. d. (NKBM), aid for the orderly wind down of Factor Banka d.d. and Probanka d.d., and temporarily approved aid for Abanka Vipa d.d.  

 

 

 

12.22.13
Employment-to-population ratio remains the same today as at recession’s end.

Economic Policy Institute

12.22.13
America’s 8 million missing jobs

Economic Policy Institute

12.22.13
5.7 million potential workers are missing from America’s workforce

Economic Policy Institute

12.22.13
College degree is no sure ticket to adequate wage growth

Economic Policy Institute

12.22.13
Wages detaching from productivity is the root of American inequality

Economic Policy Institute

12.20.13
Washington Regulatory Round-Up (12-20-13)
12.20.13
Yellen's Challenges "Unprecedented"

University of Oregon Economist Mark Thoma

12.19.13
Goldman FOMC Post-Mortem: "Slightly More Hawkish Then Expectations"

Zero Hedge

12.19.13
“We’re Certainly Not Giving Up,” said Fed Chairman Bernanke

“We intend to maintain a highly accommodative policy,” said Fed Chairman Ben Bernanke. “Nothing that we did today was intended to reduce accommodation. We’re still going to be buying assets at a high rate and increasing our balance sheet and holding onto those assets. In our guidance today, we strengthen our guidance to make clear that we expect to keep rates low well beyond the point that unemployment hits 6.5%.”

12.18.13
CFPB Financial Report for FY2013

Fiscal Year 2013 Collections by the Consumer Financial Protection Bureau

12.18.13
The Rising Threat of a Cyber Attack in the United States

 

“I believe that a foreign national could impact and destroy a major portion of our financial system,” said General Keith Alexander, director of the National Security Agency. “Right now it would be difficult to stop [the virus attack] because our ability to see it is limited.”

12.17.13
Why HELOC Resets Will Undermine Any Housing Recovery

Keith Jurow, dshort.com

12.17.13
Blackstone Launches a B2R Lending Program

"The market for financing for small and medium-sized borrowers in the single-family rental space is underserved—they don't have access to good capital now," said John Beacham, president of Blackstone's B2R, a buy-to-rent lending platform. Blackstone is loaning $500,000 to as much as $50 million to borrowers for the purchase of a minimum of five homes, each worth at least $50,000.  Blackstone’s B2R loan underwriting is very conservative with LTVs ranging from 70% to 75%.

12.16.13
This Year's Rally in Five Charts.

MoneyBeat- WSJ

12.16.13
Global Banking: A Failure of Structural Integrity

“In the quest to improve financial industry stability, behavior and performance, it is unfortunate that we choose complicated administration over structural change,” said FDIC Vice Chairman Thomas M. Hoenig. “It is the financial structure that is inherently unstable, yet it remains mostly unchanged from that which existed prior to the crisis. ...The issue of single point of failure and its effect on the economy has increased in prominence, and the competitive inequities that follow from these circumstances remain mostly unaddressed. “

12.15.13
A New Normal Jobs Report for November

AEI's James Pethokoukis December 6, 2013

12.15.13
Economic Outlook for 2014
12.15.13
New Home Sales and Misleading Headlines

John Burns Real Estate Consulting CEO John Burns on 440,000 new home sales in October.

12.15.13
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the December 15, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • FHFA directed the GSEs to raise their g-fees.  This is in accordance with FHFA’a Strategic Plan for the GSE conservatorships to gradually contract the GSEs’ prominence and to attract private capital.
    • The ongoing g-fee for all loans will increase by 10 basis points;
    • The GSEs will update the up-front g-fee grid to better align pricing with credit risk of borrowers; and
    • The up-front 25 basis point adverse market fee that has been assessed on all GSE loans since 2008 is being eliminated except in four states (Connecticut, Florida, New Jersey, and New York) whose foreclosure carrying costs are more than two standard deviations greater than the national average.  FHFA anticipates reviewing and refining this at least annually.

FHFA expects these increases and decreases to produce an overall average g-fee increase of approximately 11 basis points based on loan purchases of Fannie Mae and Freddie Mac in the third quarter of 2013. This represents an average increase of 14 basis points on typical 30-year mortgages and 4 basis points on 15-year mortgages. This increase follows FHFA-directed increases of 10 basis points each announced in December 2011 and August 2012. 

  • The Administration released its November housing scorecard and October servicers’ report, showing that for the third quarter of 2013, three servicers were found to need minor improvement, three servicers moderate improvement, and one servicer needed substantial improvement. 

 

 

 

12.13.13
Washington Regulatory Round-Up (12-15-13)
12.13.13
Stanley Fischer Tapped to be next Fed Vice Chair

Forbes, 12/11/2013

12.12.13
A Closer Look at Stanley Fischer


“Stanley Fischer appears very likely to be nominated for the position of Fed Vice Chairman, according to multiple media reports,” wrote Goldman Sachs’ Jan Hatzuis. “According to some accounts, Fischer has already been offered the job by the President and has accepted it, although a formal announcement is not expected immediately.”

12.12.13
Why Do Measures of Inflation Disagree?

Federal Reserve Bank San Francisco Economic Letter

12.11.13
What is the Volker Rule All About?

Dec. 10 (Bloomberg) –- Shearman & Sterling Partner Donald N. Lamson, Westwood Capital Managing Partner Dan Alpert and Former SEC Attorney Ron Geffner discuss the debate over proprietary trading and what the Volcker Rule means for big banks.

 

12.11.13
Volcker Rule Sets Us Up for Really Bad Day


“[The Volker Rule] will reduce ways [banks] can make money and it's also going to reduce market liquidity,” said Chris Whalen, executive vice president at Carrington Holding Co. “I think the Volker Rule sets us up for a bad day.”

12.10.13
Rental Housing Affordability

... significant erosion in renter incomes over the past decade has pushed the number of households paying excessive shares of income for housing to record levels.....

12.10.13
"Monetary Policy Rendered Flaccid"

“In my view, the Federal Reserve has supplied more than sufficient liquidity to fuel economic recovery above and beyond a reduction of unemployment from its current level of 7%,” said Richard Fisher, president of the Dallas Fed. “ …[M]oney is cheap and liquidity is abundant. ...Without fiscal policy that incentivizes rather than discourages U.S. capex (capital expenditure), this accommodative monetary policy aimed at reducing unemployment (especially structural unemployment) or improving the quality of jobs is rendered flaccid and less than optimally effective.

12.09.13
FHA Will Lower Loan Limits in 2014

FHA will reduce its conforming loan limits from a maximum of $729,750 to $625,500 at the beginning of 2014, according to the agency. FHA's move brings it partly in line with Fannie Mae and Freddie Mac, which use a $417,000 cap in most areas and have an upper limit of $625,500 in high cost markets. "As the housing market continues its recovery, it is important for FHA to evaluate the role we need to play," said FHA's Carol Galante. "Implementing lower loan limits is an important and appropriate step as private capital returns to portions of the market."

12.08.13
High-End Foreclosures Up 61 Percent Year-to-Date in 201
12.08.13
Fed's Plosser sees 3% in Economy in 2014.

Charles Plosser, Philadelphia Fed president, discusses his outlook on the economy and weighs in on Fed policy. I was not a fan of this QE program in the first place, Plosser said. It would be wise if we began to get rid of this program, he added.

12.08.13
Econonmic Outlook for 2014

Morgan Stanley.

12.08.13
Stronger and Sustainable Employment Numbers, But…

Tim Duy's Fed Watch

12.08.13
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the December 8, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • Treasury announced that it priced a secondary public offering of 1,846,374 warrants to purchase common stock of Cathay General Bancorp at $7.20 per warrant, for expected proceeds to Treasury of $13,107,778.
  • FHFA announced that Fannie Mae and Freddie Mac completed the first major overhaul of mortgage insurance master policy requirements in many years.  The policies will support loss mitigation, establish specific timeframes for processing claims, sets standards for determining when MI coverage must be maintained and when it may be revoked, and will promote information sharing among insurers, servicers, and the GSEs.  The GSEs anticipate that the master policies will go into effect in 2014, pending review and approval by state insurance regulators.

 

 

12.08.13
Greenspan on Fed, Interest Rates, Economy: Video - Bloomberg.
12.06.13
Washington Regulatory Round-Up (12/06/13)
12.06.13
Was 2013 the Tipping Point for Organized Labor in America?

“[Illinois] law demands that [Chicago] must increase contributions to public employee pensions by $590 million in 2015, totaling $1.5 billion,” wrote Walter Russell Mead. “If a deal to lower that figure isn’t reached by this time next year, Chicago could be forced to hike property taxes by as much as 70 percent, cut vital city services, or both. …[T]he possibility looms for unions that the tides are turning against them. Chicago looks to be one of 2014’s biggest battlegrounds.”

12.05.13
Can Detroit Be Turned Around?

“Detroit is  a very peculiar problem,” said Harvey Miller, a partner at Weil Gotshal & Manges LLP. “…There is a core to Detroit, which is becoming an objective of venture funds, who are trying to create new businesses. The central part of the city has the seeds that can be restructured. The problem is all the outlying areas, where people have left.  …It’s going to require major adjustments on the part of creditors.  …The question is how are you going to be able to persuade creditors to take huge hit and then is there going to be an economy that’s going to be able to service debt in the future."

 

12.05.13
Detroit bankruptcy ruling on pensions could reverberate in San Bernardino, other cities:

Editorial, TheSumn Opinion, Reuters Insider 

12.04.13
EU Imposts Record Fines for Libor Rigging

The European Union has levied a record fine of €1.71 billion ($2.3 billion) on six European and U.S. banks and brokers for rigging benchmark interest rates, including Deutsche Bank (€725.4 million), Societe Generale (€446 million), Royal Bank of Scotland (€391 million), JP Morgan (€79.9 million, related only to rate rigging for Japanese yen) and Citigroup (€70 million). The U.K.-based broker RP Martin was fined €247,000 for facilitating one infringement.

12.03.13
Detroit Can Proceed with Chapter 9 Bankruptcy
12.03.13
The Long Slog: Economic Growth Following the Great Recession

Thomas F. Siems, DallasFed

12.02.13
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the December 1, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • The federal banking agencies proposed a rule that would implement a quantitative liquidity requirement consistent with the liquidity coverage ratio (LCR) established by the Basel Committee on Banking Supervision (BCBS). The proposal would apply to internationally active banking organizations—generally, those with $250 billion or more in total consolidated assets or $10 billion or more in on-balance-sheet foreign exposure; to systemically important nonbank financial institutions; and to any consolidated bank or thrift subsidiary of one of these companies that, at the bank level, has total consolidated assets of over $10 billion The proposal would require covered companies to calculate daily and maintain high-quality liquid asset at least equal to its projected cash outflows minus its projected inflows over a 30-day period of significant stress.
  • Iceland proposed to reduce household mortgage debt.  Eligible borrowers would be able to use payments they would have sent to a private pension fund to pay down their mortgage loans. Income taxes on contributions would be partially waived for three years.

 

 

12.02.13
Is Puerto Rico TBTF?

The Washington Post's Michael Fletcher.

11.29.13
Wahington Regulatory Round-Up (11/29/13)
11.27.13
Why Tapering Is Essential to Stabilize Agency MBS Liquidity

“Liquidity in the MBS market could come under pressure in the coming months due to Fed’s settled purchases exceeding 100% of gross issuance of non-specified conventional 30-year pools,” wrote Credit Suisse analysts. “Tradable float in conventional 30-year MBS should decline between 6% and 30% during the year, increasing the risk of a potential liquidity disruption in the market under longer taper delay scenarios.”

11.26.13
The Fed's Dilemma

“I think the challenge for [the Fed] ...is to convince the markets that both their economic forecasts are right—that is the economy will be growing at 3.5% in 2016, the unemployment rate will be in the fives, and yet …interest rates still at zero,” said former Federal Reserve Governor Kevin Marsh. “My view is one of those has to give. If the economy is roaring as much as they say, markets will not believe ...the [Fed] will keep the fed funds rate at zero in that environment. The alternative is the economy is stuck at around 2% growth in which case it is possible that rates and yields stay quite low even if they're just talking rather than acting.”

11.25.13
What Hedge Funds Want From Fannie and Freddie
11.25.13
The Retirement Crisis

Laurence D. Fink, Chairman and Chief Executive Officer, BlackRock at the SIFMA 2013 Annual Meeting in NY. Hear from Laurence D. Fink and watch his one-on-one interview with Trish Regan, Anchor and Editor-at-Large, Bloomberg Television

 
11.25.13
Rebuilding Market Confidence

Paul E. Purcell, Chairman, President & CEO, Robert W. Baird & Co. Inc. at the SIFMA 2013 Annual Meeting in NY. Hear from Paul E. Purcell and watch his one-on-one interview with Gerri Willis,

11.25.13
The Importance of Free Markets

Senator Judd Gregg, CEO, SIFMA at the SIFMA 2013 Annual Meeting in NY.

11.25.13
The Global Reset

Karen B. Peetz, President, BNY Mellon at SIFMA Annual Meeting in NY.


 
11.25.13
Washington Regulatory Round Up (11/22/13)
11.22.13
The Nuclear Impact on FHFA


The Senate’s approval of the “nuclear option,” allowing simple majority votes on executive and judicial nominees raises the likelihood that the president’s nomination of Representative Mel Watt (D-NC) will be confirmed to serve as Director of the Federal Housing Finance Agency. With Watt at the helm of FHFA, the agency would likely scrap plans to reduce conforming loan limits and walk away from additional cuts to the GSEs’ multi-family business, according to an analyst report from Keefe, Bruyette & Woods.

11.21.13
Ralph Nader: Shareholder Activist FOR Fannie Mae
11.21.13
QE has been an 'abject failure'.

Bonnie Baha, Fixed Income Fund Manager, DoubleLine Capital

11.20.13
Communication and Monetary Policy

Chairman Ben S. Bernanke

11.20.13
JPMorgan Settlement Sets "Dangerous Precedent"


“This is a toxic, toxic… regulatory environment that has been created by the powers that be in Washington and I think that creates a very dangerous precedent,” said former federal and state prosecutor Jacob Frenkel. “It also highlights that this government cannot be trusted when it asks an institution to come to the rescue. I think there are terrible precedents that have been set here, not only terms of the numbers, but also in terms of how the government went about this case.”

11.19.13
The Fed’s Problematic QE Exit
11.19.13
Europe’s Bank Money Blues

"Forget fiscal austerity, the real villain here [in EU] is monetary austerity," according to Dr. Steve H. Hanke, professor of econmics at John Hopkins University. 
 

11.19.13
Early Taper Dangers
11.19.13
QE Cannot Continue Forever
11.18.13
Fannie & Freddie—the "Belles of the Ball"
11.15.13
Washington Regulatory Round-Up (11/15/13)
11.15.13
"We Are Eerily Similar To 2008"

Andrew Huszar on Bloomberg TV

11.15.13
The Distributional Effects and Risks of QE and ZIPR

“Ultra-low interest rates have had distributional effects on interest income and expenses,” according to McKinsey Global Institute.

11.14.13
GSE Reform Is Fannie and Freddie
11.14.13
Will Hedge Funds Take Over Fannie Mae and Freddie Mac?

An investor group, which owns more than half of the GSEs’ outstanding preferred shares, is eying a takeover of large parts of Fannie Mae and Freddie Mac. “Under the proposal, those preferred shares would convert to common equity ...to capitalize an insurer that would insure newly issued mortgage-backed securities,” wrote Motley Fool’s Alex Dumortier. “ [The GSEs'] existing portfolio would remain under the government's supervision and go into runoff, while a securitization platform to standardize mortgage bonds would also stay under public supervision.”

11.13.13
America's Big Cities in Volatile Times:

The 30 cities felt the recession’s fiscal effects late: Most hit their lowest revenue in 2010 or 2011, a year or more after the end of the downturn and the low point in revenue for state governments in 2009.

11.13.13
Prolonged Unemployment's Impact on the Labor Participation Rate

The decline in the labor participation rate—rather than a substantive growth in employment—has driven the U.S. unemployment rate lower. A constant, rather than falling, labor participation rate would yield an unemployment rate somewhere close to 12% today, according to an analysis by Robert Brusca, PhD, of Fact and Opinion Economics. “This does not bode well for robust economic recovery in the U.S.,” wrote Cumberland Advisors David Kotok.

11.12.13
Freddie Mac Repays the Taxpayers

11.11.13
I survived Real Estate 2013-Act 1
11.11.13
I Survived Real Estate 2013-Act 2
11.11.13
The Price Is a Blight

The Economist

11.11.13
I Survived Real Estate 2013-Act 3
11.11.13
NAR: ESSENTIALS OF A FUNCTIONING HOUSING FINANCE SYSTEM FOR CONSUMERS.
11.11.13
David Min (UC Irvine School of Law) on GSE Reform.
11.10.13
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the November 10, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • The FDIC, Bank of England, German Federal Financial Supervisory Authority, and the Swiss Financial Market Supervisory Authority wrote ajoint letter to encourage the International Swaps and Derivatives Association to adopt derivatives contracts language that would suspend early termination rights and other remedies upon commencement of a resolution proceeding of a counterparty or its specified entity, guarantor, or credit support provider.  The letter states that this would allow, where operative law permits, exercise of all resolution powers, especially expeditious transfer of derivatives to a third party including a bridge entity, a bail-in of a failing institution by liability write-down, or by converting liabilities into equity.  The letter describes this as a critical step to provide increased certainty to resolution authorities. 
  • The Administration released its October housing scorecard and September servicers’ report, showing gains in home prices and in home equity, and that 2009 and 2010 modifications have 60- and 90-day redefault rates of just over 40 percent. 
  • The Federal Reserve issued a final policy statement describing the processes it will use to develop scenarios for future capital planning and stress testing exercises.

 

 

11.10.13
Veteran's Day

From the Pride of West Virgina: The Mountaineer Marching Band.

11.08.13
Washington Regulatory Round-Up (11/08/13)
11.08.13
Economic data to prompt Fed taper?

John Silvia of Wells Fargo gives his outlook for the economy and the Fed.

11.06.13
Home Ownership Rate Lowest in 13 Years

CNBC's Diana Olick...

11.05.13
The New Urbanism Movement.

“The suburbs are entering into a period of decline,” said Leigh Gallagher, author of the new book, .

11.04.13
Is Excess Liquidity Creating Bubbles?

, John Mauldin

11.03.13
The 10 Largest Banks Hold 54% of the Nations’ Financial Assets
11.03.13
The Federal Reserve Balance Sheet Nearly Triples Since 2008
11.03.13
The Top 10 Economic Super Powers
11.03.13
Media Consolidation: The Illusion of Choice

Today, 90% of the media is controlled by six companies, down from 50% in 1983. 

11.03.13
10 Corporations Control Almost Everything You Buy
11.03.13
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the November 3, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • SIGTARP released a quarterly report to Congress, stating 65 individuals have been sentenced to prison for crimes investigated by SIGTARP and its law enforcement partners, 112 individuals have been convicted and await sentencing, 154 individuals have been criminally charged and face trial on those charges, and 60 individuals have been banned from their industries.  SIGTARP notes that defendants are presumed innocent until proven guilty.  Also: 
    • SIGTARP examined the Hardest Hit Fund (HHF), which has spent 22% of funds available for homeowners.  Despite a SIGTARP recommendation, Treasury has never set a goal of how many homeowners it will help with HHF and instead has allowed the states to decrease significantly the number of homeowners they anticipate helping.
    • SIGTARP also reported on HAMP redefaults, and made three recommendations. 
      • Treasury should research and analyze whether and to what extent the conduct of HAMP mortgage servicers may contribute to homeowners redefaulting on HAMP permanent mortgage modifications.  
      • Treasury should establish an achievable benchmark for a redefault rate on HAMP permanent mortgage modifications that represents acceptable program performance and publicly report against that benchmark.  
      • Treasury should publicly assess and report quarterly on the status of the ten largest HAMP servicers in meeting Treasury’s benchmark for an acceptable homeowner redefault rate on HAMP permanent mortgage modifications, indicate why any servicer fell short of the benchmark, require the servicer to make changes to reduce the number of homeowners who redefault in HAMP, and use enforcement remedies including withholding, permanently reducing, or clawing back incentive payments for any servicer that fails to comply in a timely manner.
    • Throughout 2011, 137 banks exited TARP by refinancing Treasury’s TARP investment into a separate taxpayer-funded investment under Treasury’s Small Business Lending Fund (SBLF).  SIGTARP remains concerned that Treasury counts the $2.1 billion in SBLF funds as TARP funds repaid or recovered.
  • GAO released a report on TARP aid to GM and Ally financial.  As of September 18, 2013, the Department of the Treasury (Treasury) has recovered about $35.21 billion of its $51 billion investment in GM and reduced its ownership stake from 60.8 percent to 7.32 percent.  By early 2014, Treasury plans to fully divest its GM common shares through installments and estimates that it will lose at least 19 percent of its original investment. Treasury is working to exit from Ally Financial with a recent agreement to sell all of its preferred stock to the company for approximately $6 billion, but Treasury faces challenges. As a regulated bank holding company, Ally Financial must be well capitalized to receive its regulator’s approval to repurchase shares from Treasury. Earlier this spring, Ally Financial’s tier 1 common ratio fell below the required 5 percent in the Federal Reserve’s “stress test,” and the Federal Reserve objected to the company’s capital plan. Ally Financial also faces growing competition in the consumer lending and dealer financing sectors that could impact its financial performance in the future. The extent of Treasury’s recoupment on its Ally Financial investment will depend on the ongoing financial health of the company. 
  • GAO released a report of foreclosure rescue schemes, finding that they remain at historically high levels and have become more complex.  For example, schemes involving attorneys—which tend to involve greater losses—had become more common in recent years following a regulation that bans upfront fees, but provides an exception for attorneys.  GAO reports that these schemes present unique challenges because attorneys typically collect fees upfront and enforcement officials have difficulty trying to determine whether attorneys are providing legitimate services.  Officials and representatives of nonprofits also noted that some populations, including minorities and the elderly, continued to be targeted.  The Financial Fraud Enforcement Task Force (FFETF) and its members have undertaken a number of actions to educate borrowers on how to avoid being victimized by these schemes.  FFETF members have developed and participated in various outreach efforts, including hosting regional education summits for distressed homeowners, counselors, and law enforcement officials and directing more individuals to resources on FFETF’s mortgage fraud webpage, StopFraud.gov.  FFETF member agencies’ fraud detection efforts have focused on gathering information from SARs and complaints from the FTC Consumer Sentinel Network and sharing this information among members.  Member agencies that GAO contacted also indicated that information sharing and coordination on investigations among FFETF members had led to joint investigations and broad enforcement initiatives.      
  • On October 29, 2013, the Justice Department announced that Rabobank has entered into an agreement to pay a $325 million penalty to resolve violations arising from Rabobank’s submissions for LIBOR and the Euro Interbank Offered Rate (Euribor).  Justice says a criminal information charges Rabobank with wire fraud for its role in manipulating LIBOR and Euribor.  The agreement requires the bank to admit and accept responsibility for its misconduct.  Rabobank has agreed to continue cooperating with the Justice Department in its ongoing investigation. Together with approximately $740 million in criminal and regulatory penalties imposed by other agencies – $475 million by the CFTC, $170 million by the U.K. Financial Conduct Authority (FCA) action and approximately $96 million by the Openbaar Ministerie (the Dutch Public Prosecution Service) – the Justice Department’s $325 million criminal penalty brings the total amount to be paid by Rabobank to more than $1 billion.   
  • The Federal Reserve announced that the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank are converting their existing temporary bilateral liquidity swap arrangements to standing arrangements that will remain in place until further notice.  The standing arrangements will constitute a network of bilateral swap lines among the six central banks, allowing for the provision of liquidity in each jurisdiction in any of the five currencies foreign to that jurisdiction, should the two central banks in a particular bilateral swap arrangement judge that market conditions warrant such action in one of their currencies.  The Federal Reserve described the standing arrangements as a prudent liquidity backstop.
  • The Federal Reserve released the supervisory scenarios that will be used in the 2014 capital planning and stress testing program for bank holding companies.  The OCC released scenarios for national banks and federal thrifts.  The program includes the Comprehensive Capital Analysis and Review (CCAR) of institutions with $50 billion or more of total consolidated assets.  The Federal Reserve reports that 18 bank holding companies have increased their aggregate tier 1 common capital to $836 billion in the second quarter of 2013, the period of most recent data, from $392 billion in the first quarter of 2009.  The tier 1 common ratio for these firms, which compares high-quality capital to risk-weighted assets, has more than doubled to a weighted average of 11.1 percent from 5.3 percent.     
  • Treasury announced that it intends to auction all of its preferred shares in the following institutions:
    • AB&T Financial Corporation (Gastonia, NC);
    • Bridgeview Bancorp, Inc. (Bridgeview, IL);
    • Madison Financial Corporation (Richmond, KY);
    • Midtown Bank & Trust Company (Atlanta, GA);
    • Pacific City Financial Corporation (Los Angeles, CA);
    • United American Bank (San Mateo, CA);
    • Village Bank and Trust Financial Corp. (Midlothian, VA).

 

 

11.01.13
Washington Regulatory Round-Up (11/02/13)
11.01.13
Jordan Issues $1.25 Billion Bond with U.S. Guarantee

The U.S. government is committed to supporting Jordan’s efforts to provide critical services to its citizens .......

10.30.13
Will The Fed Ever Taper?

Pulling the plug on QE....

10.30.13
The Death of the Political Middle in 1 Power Point Slide

Bill McInturff of GOP polling firm Public Opinion Strategies

10.29.13
RMBS Market Is "Certainly on Oxygen"


“The RMBS market is still very fragile,” said Lewis Raneri. “The danger that was done to it has not anywhere been repaired. In fact, there’s only a handful of buyers for the “AAA” tranche, where there used to be literally hundreds and hundreds. …The [private-label market] is certainly on oxygen.”

10.29.13
Fed Fight: Rand Paul vs. Janet Yellen
10.29.13
"Reparations from Banks"

New York Times Editorial, October 25, 2013

10.29.13
The “Rigged” MBS Market

Reuters' Alison Frankel

10.29.13
Will Mortgage Settlements Further Tighten Credit?
10.28.13
JPMorgan Chase Reaches Tentative $13 Billion Settlement with the Federal Government
10.28.13
Bank of America’s Countrywide Mortgage “Hustlers” Just Got Nailed
10.27.13
Puerto Rico’s debt crisis: Puerto Pobre | The Economist

A heavily indebted island weighs on America’s municipal-bond market.

10.27.13
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the October 27, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • GAO released two reports on FHA.  One, entitled Analysis of Options for Modifying [FHA’s] Products, Market Presence, and Powers, looks at options for FHA reform, including:
    • Changing underwriting requirements;
    • Increaing down payments and reducing seller concessions;
    • Raising premiums and using risk-based pricing;
    • Reducing loan limits;
    • Determining eligibility by income;
    • Reducing insurance coverage to less than 100 percent;
    • Risk-sharing with private partners;
    • Making FHA an independent corporation;
    • Enhancing FHA enforcement posers.
    • Increasing FHA’s ability to make program changes;
    • Increasing IT funding;
    • Paying employees outside of the gederal pay scale; and
    • Giving FHA greater authority to pilot new programs. 

 The report also notes that reform of Fannie Mae and Freddie Mac, as well as Dodd-Frank reforms, may affect FHA.  HUD had no comments for GAO’s report.

  • GAO’s second report is on FHA insurance, and is entitled Applicability of Industry Requirements Is Limited, but Certain Features Could Enhance Oversight.  The report examines how reserving practices and capital requirements for FHA’s insurance fund (Fund) compare with those for private mortgage insurers (PMIs), and how applicable PMI practices and requirements could enhance Fund oversight.  The report recommends that Congress consider requiring FHA to submit a capital restoration plan and regular updates on implementation whenever the Fund’s capital ratio does not meet required levels.  GAO also recommends that FHA disclose estimates of specific cash flows over time to provide additional perspective on the Fund’s financial status. FHA generally agreed with GAO’s recommendation.  
  • FHFA directed Fannie Mae and Freddie Mac to terminate their defined benefit retirement plans effective December 31, 2013.  This will eliminate risk to the GSEs and help conserve their assets on behalf of taxpayers.  The plans previously were closed to new entrants.  GSE employees will be able to elect a pension annuity or to roll over their benefits into another retirement vehicle such as an IRA or 401K.  Both GSEs will continue to provide competitive benefits for their employees through their defined contribution plans.
  • Treasury released a small business lending facility (SBLF) report, showing that SBLF participants have increased their small business lending by $10.4 billion over a $36.5 billion baseline, and by $1.4 billion over the prior quarter.  The SBLF was available to banks with less than $10 billion in assets to borrow money to support small business lending.  The dividend rate on the loans depends in part on how much the bank increases its small business lending.     

 

 

10.25.13
Washington Regulatory Round-Up (10/25/13)
10.25.13
Banks Should Be Ready" to Comply with Mortgage Rules in January

Reuters Interview of CFPB Director Richard Cordray

 

 

 

 

10.24.13
NYSE Margin Debt S&P 500
What could possibly go wrong? 
 
10.23.13
Embed Test

This is a test of Document Cloud's embed code.

10.23.13
IMF Lays The Groundwork For Global Wealth Confiscation

The sharp deterioration of the public finances in many countries has revived interest in a “capital levy”— a one-off tax on private wealth—as an exceptional measure to restore debt sustainability.

10.22.13
What’s Wrong With Fining JPMorgan Chase $13 Billion?

The New Yorker, by John Cassidy

10.21.13
The Reorganization of Fannie Mae and Freddie Mac
10.21.13
Conservatorship of Fannie and Freddie and the Takings Clause
10.21.13
The Future of Fannie and Freddie
10.21.13
Big payoff for high-end home 'flippers'.
10.20.13
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the October 20, 2013 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This includes the following:

  • On October 15, 2013, Fannie Mae announced a $675 million note offering that shares credit risk with investors.  This is the first in a series of planned offerings aimed at attracting private capital.  The amount of periodic principal and ultimate principal Fannie Mae will pay is determined by the performance of a large and diverse reference pool of more than 112,000 single-family loans with an aggregate outstanding principal balance of $27 billion.  The reference pool consists of random selected eligible loans acquired in the third quarter of 2012.  The loans are fixed rate, generally 30-year term, fully amortizing mortgages with LTV ratios between 60 percent and 80 percent.  Fannie Mae transfered some of the credit risk to investors in exchange for a portion of the guaranty fee payments.  Investors may experience a full or partial loss of their initial principal investment.  Fannie Mae retained the first loss and senior piece of the structure, as well as a vertical slice of the two tranches.
  • The OCC and Federal Reserve released amendments to their enforcement actions against EverBank and EverBank Financial Corp that memorialize an agreement reached in August requiring the bank to pay $37 million to more than 32,000 eligible mortgage borrowers.  This replaces the independent foreclosure review process established in April 2011 consent orders.  Borrowers will receive payments of range from $1,050 to $125,000 plus equity.

 

 

10.18.13
Washington Regulatory Round-Up (10/18/13)
10.18.13
Annus Horribilis or Annus Mirabilis?

My problem lies in reconciling my gross habits with my net income.  ~Errol Flynn

10.17.13
Back from the Brink: What's Next for Washington
10.15.13
Reid McConnell Shutdown Compromise
10.14.13
If credit runs out, what bills will Treasury pay?
10.11.13
Washington Regulatory Round-Up (10/11/13)
10.11.13
Home of the Future
10.09.13
A Closer Look at Janet Yellen’s Career
10.09.13
Will Unconventional Policy Be the New Normal?

Federal Reserve Bank-San Francisco

10.08.13
A Bearish View of the Housing Market


“[T]he past two-years of massive Fed, government, and bank intrusion into the housing market went way too far," wrote Mark Hanson. "Houses are mis-allocated, there is no shortage of houses ‘in which to live’, and in ALL the popular ‘mega-recovery’ regions are at least 50% [more] expensive on a monthly payment basis than they were at the peak of the housing bubble in 2006."

10.08.13
"We Expect A Debt Ceiling Deal After We Hit It”

"We expect a budget/debt ceiling deal sometime between the Treasury's Oct 17 deadline and Oct 31 which is when the Treasury runs out of cash," said Deutsche Bank Chief US Economist Joe LaVorgna.

10.06.13
ON TO THE DEBT CEILING?

John Hinderaker, Powerlineblog.com

10.06.13
The Impact of the Government Shutdown

The top 10 metro areas with a high share of federal employees.

10.06.13
Obama Is Prepared to Negotiate on Anything

CNBC's "Closing Bell"

10.06.13
When Will Housing Feel Pinch of the Shutdown?

David Stevens, Mortgage Bankers Assoc. CEO

10.06.13
No Way to Run a Country.

"The Land of the Free is starting to look ungovernable. Enough is enough.”

10.06.13
U.S. Is the Standard Bearer of the World

Blackstone's Larry Fink.

10.04.13
Survival of The Fittest?

William H. Gross. PIMCO

10.03.13
Obama to Wall Street: This time be worried

Wall Street needs to be genuinely worried about what is going on in Washington,

10.02.13
The New Lost Generation
10.02.13
The Most Predictable Economic Crisis?

“Democrats and Republicans argue about the size of the government,” wrote Axel Merk, president of Merk Investments. “Democrats tend to favor a larger government to provide healthcare [and] other services...; Republicans ...brand themselves as favoring small government. But as much as anyone may have a preference for one model or another, either approach must be financed. Financing any level of government spending can occur [by] increasing [taxes] or borrowing. Trouble is that there aren’t enough rich folks out there to tax to mend the system.”

 

 

10.01.13
Forceful mayor's drastic plan to stop foreclosures.

Mayor McLaughlin, Richmond, Califormia

09.30.13
Here We Go Again

Joeseph Y. Calhoun, Alhambra Investment Partners

09.29.13
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the September 29, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • The OCC released its Mortgage Metrics Report for the second quarter of 2013.  It shows the following:
    •  90.6% percent of mortgages were current at the end of the quarter, compared with 90.2% for the previous quarter and 88.7% a year earlier.  Seriously delinquent mortgages—60 days past due or with bankrupt borrowers and 30 days past due—decreased to 3.8% from 4.0% in the previous quarter and 4.4% a year ago.  The percentage of mortgages that were seriously delinquent decreased 15% from a year earlier.  The percentage of early stage delinquencies, mortgages that were 30-59 days past due, was 2.9%, an increase of 11.6% from the previous quarter and up 1.8 percent from a year ago.
    • Foreclosure activity fell to its lowest level since the first OCC Mortgage Metrics Report in the first quarter of 2008.  The number of loans in the process of foreclosure at the end of the second quarter of 2013 fell to 744,369, a decrease of 39.8% from a year ago.  
    • After falling materially at the end of 2012, the number of newly initiated foreclosures continued to decline to its lowest levels since early 2008.  During the second quarter of 2013, servicers initiated 150,592 new foreclosures, a 50.8% decrease from a year ago.  Compared to a year ago, the number of completed foreclosures fell 22.2% to 79,960.
    • During the quarter, servicers implemented 314,672 home retention actions compared with 121,746 home forfeiture actions.  The number of home retention actions decreased by 9.8% from the previous quarter and 25.2% from a year earlier.  In the second quarter of 2013, 93% of modifications reduced monthly principal and interest payments, and 59.1% reduced payments by 20% or more.
    • Servicers have modified 3,180,522 mortgages from the beginning of 2008 through the end of the first quarter of 2013.  At the end of the second quarter of 2013, 46.6% of these modifications were current or paid off, 6.8% were 30 to 59 days delinquent, and 11.5% were seriously delinquent.  Another 6.1% were in foreclosure, and 7.5% had completed the foreclosure process.
  • The Federal Reserve issued two interim final rules that clarify how companies should incorporate the Basel III regulatory capital reforms into their capital and business projections during the next cycle of capital plan submissions and stress tests.  The first rule applies to bank holding companies with $50 billion or more in total consolidated assets, and clarifies those companies must incorporate the revised capital framework into their capital planning projections and stress tests. This rule also clarifies that capital adequacy will continue to be assessed against a minimum 5 percent tier 1 common ratio.  The second rule provides a one-year transition period for most banking organizations with between $10 billion and $50 billion in total consolidated assets.  These companies will be required to calculate their stress test projections using the current regulatory capital rules during the upcoming stress test to allow time to adjust their internal systems to the revised capital framework.
  • Treasury announced it will continue selling its 101 million shares of General Motors stock.  It did not specify how many or at what price.  In December 2012, it announced that it would sell all of its GM stock by approximately March 2014.

 

 

09.27.13
Real Estate Crowdfunding

 

Thanks to the recently passed Jumpstart Our Business Startup Act, real estate developers can now advertise and market real estate projects to “accredited investors”—opening the market to crowdfunding. “When you democratize investment in real estate, not only do you get capital—you also get a social power that wasn’t possible before,” said Ben Miller, cofounder of Fundrise

 
 
 
 
 
 
09.26.13
Roadmap to GSE Reform
09.26.13
Dodd-Frank Act Rulemakings, Studies, and Reports Update

Attached please find an updated Roadmap to the Dodd-Frank Act Rulemakings, Studies, and Reports.

  • The CFPB published an interim final rule establishing procedures for administrative adjudication of contested temporary cease and desist orders.  Comments are due November 25, 2013.
  • FHFA published a final rule requiring annual stress tests for Fannie Mae, Freddie Mac, and the FHLBs.  It also released summary instructions and guidance.

Regards,

09.26.13
CMC Request for Guidance on the Consumer Financial Protection Bureau's Mortgage Origination Regulations (09-26-13)
09.26.13
A Conversation About GSE Reform with Senators Corker and Warner
09.26.13
The Real Cost of Obamacare
09.25.13
The GSE Report
09.25.13
Is Monetary Policy a Science?


“We urgently need to rethink the foundations of our current international monetary (non) system,” wrote economist William White. “...[R]ecognizing both past uncertainties and future uncertainties about how ‘best’ to conduct monetary policy, we should not rely excessively on the use of monetary policies to cure all ills. Monetary policy remains more art than science and the artists remain all too human and fallible.” 

 
 
 
 
 
 
 
09.24.13
Review, Reflect and Deflect Richard W. Fisher, President of Dallas Fed.
09.24.13
The Countdown Clock for a Government Shutdown
09.24.13
Fed’s George: Decision Not to Taper Raises Risks, Clouds Credibility
09.24.13
The Effectiveness of QE, Inflation and Taper Prospects

James Bullard, President of the St. Louis Fed.

09.24.13
Four Questions for Current Monetary Policy
09.24.13
A Shut Down Is “More Likely Than Not,” Rathner
09.24.13
Why the Fed "Blew It,"According to Druckenmiller
09.23.13
How Much Have Expectations Changed on Fed Bond Buying and Interest Rates?


On September 18, the Federal Reserve reported total assets of $3.722 trillion, according to their weekly release regarding their balance sheet. Based upon Chairman Bernanke’s comments that the Fed expects to wind down its asset purchase program by mid-2014, Wall Street analysts expect the central bank to have total assets of $4.06 trillion when QE is “finished.” 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
09.23.13
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the September 22, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • FSOC designated Prudential Financial, Inc. for Federal Reserve supervision and enhanced prudential standards, after an oral hearing on July 23, 2013.  FSOC explained that, because of Prudential’s interconnectedness, size, certain characteristics of its liabilities and products, the potential effects of a rapid liquidation of a significant portion of its assets, potential challenges with resolvability, and other factors, material financial distress at Prudential could lead to an impairment of financial intermediation or of financial market functioning that would be sufficiently severe to inflict significant damage on the broader economy.  “While exposures to Prudential may be small relative to the capital of its individual counterparties, aggregate exposures are significant enough that they could amplify the risk of contagion among other financial institutions if Prudential were to experience material financial distress.”
  • FHFA released a new Quarterly Performance Report on the Housing GSEs.  It shows the GSEs continue to report positive earnings and declining loan loss reserves, and declining seriously delinquent loans.  The average FICO score for new single-family loans was 756 at Fannie Mae and 751 at Freddie Mac.
  • The Treasury Department announced results of auctions to sell its preferred shares in six institutions:
    • Centrue Financial Corporation (Ottawa, IL), for $8,211,450; Treasury paid $32,668,000;
    • DeSoto County Bank (Horn Lake, MS), for $2,254,126; Treasury paid $2,681,000;
    • First Banks, Inc. (Clayton, MO), for $6,436,504; Treasury apparently paid $11,669.000;
    • RCB Financial Corporation (Rome, GA), for $8,329,222; Treasury paid $8,900,000;
    • Reliance Bancshares, Inc. (Frontenac, MO), for $42,418,020; Treasury paid $40,000,000; and
    • Severn Bancorp, Inc. (Annapolis, MD), for $23,367,268; Treasury paid $23,393,000.

Purchase prices are available here.

 

 

 
 
09.23.13
The Fed’s Takeover the Bond Market

Salon interview with Rep. Alan Grayson (D-FL)

09.20.13
Washington Regulatory Round-Up (9/20/13)
09.20.13
U.S. Falls from #2 to #17 in Economic Freedom

Economic Freedom of the World  Fraser Institute

 

09.19.13
The Impact of Higher Rates on the Economy—Slower Growth and More QE
 
09.18.13
How Detroit Went Broke

Detroit Free Press

09.17.13
Why We Didn’t Learn Enough From the Financial Crisis

Justin Fox, Harvard Business Review.

09.15.13
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the September 1, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  These updates include the following:

  • The Administration released its August housing scorecard and July servicers’ report, showing that increased home prices have helped reduce the number of underwater homeowners by 42% since the beginning of 2012, from 12.1 million to 7.1 million as of the second quarter of 2013.  In the first half of 2013, nearly 3.5 million homeowners have returned to positive equity.
  • Treasury announced that it commenced auctions to sell all its preferred shares in six institutions:
    • Centrue Financial Corporation (Ottawa, IL);
    • DeSoto County Bank (Horn Lake, MS);
    • First Banks, Inc. (Clayton, MO);
    • RCB Financial Corporation (Rome, GA);
    • Reliance Bancshares, Inc. (Frontenac, MO); and
    • Severn Bancorp, Inc. (Annapolis, MD). 
  • The European Parliament approved legislation to set up the Single Supervisory Mechanism for Eurozone banks.  The European Central Bank (ECB) will have the legal capacity to supervise all banks of the Eurozone and of those countries that decide to join the banking union.  These supervisory powers will be operational one year after they are effective, which is expected in a few weeks.
    • The ECB will directly supervise banks having assets of more than €30 billion or constituting at least 20% of their home country’s GDP or that have requested or received direct public financial assistance from the EFSF (European Financial Stability Facility) or the European Stability Mechanism (ESM).
    • The governance structure of the ECB will consist of a separate Supervisory Board supported by steering committee, the ECB Governing Council, and a mediation panel to solve disagreements that may arise between national competent authorities and the Governing Council.  The ECB’s monetary tasks and supervisory tasks will be separate.
    • To the extent that the ECB has taken over direct supervisory tasks, it will carry out the functions of the home and host authority for all participating Member States.
    • The European Banking Authority (EBA) will continue developing the single rulebook applicable to all 27 Member States.  It will develop a single supervisory handbook.  It will ensure that regular stress tests are carried out.  There will be safeguards for non-euro zone Member States by means of double majority voting requirements for EBA decisions on mediation and on technical standards. 

 

 

09.15.13
The Case Against Larry Summers

NationalJournal by Michael Hirsch

 
 
09.15.13
The Housing Recovery

CoreLogic's Mark Fleming.  Homes prices rise 12.5%

09.15.13
Assessing the Costs and Consequences of the 2007–09 Financial Crisis and Its Aftermath
09.15.13
Financial Crisis was a 100-Year Storm

Former Treasury Secretary Hank Paulson

09.13.13
Washington Regulatory Round-Up (9/13/13)
09.13.13
The Financial Crisis Five Years Later
 
 
09.13.13
The Financial Crisis in 9 Charts

 

 
 
 
 
 
 
 
 
 
09.12.13
Who Fears the Repo Market?

according to notes from the Underground.

09.12.13
Generational Theft, the Fed Regime Change, and QE Tapering...

....according to Stan Druckenmiller

09.11.13
What if...

CEO Jeffrey Gundlach, Double Line.

09.10.13
Federal Home Loan Bank of Chicago to Issue Ginnie Mae Securities

On September 9, the Federal Home Loan Bank of Chicago and Ginnie Mae announced that the Bank plans to issue securities guaranteed by Ginnie Mae and backed by mortgages originated by member financial institutions. With the new authority granted by the Federal Housing Finance Agency, the FHLB-Chicago will now be able to purchase government-insured loans, hold these loans on-balance sheet, and then pool them into securities guaranteed by Ginnie Mae which may then be sold to investors.

 
 
09.10.13
Money for Nothing: Inside the Federal Reserve

Squawk Box on CNBC.

09.09.13
G-Zero World

Pimco's El-Erian on Bloomberg

09.09.13
US Labor Force Participation 2nd Lowest In World (Even Greece Is Higher)

The falling labor participation rate—the second lowest in the world—“poses a problem for the Fed,” said Roberto Perli, a former senior staff member of the Fed’s Division of Monetary Affairs. “The unemployment rate is coming down faster than the Fed thought, but it’s not declining for the right reason.” There appears to be a consensus at the central bank that the falling participation rate is more long lasting and structural, rather than cyclical. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
09.06.13
Washington Regulatory Round-Up (9/6/13)
09.06.13
The Impact of Cash for Homes

Center for American Progress.

09.05.13
Home Price Change Peak-to-Current as of June 30, 2013

Fannie Mae 2013 Second Quarter Credit Supplement

09.05.13
Second Homes in the U.S.

No mortgage deduction for second homes?  Which states will feel the greatest effects.

09.05.13
The Healthiest Real Estate Markets for 2013

Home prices rose 4.9% nationwide.

09.05.13
Federal real estate spending and commitments.

Smart Growth America.org.  

09.05.13
New Home Rising

The premiums on new homes is abnormally high. 

09.05.13
Roadmap to GSE Reform

Please find attached the latest update to the Roadmap To GSE Reform.

Regards,

Canfield Press

09.05.13
Seventh Inning Stretch

Bill Gross/PIMCO

09.04.13
U.S. to hit debt limit in mid-October

Treausry Secretary Jack Lew 

09.03.13
The Next Global Crisis--Emerging Markets

Real Clear Markets, Stephen Roach, Former Morgan Stanely Economist

08.30.13
Washington Regulatory Round-Up (8/30/13)
08.30.13
Our Speculative Housing Market
"Housing is a market with momentum." Robert Shiller, Case-Shiller Index.
08.28.13
What does Syria Mean for the Oil Markets? Base case for Brent oil: $125
08.26.13
The War Rotation

Kerry Said: 'Our sense of basic humanity is offended, not only by this crime in Syria, but at the cynical attempt to cover it up."

 
08.26.13
Meredith Whitney’s views from Jackson Hole .
Meredith Whitney Advisory Group.
08.26.13
The Natural Rate of Interest, Financial Crises and the Zero Lower Bound
Robert E. Hall, Professor of Economics at Standford University.
Jackson Hole conference on August 23.
08.26.13
IMF Managing Director Christine Lagarde interview on Bloomberg TV
Bloomberg New and ZeroHedge.com
08.26.13
"We need a taper rule”
John Taylor, Economics Professor at Stanford University.
08.26.13
The Ins and Outs of Large Scale Asset Purchases
Arvind Krishnamurthy and Annette Vissing-Jorgensen
 
08.26.13
Taper Talk Hits Home
Timing of the data and factors that are impacting the housing market in today's higher mortgage rate environment. 
08.25.13
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the August 25, 2013 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  It includes the following:

  • The OCC announced that EverBank agreed to pay $37 million to more than 32,000 eligible mortgage borrowers.  Borrowers whose homes were in any stage of foreclosure in 2009 and 2010 with EverBank will receive cash compensation.  Payments will range from $1,050 to $125,000 plus equity.  EverBank was subject to an April 2011 cease and desist order for unsafe and unsound practices in mortgage servicing and foreclosure processing.  EverBank will consent to an amendment to the order, which will effectively end the Independent Foreclosure Review process for EverBank and its customers required by the order.  EverBank will pay approximately $6.3 million to organizations that provide affordable housing, foreclosure prevention and educational assistance to low- and moderate-income families.  OCC will approve recipient organizations.  EverBank also will evaluate each eligible borrower still in the process of foreclosure for a new loan modification, where investor contracts allow, and will establish a special complaint process to resolve borrower complaints regarding credit report errors.  As is the case with the previous amended orders, borrowers who accept a payment will not be prevented from taking any action related to their foreclosure. 
  • The Federal Reserve Board released a paper entitled Capital Planning at Large Bank Holding Companies: Supervisory Expectations and Range of Current Practice.  The paper concludes that bank holding companies have made advances in identifying and measuring risks to their capital and in integrating stress testing and capital planning into their broader strategic planning.  The paper states that some bank holding companies fall short of leading practice in:
    • Not being able to show how all their risks were accounted for in their capital planning processes;
    • Using stress scenarios and modeling techniques that did not address the particular vulnerabilities of the organization’s business model and activities;
    • Generating projections for some components of loss, revenue, or expenses using approaches that were not robust, transparent, or repeatable, or that did not fully capture the impact of stressed conditions;
    • Having capital policies that did not clearly articulate the organization’s capital goals and targets, did not provide analytical support for how these goals and targets were determined, or were not comprehensive or detailed enough to provide clear guidance about how the organization would respond as its capital position changed; and
    • Having less-than-robust governance or controls around the capital planning process, including around fundamental risk-identification, risk-measurement, and risk-management practices.

The Federal Reserve said that as capital planning practices advance, its expectations for how bank holding companies implement capital planning and stress testing will evolve.

 

08.23.13
Washington Regulatory Round-Up (8/23/13)
08.22.13
Real Estate vs. the Fed
08.22.13
Slow GDP Growth AND Rising Interest Rates?


"With 10 years close to 3% and 30 years close to 4%, the markets feel oversold to us," wrote Government Perspectives' Steve Feiss. "Whether or not you think the 30-year bull market in rates is over…—[Wells Fargo] cutting 2,300 jobs...hmmm—…they will NOT go straight up from here, to wherever you think they will stop."

08.22.13
Global Sovereign Yields Rise On Fed’s Hawkish Message
Confounded Interest.  Anthony B. Sanders
August 21, 2013.
08.21.13
The Beholden State: Reclaiming California's Lost Promise
California is at a tipping point...
08.20.13
This is Bond War.
PIMCO Founder, Bill Gross
08.20.13
Zero Isn't Forever
The Financialist, Credit Suisse
08.20.13
The Destruction Of America's Middle Class
27% of Americans have no  savings at all.
08.20.13
Employment Trends Around the World
U.S., France, Germany, Singapore, Korea and Hong Kong.
08.20.13
The Great Food Stamp Binge
''One in seven Americans."
08.20.13
The Fed Chairman Horse Race and NSA Purgatory
08.19.13
10 Year Treasury hits 2.873%
ZeroHedge, Tyler Durden,
08.16.13
Washington Regulatory Round-Up
08.16.13
The Dark Side of Egypt's "Political Awakening"
"This is a political, social, economic, and institutional dislocation."  
Mohamed El-Erian, CEO and Co-CIO at PIMCO
08.15.13
Household Indebtedness Totaled $11.15 Trillion on June 30

08.14.13
The PATH Home: How to Create a Sustainable Housing Finance System for America”
08.13.13
How Stimulatory Are Large-Scale Asset Purchases?
Federal Reserve Bank of San Francisco Economic Letter.
08.11.13
End Fannie and Freddie
Jerry Howard, the CEO of the National Association of Home Builders, and Mark Calabria, the Director of Financial Regulation Studies at the Cato Institute, debate the proper role for the government with host Peter Cook. (Source: Bloomberg)
08.11.13
Home Prices Go From Hot To Cold To Hot Again In 9 Years
In May, home prices jumped 12% year-over-year....
08.11.13
Freddie Mac reports $5 billion net income for Q2.
Shrinking mortgage delinquencies coupled with skyrocketing house prices translates into higher profits for Freddie Mac.  
 
08.11.13
Fannie Mae’s $ 10 billion profit for Q2
08.11.13
The Future of Fannie Mae and Freddie Mac
08.11.13
The Moral Hazard of Eminent Domain
.... has determined such use presents a clear threat to the safe and sound operations of Fannie Mae, Freddie Mac and the Federal Home Loan Banks.
08.11.13
Dodd-Frank Act Rulemakings, Studies, and Reports Update

Attached please find an updated Roadmap to the Dodd-Frank Act Rulemakings, Studies, and Reports.

  • The CFPB, FDIC, Federal Reserve, FHFA, NCUA, and OCC released a supplemental proposal relating to appraisals for higher-priced mortgage loans.  The proposal would exempt transactions secured by existing manufactured homes and not land, certain streamlined refinancings, and transactions of $25,000 or less.  Comments are due September 9, 2013. 
  • The CFPB released a regulation under the Federal Tort Claims Act, which governs injuries caused by agency employee negligence.
  • The CFTC released interpretive guidance and a policy statement regarding the cross-border application of the Dodd-Frank swaps provision.  The guidance addresses the scope of the term “U.S. person,” the general framework for swap dealer and major swap participant registration determinations, the treatment of swaps involving certain foreign branches of U.S. banks, the treatment of swaps involving a non-U.S. counterparty guaranteed by a U.S. person or affiliate conduit, and the categorization of the Dodd-Frank swaps provisions as entity-level requirements or transaction-level requirements.
  • The Federal Banking Agencies released joint proposed guidance on stress tests for banking organizations with more than $10 billion but less than $50 billion in total consolidated assets.  Comments are due September 25 to the FDIC and OCC, and September 30 to the Federal Reserve Board. 
Regards,
Canfield Press
08.11.13
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the August 11, 2013 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  It includes the following:

  • Fannie Mae reported results for the second quarter, showing net income of $10.1 billion, and a positive net worth of $13.2 billion as of June 30, 2013.  Fannie Mae will pay $10.2 billion of that net worth as a dividend to Treasury in the third quarter.
  • Freddie Mac reported net income of $5 billion for the second quarter, and a positive net worth of $7.4 billion, as of June 30, 2013.  Freddie Mac will pay $4.4 billion of that net worth as a dividend to Treasury in the third quarter.
  • FHFA solicits comment on strategies for reducing Fannie Mae and Freddie Mac’s presence in the multifamily housing finance market in 2014.  FHFA notes that most GSE multifamily lending is for loans with terms longer than five years, and asks whether it should consider loan term as a factor in reducing GSE multifamily business.  It also asks whether it should limit loan product types or per-unit loan amounts.
  • The Administration released its July housing scorecard and June servicers’ report, showing home equity increased $816 billion in the first quarter of 2013.  Making Home Affordable, through June 2013, has included 1.7 million HAMP first and second lien modifications, short sales and deeds in lieu of foreclosure, and principal forbearance for the unemployed.

 

08.09.13
Washington Regulatory Round-Up (8/9/13)
08.08.13
Not my job to worry about broad muni market - Detroit G.M. Orr
Detroit emergency manager Kevyn Orr says his first order of business is to revive the economy in Detroit, and isn't concerned with implications of its bankruptcy on the broad municipal bond market.
08.07.13
Zillow & President Obama: A Better Bargain for Responsible Homeowners
16 bedrooms, 35 baths, 55,000 sf., forced air, built in 1792. Not for sale.
08.07.13
Remarks by the President on Responsible Homeownership
A Better Foundation for Middle Class Homeownership.
08.06.13
“Owning a Home is at the Very Heart of Middle-Class Security”
“It's time to help hard-working folks fulfill their dream of buying their first home,” wrote David Simas, Deputy Senior Advisor at the White House. “We can help responsible homeowners refinance their mortgage, and make sure middle-class families and all of those working to get into the middle class are never again on the hook to bailout certain mortgage lenders for irresponsibility and bad loans. ...We put together a that helps explain the President's plan for a more secure foundation for middle-class homeownership."
08.06.13
The Challenge of Untying the Monetary Gordian Knot
Richard W. Fisher, President and CEO
Dallas Federal Reserve
08.05.13
The Tapering Debate by James Bullard
President and CEO of the Federal Reserve Bank-St.Louis.
08.05.13
Roadmap to Financial and Housing Market Stabilization Plans

This is the August 4, 2013 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This include the following:

  • GAO released a report on the effects of the regulatory response to the 2007-2009 financial crisis on insurance markets.  The report states:
    • The effects of the financial crisis on insurers and policyholders were generally limited, but varied by market segment.  Some life insurers that offered variable annuities with guaranteed living benefits, as well as financial and mortgage guaranty insurers, were more affected by their exposures to the distressed equity and mortgage markets.  Some mortgage and financial guaranty policyholders received partial claims or faced decreased coverage availability.
    • To identify potential risks, state regulators said they increased the frequency of information sharing among the regulators, and used National Association of Insurance Commissioners (NAIC) analysis and information to help focus their inquiries.
    • Insurance business practices, regulatory restrictions, and a low interest rate environment helped reduce the effects of the crisis.
    • The NAIC and state regulators’ efforts have included an increased focus on insurers’ risks and capital adequacy, and oversight of noninsurance entities in group holding company structures. The Own Risk and Solvency Assessment, an internal assessment of insurers’ business plan risks, will apply to most insurers and is expected to take effect in 2015.  NAIC amended its Insurance Holding Company System Regulatory Act to address the issues of transparency and oversight of holding company entities. However, most states have yet to adopt the revisions, and implementation could take several years.
  • Treasury announced that it auctioned all of its preferred stock and subordinated debt in five institutions as follows:
    • Community Pride Bank Corporation (Ham Lake, MN), for $5,064,436; Treasury paid $4,400,000 million;
    • First Banks, Inc. (Clayton, MO), for $107,739,520, Treasury paid $295,400,000;
    • First Intercontinental Bank (Doraville, GA), for $3,411,433; Treasury paid $6,398,000;
    • Universal Bancorp (Bloomfield, IN), for $9,887,476; Treasury paid $9,900,000; and
    • Virginia Company Bank (Newport News, VA), for $2,957,455; Treasury paid $4,700,000.

 

08.02.13
Washington Regulatory Round-Up (8/2/13)
08.02.13
Bank of America Says It May Face Civil Charges
Bank of America's mortgage troubles appear to be far from over. In the Bank's 10Q for the second quarter, Bank of America disclosed that the Department of Justice plans to file a civil lawsuit against the holding company and related entities over two jumbo prime mortgage securitizations. In addition, the New York State Attorney General plans to recommend filing civil charges against BofA's Merill Lynch subsidary arising the NYAG's CDO investigation. 
08.01.13
Home Prices Go From Hot To Cold To Hot Again In 9 Years
The interactive map by CoreLogic shows the change in that time.
08.01.13
Becoming Japan: Patterns of GDP Growth
ECRI’s research found that U.S. economic growth had been stair-stepping down in successive economic expansions, going back to the 1970s.
07.30.13
The New Bailout Begins: Eminent Domain Is Upon Us

....the working-class city of Richmond, Calif., hopes to use the same legal tool to help people stay right where they are.

07.30.13
'Detroit will start a wave of Municipal Bankruptcies"
Meredith Whitney on CNBC
07.29.13
Goldman CEO on Risk: The Worst 'Absolutely Will Happen'

“Most risk management is really just advanced contingency planning and disciplining yourself to realize that, given enough time, very low probability events not only can happen, but they absolutely will happen," said Goldman Sachs CEO Lloyd Blankfein.  "Once you think that something is improbable and everybody thinks it, people modify their behavior in a way that makes it more probable.”
07.28.13
S&P State Credit Ratings
Stateline...The PEW Charitable Trust.
07.28.13
Falling Short: How State Budgets Are In The Red
07.28.13
Unemployment in the U.S
07.28.13
Debt in America
07.28.13
America: a National Underwater
07.28.13
Detroit Will Be In Bankruptcy 'For A Long Time'
Harvey Miller, partner at Weil, Gotshal & Manges, tells Bloomberg Law's Lee Pacchia that Detroit's recently filed Chapter 9 bankruptcy case will not be an easy restructuring.
07.28.13
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the July 28, 2013 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  It includes the following:

  • The Federal Reserve announced an amendment to its April 2011 consent order against GMAC Mortgage, under which GMAC will pay $230 million in cash to borrowers without waiting for an independent review of each loan.  The amendment is similar to those announced in February 2013 between 13 mortgage servicers and the OCC and the Federal Reserve.  More than 232,000 borrowers whose homes were in any stage of foreclosure in 2009 and 2010 with GMAC Mortgage will receive cash compensation under the amendment.  As is the case with the previous amendments, borrowers who accept a payment will not be prevented from taking any action related to their foreclosure.
  • SIGTARP released a quarterly report showing the following:
    • As of June 30, 2013, $420 billion in TARP funds has been expended.  Of this, $8.6 billion was for housing subsidies that will not be repaid; $352 billion has been repaid; Treasury has realized losses or written off $29.1 billion; and $58 billion is still owed. 
    • TARP funds remain available to be spent only for housing programs, and $29.9 billion is available. 
    • SIGTARP investigations have resulted in 107 convictions.  Of the se defendants, 51 have been sentenced to prison, nine to probation, and the remainder await sentencing.
    • SIGTARP investigations have resulted in 102 civil charges and other actions against 58 individuals (including 44 senior executives) and 47 corporate entities.  These charges have resulted in 55 settlements yielding over $282 million in civil penalties and other actions.
    • SIGTARP currently has more than 150 ongoing investigations.
  • Treasury announced it intends to sell all of its preferred shares and subordinated debt in six institutions:
    • Calvert Financial Corporation (Ashland, MO);
    • Community Pride Bank Corporation (Ham Lake, MN);
    • First Banks, Inc. (Clayton, MO);
    • First Intercontinental Bank (Doraville, GA);
    • Universal Bancorp (Bloomfield, IN); and
    • Virginia Company Bank (Newport News, VA).

 

07.26.13
Washington Regulatory Round-Up (7/26/13)
07.26.13
Implementing Dodd Frank
07.25.13
HUD Fair Housing and Equal Opportunity

Remarks of Secretary Shaun Donovan Before the NAACP’s 104th Annual Convention

Tuesday, July 16, 2013
Orlando, Florida

07.24.13
Restoring America's Economic Growth
 "Lack of investment, the U.S. dependence on foreign petroleum, and finally the inability to engage in a more productive trade relationship are at the heart of low growth rates," said Fred Smith, chief executive officer of FedEx. To renew America’s economy, we must understand the effects of the country’s reliance on imported petroleum, according to Smith. “Policy choices [in the U.S., Europe and China] have created today’s dour mood," he added. "...The regulatory and litigation environment are very retardant for economic growth.” 
07.23.13
HUD PUBLISHES NEW PROPOSED RULE ON AFFIRMATIVELY FURTHERING FAIR HOUSING

07.22.13
Distressed Residential Real Estate: Dimensions, Impacts, and Remedies
Federal Reserve Bank of New York
Diego Aragon, Richard Peach, and Joseph Tracy
 
07.22.13
Detroit!
 Let’s dig into this news. Detroit will now be a poster child.
07.22.13
Detroit's Impossible Predicament
 Detroit’s bankruptcy has just teed up one of the most consequential court cases in recent memory.
07.22.13
There's No Way Home in Detroit
Detroit's fate now rests with the federal bankruptcy court.
07.22.13
Bail Out Detroit?
No one likes bailouts...but.....
07.22.13
Now That Detroit’s Gone Bust, Is Your City Next?
And unfortunately, Detroit’s not alone. 
07.21.13
A Close Look at Middle East Policy
Aspen Security Forum, Marine General James N. Mattis, 
07.19.13
Washington Regulatory Round-Up (7/19/13)
07.17.13
IECD Employment Outlook 2013
07.17.13
Chairman Bernanke's High Wire Act
07.16.13
Hinde Capital on the Continuing Unraveling Of Our Monetary Order
The global crisis is a financial crisis driven primarily by global trade and capital imbalances.  Hinde Capital June 2013.
07.15.13
Welcome to the FInTech revolution
07.15.13
The Financial Technology Revolution
. “The financial services industry, long protected by complex regulations, high barriers to entry and economies of scale, is ripe for disruption.”  Brian Asher at Venrock in Forbes
 
07.15.13
Mobile Banking: Financial Services Meet the Electronic Wallet
07.15.13
Global Banking 2020
What strategies should global bank executives adopt now to prosper over the next 10 years?
07.15.13
How Digital Will Change Banking Forever
Banking is very ‘digitisable’.
07.14.13
“Why has inflation been low?"
James Bullard, president of the Federal Reserve Bank of St. Louis, at the Bank’s 5th Annual Rocky Mountain Summit.
07.12.13
Regulatory Round-Up (7/12/13)
07.12.13
Senators Warren, McCain, Cantwell, and King Introduce 21st Century Glass-Steagall Act
07.11.13
A Century of U.S. Central Banking: Goals, Frameworks, Accountability
Ben Bernake, Chairman
Board of Governors of the Federal Reserve System
07.10.13
Egypt: 6 Charts and 2 Scenarios
The overthrow of President Mohamad Morsi by popular demand and supported by the army inaugurates yet another volatile episode in Egypt’s long and turbulent transition.  ZeroHedge via Barclays reporting.
07.09.13
QE Has No Transmission to U.S. Economy
JP Morgan, Guide to the Markets 3Q 2013
07.08.13
Roadmap to HAMP and 2013 Final and Proposed Servicing Regulations
Attached please find a Roadmap that compares HAMP program standards to the analogous provisions in the CFPB's 2013 final and proposed servicing regulations.
 
Regards,
 
Canfield Press
07.08.13
Tax Reforms Will Have Only "Modest" Impact on Home Prices
In a new study analyzing the effect of tax reforms, Benjamin Harris concludes“(1) the president’s proposed limit on itemized deductions would have a minimal impact on housing prices; (2) eliminating itemized deductions altogether would cause housing prices to fall markedly, but less so under the model introduced in this study relative to prior models; (3) limiting the mortgage interest deduction while providing a flat credit for closing can boost housing prices; and (4) the higher tax rates in ...[effect in] 2013 are unlikely to substantially boost housing prices…”
07.08.13
Progress on Housing Finance Reform
The New York Times, Economix, by Phillip Swagel
07.07.13
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the July 7, 2013 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This includes the following:

  • FHFA released a Foreclosure Prevention Report for the first quarter of 2013.  It shows:
    • The GSEs completed more than 130,000 foreclosure prevention actions during the quarter, bringing the total actions to nearly 2.8 million since the start of conservatorships. The GSEs have helped more than 2.3 million borrowers stay in their homes, including nearly 1.4 million who received permanent loan modifications.
    • Half of troubled homeowners who received permanent loan modifications in the first quarter had their monthly payments reduced by more than 30%.
    • More than a third of permanent loan modifications in the first quarter included principal forbearance.
    • As of March 31, 2013, 12% of loans modified in the second quarter of 2012 had missed two or more payments.
    • Completed short sales and deeds-in-lieu fell 7% during the quarter to nearly 30,300, bringing the total to over 476,300 since the start of conservatorship.
    • The number of GSE borrowers 60-plus-days delinquent declined 11% in the first quarter to the lowest level since first quarter of 2009.
    • Serious delinquency rates declined to 3.0% at the end of the quarter compared with 8.05 for FHA loans, 4.2% for VA loans, and 6.4% for all loans (industry average).
    • Third-party sales and foreclosure sales continued a downward trend in the first quarter while foreclosure starts increased.
    • REO inventory continued to decline as property dispositions outpaced property acquisitions in the first quarter.
    • Over 1 million homeowners have been offered a HAMP trial modification since the program started in April 2009. More than half of these have been permanently modified.
    • Non-HAMP modifications accounted for 77% of all permanent loan modifications in the first quarter.
    • More than 48,800 borrowers received permanent loan modifications through the GSEs’ proprietary modification programs in the first quarter, bringing the total number of non- HAMP permanent modifications to approximately 657,500 since October 2009. 
  • Treasury announced it intends to sell all of its preferred shares and subordinated debt in eight institutions:
    • Alarion Financial Services, Inc. (Ocala, Florida);
    • ColoEast Bankshares, Inc. (Lamar, Colorado);
    • Commonwealth Business Bank (Los Angeles, California);
    • Crosstown Holding Company (Blaine, Minnesota);
    • Fidelity Federal Bancorp (Evansville, Indiana);
    • Mountain Valley Bancshares, Inc. (Cleveland, Georgia);
    • Omega Capital Corp. (Lakewood, Colorado); and
    • Premier Financial Corp. (Dubuque, Iowa). 

 

07.05.13
Washington Regulatory Round-Up (7/5/13)
07.05.13
Japan Update June 2013
Hayman Capital Management
07.04.13
4th of July Rap from Reason TV
Happy Independence Day!
07.04.13
The Cause of Human Freedom
“…[T]he things that unite us — America’s past of which we’re so proud, our hopes and aspirations for the future of the world and this much-loved country — these things far outweigh what little divides us,” said President Ronald Reagan. “And so tonight we reaffirm that Jew and gentile, we are one nation under God; that black and white, we are one nation indivisible; that Republican and Democrat, we are all Americans. Tonight, with heart and hand, through whatever trial and travail, we pledge ourselves to each other and to the cause of human freedom, the cause that has given light to this land and hope to the world.”
07.04.13
The Cause of Human Freedom

“…[T]he things that unite us — America’s past of which we’re so proud, our hopes and aspirations for the future of the world and this much-loved country — these things far outweigh what little divides us,” said President Ronald Reagan. “And so tonight we reaffirm that Jew and gentile, we are one nation under God; that black and white, we are one nation indivisible; that Republican and Democrat, we are all Americans. Tonight, with heart and hand, through whatever trial and travail, we pledge ourselves to each other and to the cause of human freedom, the cause that has given light to this land and hope to the world.”
 

07.03.13
Disruptive technologies: Advances that will transform life, business, and the global economy
McKinsey Global Institute, cuts through the noise and identifies 12 technologies that could drive truly massive economic transformations and disruptions in the coming years.
07.02.13
The Economic Recovery: Past, Present, and Future
“The U.S. economy is well into a period of sustained expansion, raising questions about when the Federal Reserve will cut back or end its stimulatory asset purchase program,” wrote John Williams, president of the San Francisco Federal Reserve Bank. “Such moves will be appropriate at some point, but it’s still too early to act. The timing of any program adjustments will depend on incoming economic data.”
07.01.13
Housing. Too far too fast?
CNBC
07.01.13
This Isn't Going to End Well
David Stockman, Former Reagan White House budget director.
07.01.13
The Drag from Higher Mortgage Rates
“Mortgage rates have increased more than 1 percentage point since early May, …[raising] concerns that the rapid rise in mortgage rates may derail the housing recovery and dim the outlook for the broader economy...,” wrote Goldman Sachs analysts. “The rise in mortgage rates may impact the economy through two broad channels: (1) the direct impact on construction activity and home sales, which feed into the residential investment component of GDP, and (2) the indirect effects of lower home prices and less refinancing activity on consumption.”
06.30.13
30-Year Fixed Mortgage hits 4.38%
According to Zillow Mortgage Marketplace:
 
06.30.13
Median Home Price Trends (adjusted for inflation)
The U.S. real estate market continues to surge. Chart of the Day
06.30.13
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the June 30, 2013 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document.  This includes the following:

  • The OCC released its Mortgage Metrics Report for the first quarter of 2013.  The report shows:
    • 90.2 percent of mortgages were current and performing at the end of the quarter, compared with 89.4 percent the prior quarter and 88.9 percent a year earlier.  Seriously delinquent mortgages—60 or more days past due or held by bankrupt borrowers whose payments are 30 days or more past due—decreased to 4.0 percent compared with 4.4 percent at the end of 2012 and 4.5 percent a year ago.  The percentage of mortgages that were seriously delinquent has decreased 10.4 percent from a year earlier.  The percentage of early stage delinquencies, mortgages that were 30-59 days past due, was 2.6 percent, down 9.3 percent from the previous quarter but up 3.0 percent from a year ago.
    • The number of loans in the process of foreclosure at the end of the first quarter of 2013 decreased by 28.6 percent from a year ago to 907,231.  Servicers initiated 178,356 new foreclosures during the quarter—a 13.8 percent increase from the previous quarter but a 37.8 percent decrease from a year ago.  The number of completed foreclosures fell to 84,972, a 19.7 percent decrease from the previous quarter and a 30.9 percent decrease from a year ago.
    • Servicers implemented 348,733 home retention actions—including modifications, trial-period plans, and shorter term payment plans—compared with 131,704 home forfeiture actions during the quarter—completed foreclosures, short sales, and deed-in-lieu-of-foreclosure actions.  The number of home retention actions implemented by servicers decreased by 5.0 percent from the previous quarter and 1.2 percent from a year earlier.  Nearly 94 percent of modifications in the first quarter of 2013 reduced monthly principal and interest payments; 56.4 percent of modifications reduced payments by 20 percent or more.  Modifications reduced payments by $361 per month on average, while modifications made under the Home Affordable Modification Program (HAMP) reduced monthly payments by an average of $547.
    • Servicers have modified 3,021,617 mortgages from the beginning of 2008 through the end of the fourth quarter of 2012.  At the end of the first quarter of 2013, 49.5 percent of these modifications were current or paid off.  Another 6.4 percent were 30 to 59 days delinquent, and 12.4 percent were seriously delinquent.  Another 7.3 percent were in the process of foreclosure, and 7.4 percent had completed the foreclosure process.
  • The Federal Reserve Board proposed to require certain institutions to report daily on their federal funds transactions, Eurodollar transactions, and certificates of deposit.  The proposal would apply to insured depository institutions with total assets of $26 billion or more, and U.S. branches and agencies of foreign banks with third party assets of $900 million or more.  The intent is to assist the Federal Reserve in monitoring money market conditions.  Comments are due 60 days after Federal Register publication. 

 

06.30.13
Median House Prices increase 15.4% Year-Over-Year
In May, the median existing home sale price increased 15.4% to $208,000, year-over-year, according to the National Association of Realtors.
06.30.13
Mortgage Applications Collapse 29% Over Eight Weeks
Mortgage applications have fallen 29% over the last 8 weeks, the biggest plunge in 30 months.
06.30.13
Housing Prices Up 13% from Bottom
In real terms, house prices are back to early 2000s levels. 
06.28.13
Washington Regulatory Round-Up 6-28-13
06.28.13
Wealth Strategies. Think bonds are safe? Think again.
Research Affiliates, Jason Hsu June 27, 2013
06.27.13
The Future of Detroit
Detroit on Reuters' Muniland Roundtable , Jim Dorer, a Moody’s analyst.
06.26.13
Retirement Crisis Worse Than We Thought

.....we now face an estimated retirement savings gap of $6.8 to $14.0 trillion, with lower- and middle-income Americans at the most risk.

06.25.13
The End of the Bernake Put?
Alhambra Investment Partners
06.24.13
As goes Detroit

URBAN AMERICA has a much-needed new truth-teller, and his name is Kevyn Orr.  The Washington Post.

06.21.13
Washington Regulatory Round-Up (6/21/13)
06.21.13
Updated Roadmap to GSE Reform
Attached please find a Roadmap to GSE Reform, which reflects the latest version of the Warner-Corker draft bill. 
06.20.13
Pimco's Gross on Bond Market
06.19.13
Roadmap to GSE Reform
This update adds H.R. 2348, the House companion bill to S. 563.  There is no link to H.R. 2348 yet.  Both bills would restrict federal use of G-fee increases to GSE business functions under specified laws, and would prohibit Treasury from disposing of GSE preferred shares until a law is enacted permitting it.
 
Regards,
 
Canfield Press
06.17.13
Avoiding the Regulatory Cliff
The Competitive Enterprise Institute has published a white paper, Avoiding the Regulatory Cliff: A Bipartisan Agenda to Restore Limited Government and Revive America's Economy.  
06.16.13
Then And Now: What 100 Years Of Change Looks Like, In One Infographic.
06.14.13
Washington Regulatory Round-Up (6/14/13)
06.14.13
Mortgage Interest Deduction & Home Prices" from CNBC:
Home prices have been soaring lately amid lack of supply, but now new numbers point to a shift, reports CNBC's Diana Olick. 
06.13.13
Fannie, Freddie Shareholders take on U.S. Govt.
Bloomberg's "Street Smart"
06.11.13
Think housing has rebounded? Think again!
Reuters, Wealth Strategies
06.10.13
Greenspan: When do we taper down? When do we turn?
06.10.13
Wilbur Ross: 10-Year Treasury Runs Risk of 25% Decline
06.10.13
May Unemployment, 175,000 Jobs
06.10.13
Guggenheim commentary.

The Fed's Dilemma

Market volatility is rising as the Fed continues with its asset purchase program. 

06.10.13
Social Security Falls Even Deeper into a Sinkhole
The CATO Institute.
06.07.13
Washington Regulatory Round-Up (5/7/13)
06.06.13
Downside risk to Friday's jobs report- UBS's Cummins
After a couple of weaker-than-expected-employment reports....
06.05.13
Roadmap to GSE Reform Legislation
Please find attached the latest Roadmap to GSE Reform Legislation that reviews the pending legislative proposals that have been introduced, or about to be introduced, in this Congress.
 
As additional legislative proposals are introduced, this document will be updated.
 
Regards,
 
Canfield Press
 
06.05.13
Wounded Heart
And just as profits are critical to the longevity of our capitalistic real economy so too is return or “carry” critical to our financial markets.   PIMCO Investment Outlook
06.03.13
Managing disruptive technology: A conversation with investor Chamath Palihapitiya
"Technology will disrupt every facet of every job,” says Chamath Palihapitiya, the former Facebook executive turned venture investor.
06.03.13
What to Do With Fannie and Freddie
Here’s a way to move beyond the political stalemate.
05.31.13
Regulatory Round-Up (5/31/13)
05.31.13
KPCB Internet Trends 2013
From documents to pictures to tweets, grew 9x in 5 years to nearly 2 zettabytes in 2011.
05.30.13
Interview with Barry Eichengreen

He is known as an expert on monetary systems and global finance.

05.29.13
Equity Extraction and Mortgage Default
 Equity extraction was responsible for 30% defaults from 2006 to 2009.
05.27.13
Disruptive technologies: Advances that will transform life, business, and the global economy
We estimate that, together, applications of the 12 technologies discussed in the report could have a potential economic impact between $14 trillion and $33 trillion a year in 2025
05.27.13
Wynton Marsalis, Classical and Jazz Musician, University of Vermont
"To journey is to embrace change."
05.27.13
David Brooks, commencement speech at University of the South
"The daily activity that contributes most to happiness is having dinner with friends."
05.27.13
Twitter CEO Dick Costolo, University of Michigan
"Make bigger choices, take bigger risks. ...
05.27.13
Elizabeth Warren's Commencement Speech
"I know it is hard out there, but I have high hopes for every one of you – every single one of you."
05.26.13
A real American Idol
Thank a Veteran when you see  him or her.
05.24.13
Washington Regulatory Round-Up (5/24/13)
05.24.13
The New York Fed Staff Forecast for May 2013
Federal Reserve Bank of New York, 
Jonathan McCarthy and Richard Peach
May 23, 2013
05.23.13
Fed's Exit From QE Still a Long Time Off: Hanson
05.20.13
Ben S. Bernanke, Chairman Board of Governors of the Federal Reserve System Bard College at Simon’s Rock
05.17.13
Washington Regulatory Round-Up (5/17/13)
05.16.13
"China: The Edifice Complex"
James Chanos, 2013 Wine Country Conference
05.14.13
Households Cut Another $110 Billion In Debt Even With $577 Billion In Q1 Mortgages Originated: Most Since 2007
05.14.13
The Future of U.S. Financial Regulation

Technology plays a huge role in helping to prevent the next financial crisis, wrote  J.C. Boggs in  FEDTECH Magazine, May 10, 2013

05.13.13
The Jobs Crisis: Bigger Than You Think
 This is more than the problem of recovering from the last economic slump; it is more than the impact of globalization and automation on manufacturing jobs.
05.10.13
Regulatory Round-Up (5/10/13)
05.10.13
Housing Finance, Systemic Risk, and Returning Private Capital to the Mortgage Market
Remarks as Prepared for Delivery, Edward J. DeMarco Acting Director 
Federal Housing Finance Agency 
05.09.13
This Can't Go on Forever
 Dallas Fed head Richard Fisher provided more than a few compellingly truthy comments in this excellent discussion with CNBC's Rick Santelli.
05.08.13
Does High Home-Ownership Impair the Labor Market?

 David G. Blanchflower and Andrew J. Oswald 
Peterson Institute for International Economics.


05.07.13
Congressional influence as a determinant of subprime lending.

VOX
Stuart A Gabriel, Matthew E. Kahn, Ryan K Vaughn,
5 May 2013

05.06.13
German euro founder calls for 'catastrophic' currency to be broken up.

Oskar Lafontaine, the German finance minister who launched the euro.

05.03.13
Washington Regulatory Round-Up (5/3/13)
05.03.13
25 Markets Where Flipping Homes is Most Profitable
RealtyTrac  May 1, 2013  
05.02.13
Central Banks: Is Quantitative Easing Becoming Quantitative Exhaustion?
Concern is growing, however, that quantitative easing has distorted markets by interfering with the proper pricing of risk and, by extension, obscuring the true cost of capital.
05.01.13
Federal Housing Finance Agency
FHFA's progress report on their creation of a common securitizaiton infrastructure.
04.30.13
Global Macro Outlook
Jim O'Neill, Chairman Goldman Sachs Asset Management
04.29.13
Easy Money: Japan’s Policy Gamble
What Japan needs is a more expansive domestic monetary policy.  Action Forex, Wells Fargo Securities.
04.29.13
France On The Brink of A Secondary Depression
Authored by Charles Gave of Gavekal.com,

France is engulfed by a political, economic and moral paralysis.

04.29.13
Jim Chanos: China: The Edifice Complex
Chanos Wine Country Conference...
04.28.13
CBO’s Tour of the Federal Budget and Possible Changes to Budget Policy
Presentation to Economics 10 to Harvard University
04.28.13
EU’s Ten Lessons from Cyprus
 Cyprus is likely to lead to the literal collapse of the Cypriot economy over the next year and to Cyprus’s exit from the euro.   The American.
04.28.13
This is what a permanent underclass looks like.
The Atlantic, Matthew O'Brien, April 26, 2013
04.26.13
Regulatory Round-Up (4/26/13)
04.26.13
It's A Bit Early To Declare A Winner In The Economic Debate
Streettalklive.com, Lance Roberts, April 25, 2013.
04.26.13
China Bubble Growing Bigger
"New credit outstanding jumped by $1 trillion U.S." said Jim Chanos of Kynikos Associates, adding that China's economy was equivalent to $8 trillion in U.S. dollar terms. "So, on an annualized rate, that's 50 percent of GDP, new credit creation. To put that in perspective, the total new credit globally went up by a trillion and a half in the first quarter. China was $1 trillion of that, yet it's only 10 percent of the world economy."


04.25.13
Will Housing Save the U.S. Ecomony?
Amir Sufi of the University of Chicago’s Booth School of Business.
04.24.13
The Financial Crisis at the Kitchen Table: Trends in Household Debt and Credit
 Since the onset of the financial crisis, households have reduced their outstanding debt by about $1.3 trillion.


04.23.13
Helping Cities Fix Themselves
George W. Bush Institute, Carl Schram posted on April 22, 2013
04.22.13
Deja Vu All Over Again?
Alhambra Investment Partners
04.19.13
Regulatory Round-Up (4/19/13)
      
04.19.13
One Country Two Economies
Bill Dunkelberg and William Dennis. NFIB
04.18.13
Hyperactive Monetary Policy: The Good, the Bad and the Ugly
04.17.13
5 Unacknowledged, Unexpected, and Unavoidable Facts about Government Spending and the Economy

Nick Gillespie at Reaon Weekend, 2012

04.16.13
McLaughlin Group’s Analysis of the Obama Budget
"By 2020, the national debt ceiling will exceed $25 trillion."
04.16.13
Top 10 from the White House.
The White House
April 10, 2013
04.16.13
Fannie/Freddie Could See $51 Billion Profit … IF They Remain Under Gov’t Control For 10 Years

04.16.13
FHA has about $30 billion on hand but said its cash reserves would probably be swamped by souring loans.
04.16.13
Winners and Losers in Obama budget

Who are the winners? Teachers and administrators for Pre-school and K-12.

04.16.13
Tax Collections Up in 2013
With the federal tax rate increases for 2013 now taking effect, it is not too surprising to see total federal tax receipts rising. Tom McClellan Editor, The McClellan Market Report
04.16.13
Et Tu, Canada?

"...[I]t should be obvious that the Canadian real estate is well into a correction of some description, and I remain convinced that the near-mythical 'soft landing' policy makers are striving for will be very difficult to achieve without inflicting significant collateral damage on the labor market and broader economy," wrote Ben Rabidoux.
04.15.13
U.S. Could Profit From Fannie Mae Bailout
Timothy J. Mayopoulos, chief executive officer of Fannie Mae
Bloomberg Exclusive.
04.12.13
Regulatory Round-Up (4/12/3)
04.12.13
How advanced analytics are redefining banking.
Innovators are using big data and analytics to sharpen risk assessment and drive revenue.McKinsey & Company
04.11.13
Better to Be Safe Than Sorry
 2013 Letter to Fellow Shareholders, Jamie Dimon, chairman and CEO of JPMorgan Chase
04.10.13
Kyle Bass Is "Perplexed" At Gold's Low Price. ZeroHedge

"The stress is beginning to show," Kyle Bass warns during a wide-ranging interview with Bloomberg TV.

04.09.13
As The Market Recovers, U.S. Single-Family Housing Activity Builds
S&P Down Jones Indices, Housing Views, Vandan Sharma, April 8, 2013
04.09.13
The Lady Who Changed the World
"As Prime Minister, Margaret had the clear vision and strong determination to stand up for her beliefs at a time when so many were afraid to 'rock the boat,'" said Former First Lady Nancy Reagan. "As a result, she helped to bring about the collapse of the Soviet Union and the liberation of millions of people."
04.07.13
Abenomics and the Japanese Economy
"Almost the entire rich world is stuck in a zero interest rate liquidity trap situation, and I think everybody is haunted by the possibility that there's no way out of it. If Japan shows a way out of that, it will be very encouraging." —Greg Ip


04.05.13
Washington Regulatory Round-Up (4/5/13)
04.05.13
Federal Reserve Bank of Dallas President Fisher's View of Monetary Policy
..... monetary policy, financial regulation and Bank of Japan’s decision to double monthly bond purchases on Bloomberg Television’s “Market Makers. 
04.04.13
Euro Zone Monitor April 2013
 In the April Euro-zone Monitor, Alex Gloy, president of Lighthouse Investment Management concluded: 
04.03.13
Is it Fannie and Freddie's Turn to Bailout the U.S. Treasury?
e21. Economics for the 21st Century.   4.3.2013.
04.02.13
Kuroda Says Bank of Japan will Consider Buying Derivatives
Haruhiko Kuroda said that the central bank will consider buying derivatives if he’s confirmed as governor and signaled a readiness for a quick expansion in monetary stimulus.
04.02.13
State auditor: California's net worth at negative $127.2 billion
....according to an annual financial report issued by State Auditor Elaine Howle and the Bureau of State Audits.

Read more here: http://blogs.sacbee.com/capitolalertlatest/2013/03/state-auditor-california-net-worth-at-negative-127-billion.html#storylink=cpy
04.02.13
QE: A Sedative That Robs The Economy of Vitality
"The European problem remains an unsolved problem going on four years."   Real Clear Markets.
04.01.13
Financial Globalization: Retreat or Reset?
McKiney Global Institute
04.01.13
When Interest Rates Rise
When interest rates rise, as they surely will, the bubbles will burst, the prices of those securities will fall, and anyone holding them will be hurt.  Martin Feldstein, Project Syndicate.
03.29.13
Regulatory Round-Up (3/29/13)
03.29.13
Has EU Has Solved the Bank Capital Adequacy Problem?

 Bob Eisenbeis is Cumberland’s Vice Chairman & Chief Monetary Economist.

03.28.13
Chickens Coming Home to Roost in EU
David Stockman, former Director of OMB for the Reagan Administration.....
03.27.13
"Cyprus Should Leave The Euro. Now."
 Moody’s Sarah Carlson, the financial crisis in Cyprus "will have profound long-term negative consequences.
03.26.13
MF Global And The Cypriot Banking Crisis: Troubling Similarities
FORBES
Fred Kingery, March 22, 2013
03.25.13
UBS: Contagion Risks Are Alive And Well
 Last night, euro zone leaders finally agreed on a deal to bail out Cyprus' financial system.  Among other things, depositors with over 100,000 euros in their accounts will get slammed.
 
03.22.13
Regulatory Round-Up (3/22/13)
03.20.13
The European Project is Dying.
 Anthanasios Orphanides, former president of the Central Bank of Cyprus..Bloomberg News
03.19.13
The Federal Reserve Explained Why the Cyprus Bailout Was a Terrible Idea in 1941
Such a tax violates "one of the fundamental principles of taxation in a democracy."
03.18.13
President Obama: There is no debt problem.
George Stephanopolous - ABC News 
03.18.13
House Budget: The Path to Prosperity
Senate Democrats: Take More to Spend More, Unserious and Unbalanced 
House Republicans: A Responsible, Balanced Budget.
03.18.13
Senate Budget: Restoring the Promise of American Opportunity.
Fiscal Year 2014 Senate Budget Resolution.
03.18.13
17 Signs of Economic Depression in Southern Europe:
The Eonomic Collapse Blog.
03.18.13
This Is Just the Beginning…

 For Everyone Shocked By What Just Happened.. Zero Hedge

03.18.13
The Meaning of Cyprus
Cyprus will become the fifth euro zone country to receive assistance. Marc to Market. Saturday March 16, 2013.
03.15.13
Regulatory Round-Up (3/15/13)
03.15.13
Growing Number of Part-Time Workers is bad for the American Economy.
Now 20.6% of our workforce are part-time employees. CFIF - Center for Individual Freedom.
03.14.13
Senator Corker Introduces “Jumpstart GSE Reform Act"

In an effort to spur substantive and structural housing finance reform, Senators Bob Corker, R-Tn., Mark Warner, D-Va., David Vitter, R-La., and Elizabeth Warren, D-Ma., all members of the Senate Banking, Housing and Urban Affairs committee, on Thursday introduced the “Jumpstart GSE Reform Act.”

03.13.13
The Two Drunks Model of Financial Crises
 It’s unlikely that banks and government can be disentangled, but a healthier relationship could begin with a new approach to credit guarantees.
03.10.13
Replacing the Home Mortgage Interest Deduction
In this policy proposal, AEI's Alan Viard proposes to replace the mortgage interest deduction with a refundable income tax credit as a way to reduce the artificial incentive for the construction of high-end homes by better targeting the tax breaks for housing.
03.08.13
Regulatory Round-Up (3/8/13)
03.07.13
Currency Wars 2013:
Although Japanese leaders won’t admit it, the country has quietly declared war on the rest of the world.  By Moran Zhang | March 01 2013 9:05 PM
 

 

03.07.13
Economic Conditions and Conditionality
Charles L. Evans
President and Chief Executive Officer Federal Reserve Bank of Chicago 

 

03.07.13
Grading Student Loans
 14.4%, or about 5.4 million borrowers, have at least one past due student loan account.
03.07.13
Time to End the ‘Monetary Ritalin’: Fed’s Fisher

With the economy starting to improve, the Federal Reserve should begin to end its bond purchases, Richard Fisher, Federal Reserve Bank of Dallas President, told CNBC's "Closing Bell" on Thursday.

03.07.13
How Low Will the Yen Go: Depression-Era Policies?

 Today Japanese government debt has swelled to over 210% of GDP.   
Axel Merk and Yuan Fan, Merk Investments.


03.05.13
The Housing Bubble and the Limits of Human Knowledge

Friday, March 1, 2013

03.04.13
China's Real Estate Bubble
China's economy has become the second largest in the world, but its rapid growth may have created the largest housing bubble in history. Lesley Stahl reports.
03.01.13
Regulatory Round Up (3/1/13)
02.28.13
"Sparks Fly: Bernanke Asked to Cut the 'Ton of Fat'"
02.27.13
Semiannual Monetary Policy Report to the Congress Before the Committee on Banking, Housing, and Urban Affairs,
Semiannual Monetary Policy Report to the Congress Before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, Washington, D.C.
February 26, 2013
02.26.13
The Macroeconomic Effects of Forward Guidance
Marco Del Negro, Marc Giannoni, and Christina Patterson
02.26.13
The Fed Faces Billion-Dollar Losses in Stress Test Projections for Exiting QE
Chairman Bernanke will face questions on Capitol Hill today regarding how the Fed plans to unwind its massive $3 trillion balance and what losses the central bank may incur, as interest rates rise. Projected losses on the Fed holdings range from $216 billion to $547 billion over three years, depending upon how abrupt the interest rates and inflation rises, according to stress test projections by MSCI Inc.
02.24.13
The Keynesian Depression
A Premonition From a Halcyon Era
By Scott Minerd, Chief Investment Officer, Guggenheim Funds
02.24.13
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the February 24, 2013 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

  • FHFA released its November 2012 Refinance Report, showing that Fannie Mae and Freddie Mac have refinanced more than 2 million loans through HARP.  In November alone, the report shows nearly 130,000 HARP refinances, making it the second biggest month in 2012.  Between January and November of 2012, HARP refinanced nearly 1 million loans, HARP’s most active year.  In November 2012:
    • HARP volume represented 23 percent of total refinance volume;
    • 46 percent of HARP’s refinances had LTVs greater than 105 percent and 24 percent had LTVs greater than 125 percent;
    • HARP refinances represented 68 percent of total refinances in Nevada, and 56 percent in Florida;
    • 17 percent of HARP refinances for underwater borrowers were for 15- and 20-year mortgages.
  • On February 20, 2013, the Federal Reserve Bank of New York announced a pilot program with small broker-dealers to examine options for broadening access to monetary policy operations.  The one-year pilot program will allow no more than five small firms to participate solely as counterparties in outright purchases and sales of U.S. Treasury securities for the System Open Market Account portfolio. The program will explore the effectiveness and feasibility of expanding operations to a broader range of counterparties.  Applications will be limited to firms meeting designated eligibility requirements, including size restrictions, transaction capabilities, and compliance controls.  The firms will be incorporated into the current business process for Treasury outright operations, and as such, their bids and offers will be put into direct competition with those submitted by primary dealers.  Participating firms will only have access to permanent open market operations for Treasury securities, subject to a limitation on trade sizes, and will not be eligible to participate in other types of open market operations.
  • On February 22, 2013, Treasury announced that it intends to auction preferred stock and subordinated debt in the following institutions:
    • Boscobel Bancorp, Inc. (Boscobel, WI);
    • Coastal Banking Company, Inc. (Beaufort, SC);
    • CoastalSouth Bancshares, Inc. (Hilton Head Island, SC);
    • First Reliance Bancshares, Inc. (Florence, SC);
    • Northwest Bancorporation, Inc. (Spokane, WA);
    • Old Second Bancorp, Inc. (Aurora, IL);
    • Santa Clara Valley Bank, N.A. (Santa Paula, CA);
    • SouthCrest Financial Group, Inc. (Peachtree City, GA); and
    • The Queensborough Company (Louisville, GA).
  • The FDIC’s TLGP program has expired.  On February 21, 2013, the FDIC released its monthly TLGP report for December 2012, showing no outstanding debt.

 

 
02.22.13
Regulatory Round-Up (2/22/13)
02.20.13
Roadmap to Dodd-Frank Act Rulemakings, Studies, and Reports Update
Attached please find an updated Roadmap to the Dodd-Frank Act Rulemakings, Studies, and Reports.
  • The Federal Reserve extended the public comment period on a proposal to implement enhanced prudential standards and early remediation requirements for foreign financial companies the Board supervises.  Comments were originally due March 31, 2013, and are now due April 30, 2013.
Regards, 
Canfield Press
02.20.13
From Pin Point, GA to the Supreme Court
Justice Clarence Thomas--the epitome of the American Dream.
02.18.13
There Is A Winner In The Currency War
As fear (and actuality) of currency wars flares, the USD has borne the brunt of the buying.
02.17.13
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the February 17, 2013 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

  • GAO released a report on areas of high risk, including FHA.  GAO says FHA’s single-family insurance portfolio has grown from $300 billion in 2007 to more than $1.1 trillion in 2012, while its capital reserves have fallen below the 2 percent minimum requirement.  The report says new actions beyond those already taken are needed to help restore FHA’s financial soundness and define its future role.  GAO recommends determining the economic conditions that FHA’s primary insurance fund would be expected to withstand without drawing on the Treasury.  GAO suggests that the 2 percent capital requirement may not be adequate to avoid the need for Treasury support under severe stress scenarios.  Additionally, GAO says actions to reform GSEs and to implement mortgage market reforms in the Dodd-Frank Act will need to consider the potential impacts on FHA’s risk exposure.
  • The European Commission announced that eleven countries will move forward towards implementing a financial transactions tax, of 0.1% for shares and bonds and 0.01% for derivatives, which the Commission expects to is expected to collect €30-35 billion annually.  The proposal covers only transactions in which financial institutions are involved.  The eleven countries are Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia, and Spain.  The eleven countries must agree on the tax before it would go into effect.  The tax would be due if any party to the transaction is established in a participating country regardless of where the transaction takes place. 

 

02.15.13
X Manipulating G-20 "Glass House" Unable To Cast Stone At FX Manipulating-Japan
 Curious why nobody at the G-7 or G-20 had the gall to outright accuse Japan of currency manipulation? 
02.15.13
This is what a currency war looks like.
  Mario Draghi, the president of the European Central Bank, took his seat in front of gathered reporters and took questions.
02.15.13
Regulatory Round-Up (2/15/13)
02.15.13
The Week Ahead: Currency Wars and Commodities

Big Declines in both the yen and crude oil may be giving the market a sneak peak at near-term correction


02.15.13
How could FHA have contributed to the housing bust?
This was a common refrain made by some members of the Financial Services Committees at the February 12 hearing featuring FHA Commissioner Carol Galante.
02.15.13
Quantitative Easing, Intervention, and Currency Wars, Again
Thinking about what is driving -- and will drive -- the yen.
02.15.13
G-7 Nations Pledge to Avoid Currency War
 The Group of Seven leading economies Tuesday attempted to head off a potentially destabilizing round of currency devaluations.
02.15.13
U.S., Europe Seek to Cool Currency Jitters.
U.S. and European financial policy makers are discussing issuing a joint message designed to head off a potentially destabilizing round of currency devaluations. The Wall Street Journal.
02.14.13
FSC Chairman Hensarling's Opening Statement at the FHA Hearing
 FHA today controls 56% -- well more than half -- of the total mortgage insurance market in terms of numbers of loans, talk about Too Big to Fail.
02.13.13
The State of the Union

The greatest nation on Earth cannot keep conducting its business by drifting from one manufactured crisis to the next.


02.13.13
The President's State of the Union

The greatest nation on Earth cannot keep conducting its business by drifting from one manufactured crisis to the next.

02.12.13
Student Loans: A Different Financial Market
John Silva, Chief Economist, Wells Fargo Securities, Economics Group Special Commentary
02.10.13
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the February 10, 2013 updates to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

  • On Febuary 8, 2013, Treasury announced pricing on sales of preferred stock and subordinatd debt in five institutions. When itannounced the sales, Treasury said it would sell all of its shares in these firms:
    • Carolina Bank Holdings, Inc. (Greensboro, NC) for $14,961,600; Treasury paid $16 million for its investment;
    • FC Holdings, Inc. (Sugar Land, TX) for $19,879,334; Treasury paid $21,042,000;
    • First Trust Corporation (New Orleans, LA) for $14,401,297; Treasury paid $17,969,000;
    • National Bancshares, Inc. (Bettendorf, IA) for $19,357,167; Treasury paid $24,664,000; and
    • Ridgestone Financial Services, Inc. (Brookfield, WI) for $9,447,357; Treasury paid $10,900,000.

The original announcement said Treasury would include Flagstar Bancorp, Inc., Troy, MI, but the announced results did not mention this institution.

  • Treasury announced it priced an offering of Citigroup subordinated notes at $894 million.  The notes arose from a joint program between Treasury, FDIC, and Federal Reserve to share potential losses of up to $5 billion on a $301 billion pool of Citigroup assets.  Citigroup originally issued securities to the FDIC in 2009.  In December 2009, the loss-sharing arrangement was terminated at Citigroup’s request.  The government did not make any payment under the arrangement.  In connection with the termination of the guarantee, the FDIC transferred Citigroup trust preferred securities with an aggregate liquidation value of $800 million to Treasury upon the maturity of Citigroup’s TLGP debt, which occurred on December 28, 2012.  On February 4, 2013, Treasury and Citigroup agreed to exchange Treasury’s $800 million in Citigroup trust referred shares for Citigroup subordinated notes with an aggregate principal value of $894, and Treasury agreed to sell those subordinated notes.  After the note sale, Treasury will not hold any Citigroup securities.  Including the note sale, Treasury received more than $58.4 billion in repayments and other income on its TARP investment of $45 billion in Citigroup.
  • On February 8, 2013, the Administration released its January housing scorecard and December servicers’ report.  The scorecard contains quarterly redefault rates, which are largely unchanged.  After three months, only 1.1% of modified loans are 90 or more days past due; after six months, the 90-day default rate is 5.5%; after 12 months, the rate is 14.3%; after 18 months, the rate is 21.9%; after 24 months, the rate is 28.1%; and after 30 months, the rate is 33.3%.
 
 
02.10.13
Taking Europe's pulse
The interactive graphic (updated February 5th 2013) display the latest economic and fiscal differences across the entire European Union.
02.10.13
Big Blue Cities Losing The Race for The Future

 The map of America’s wealth is changing.  By Joel Kotkin, 02/07/2013.


02.10.13
U.S. economy contracts for first time since recession.
02.10.13
Iceland Shows How It's Done
Four years later, Iceland has recovered with 3% GDP and 5% unemployment
02.10.13
Soros Fears 'Rebellion', Warns "The Euro Could Destroy The EU"
 Soros fears that "there is a real danger that the [Euro] solution to the financial problem creates a really profound political problem."
02.08.13
Keep the Music Going for Shadow Banking
Thanks to the magic of FAS 140 banks can literally transform worthless garbage into supersafe Treasurys, then use that newly transformed collateral via further repo as cash to fund simple stock purchases, and at the end of the day nobody knows where the exposure came from, who the counterparty is, and what the ultimate liability is!
02.07.13
The Budget and Economic Outlook: Fiscal Years 2013 to 2023
U.S. Deficit to Shrink Below $1 Trillion in 2013 (1st time since ’08)
02.06.13
Jefferson, The FHA and Harming Borrowers: The Case For Tightening FHA Standards
 Anthony B. Sanders, Senior Scholar at George Mason University,
02.05.13
The Kickstarter Economy: How Technology Turns Us All Into Bankers
The democratization of lending could in time have as revolutionary an effect on traditional banking as digital music has had on the traditional recording industry
02.05.13
TBTF Banks' Bigger Moat
JPMorgan Chase CEO Jamie Diamon believes that the Dodd Frank Act's reforms make it more expensive and tougher for small institutions to enter the market, which helps expand his bank's market share and effectively widens JPM's "moat."
02.04.13
I will gladly pay you Tuesday for a hamburger today.” - J. Wellington Wimpy

02.03.13
Goldman Sachs braces for bond market blow up.
02.02.13
S&P, Dow wrap up best January in 21st century.
 NEW YORK (CNNMoney)
02.02.13
The Fed Releases it first monetary policy of 2013.
Michael Derby discusses what he Fed's next moves are expected to be on WSJ.
02.02.13
Cybersecurity Act of 2012
 By Chris Finan, consultant, Department of Defense 

 


02.01.13
Regulatory Round-Up (02/01/13)
01.31.13
Eurozone's Biggest Bank Posts $26 Billion Write-Down
Spanish bank Santander, the Eurozone's largest bank based upon market value, reported that its net profit plunged 59% to 2.2 billion euros in 2012, 
01.30.13
More Than Half of Student Loans in Deferment; High Unemployment Rates Put Loans at Risk
Deferred loans now represent 43.5% of all student loan balances.
01.29.13
Rethinking Conventional Wisdom: A Monetary Tour d’Horizon for 2013
 This article appeared in the January 2013 issue of GlobeAsia by  Steve H. Hanke
01.28.13
Noel Canning v. NLRB and the CFPB
While it is likely that the administration will appeal the NLRB case, potentially to the Supreme Court, that process could take a year or more.  In the meantime, Congress might need to implement an emergency legislative fix because of the extraordinary amount of uncertainty this situation has created.
01.28.13
D.C. Circuit Voids NLRB Order Based on "Recess" Appointments
D.C. Circuit holds NLRB recess appointments, and by implication Director Cordray's recess appointment to the CFPB, were invalid.
01.26.13
Noel Canning v. NLRB

D.C. Circuit holds NLRB recess appointments, and by implication Director Cordray's recess appointment to the CFPB, were invalid

01.25.13
Regulatory Round-Up (1/25/13)
01.25.13
Robert Shiller: Housing, The Economy and Bubbles
WSJ's John Hilsenrath in the World Economic Forum in Davos with Robert Shiller.
01.24.13
Housing Cliff?
  , David Stephens, president of the Mortgage Bankers Association,
01.24.13
GE Settles FHFA Suit Over Freddie Mac Mortgage Bonds
“This settlement resolves the dispute between FHFA and GE consistent with FHFA’s responsibilities as conservator of Freddie Mac,” said FHFA general counsel Alfred M. Pollard. “FHFA is pleased this lawsuit has been resolved and appreciates the work of Freddie Mac in this matter.” The terms of the settlement were not disclosed.
01.23.13
Does Bank of America Have Successor Liability for Countrywide?
To be determined by the courts soon.
 
01.22.13
FRBSF Economic Letter by John C. Williams
 The Federal Reserve has taken bold steps this past year, both in the approaches to stimulate the economy and the way it talks about policy. The Fed’s initiatives are working, and represent the best course to move toward maximum employment and price stability.
01.21.13
"Detonating The Japanese Debt Time Bomb" With Kyle Bass
 The hyper-correlation of Japanese stocks and the JPY have led many to believe that Abe's miracle promise will be just the ticket to bring the nation's two-decade slump to an end - a 2% inflation target is all you need
01.18.13
Regulatory Round-Up (1/18/13)
01.18.13
Ending 'Too Big to Fail': A Proposal for Reform Before It's Too Late
 The Dallas Fed’s proposal offers an “about-turn” and a way to mend the flaws in Dodd–Frank. The Dallas Fed’s proposal offers an “about-turn” and a way to mend the flaws in Dodd–Frank. 
01.17.13
Ending TBTF: A Proposal for Reform Before It's Too Late
In a a nutshell, [the Dallas Fed] recommend[s] ...TBTF financial institutions be restructured into multiple business entities. Only the resulting downsized commercial banking operations—and not shadow banking affiliates or the parent company—would benefit from the safety net of federal deposit insurance and access to the Federal Reserve’s discount window.
01.17.13
Sen. Isakson Joins CNBC's "Squawk on the Street"
 Senator Johnny Isackson (R-GA) on CNBC to Discuss QRMSenator Johnny Isackson (R-GA) on CNBC to Discuss QRM
01.16.13
A Economist's View of Fiscal Cliff Policy
01.16.13
So Much Quantitative Easing, So Little Growth
01.16.13
Living in an Unsustainable World
01.16.13
Debt Ceiling Delay Would Prompt Formal US Rating Review by Fitch
01.16.13
The Fed Declares War on the Dollar.
 What do Rogaine and the Federal Reserve's economic-stimulus policies have in common? Side effects
01.16.13
Debt Limit Measures May Run Out by Mid-February
 "Treasury currently expects to exhaust these extraordinary measures between mid-February and early March of this year," wrote Treasury Secretary Timothy Geithner in a January 14 letter to House Speaker John Boehner (R-OH).
01.15.13
The Implicit Guarantee of TBTF Banks
 “And while the economy still mostly [stinks] overall, there's never been a better time to be a Too Big to Fail bank,” writes Rolling Stone’s Matt Taibbi. 
01.15.13
Home Prices Up 6% in 2012
"Housing was clearly one of the past year's biggest surprises," wrote Corelogic's Mark Fleming. "Even without significant gains in income, housing mounted an impressive recovery."
01.14.13
Top Five Questions on the QM Rule
 In a recent report, Compass Point responded to the top five questions on QM rule:
01.11.13
Regulatory Round-Up (1/11/13)
01.11.13
The Latest Wrinkle in Foreclosure Crisis: The Zombie Title
 The banks are just deciding not to foreclose, even though the homeowners never caught up with their payments," says Daren Blomquist, vice president at RealtyTrac, a real-estate information company in Irvine, California.
 
01.10.13
Prepared Remarks by CFPB Director Cordray at Ability-to-Repay Event
 " It is nothing more than the true essence of “responsible lending.”
01.09.13
App Driven Banking for Customers Fed Up with Banking
Josh Reich [a software engineer] …and a co-founder, Shamir Karkal, created Simple, an online banking start-up company based in Portland, Ore., 
01.08.13
Securitization and the Fixed Rate Mortgage
 Government credit guarantees for securitized mortgages may not be necessary for maintaining a high FRM share, but only as long as private securitization markets are liquid and well functioning,” concludes a New York Fed study.
 
01.08.13
Obama is close to choosing Lew for Treasury Secretary.
01.07.13
What’s a Bond Vigilante to Do?

“The Fed buys, believe it or not, 80% of everything the Treasury issues right now,” said PIIMCO’s Bill Gross. “They're buying $1 trillion worth of bonds and mortgages a year. What can the vigilantes do relative to the Fed? There are hardly any bonds for the vigilantes to buy."

01.07.13
Dodd-Frank Act Rulemakings, Studies, and Reports Update
 Attached please find an updated Roadmap to the Dodd-Frank Act Rulemakings, Studies, and Reports. Please click on the title hyperlink to access the full report.
  • The CFPB requests comments on how the credit card market is functioning under the CARD Act.  Comments are due February 19, 2013.
  • The CFPB proposed to revise its remittance transfers rule to provide more flexibility about disclosing foreign taxes and fees by recipient institutions; to limit the required disclosure of taxes to taxes charged only by a central government; and to revise the error resolution provisions that apply when the sender provided incorrect or insufficient information.  The Bureau is also proposing to temporarily delay the effective date until 90 days after this rule is final.  Comments on the effective date are due January 15, and on the rest of the proposal are due January 30, 2013.
  • The CFTC proposed to extend compliance dates for several of its rules.  Dates for regulations at 17 C.F.R. § 23.201(b)(3)(ii), 23.402; 23.410(c); 23.430; 23.431(a) through (c); 23.432; 23.434(a)(2), (b), and (c); 23.440; 23.450, and 23.505 is extended until May 1, 2013; the compliance date for the regulations at 17 C.F.R. § 23.502 and 23.504 is extended until July 1, 2013.  Comments on the extensions are due February 1, 2013.  The CFRC published a list of compliance dates searchable by rulemaking or topic here.
  • The OCC extended a temporary exception to the lending limit rule for credit exposures arising from a derivative transaction or securities financing transaction, from January 1, 2013 to July 1, 2013.  Dodd-Frank § 610 extended the rule to credit exposure from a derivative transaction, repurchase agreement, reverse repurchase agreement, securities lending transaction, or securities borrowing transaction.  The OCC published an interim final rule June 21, 2012, applicable to the new transactions January 1, 2013, now extended. 
  • The OCC published a notice to insured depository institutions that are or may become swap dealers that the OCC is prepared to favorably consider requests for a transition period for Dodd-Frank § 716(f) if the requests conform to the procedures and conditions established in the notice, and are submitted by January 31, 2013.  Section 716 prohibits Federal assistance to swaps entities, including federal depository institutions that are swap dealers, with some exceptions.
Regards.   
Canfield Press
01.07.13
Fed’s Historic Error Is in Not Acting Boldly Enough, Paper Argues
The Most Dangerous Idea in Federal Reserve History: Monetary Policy Doesn’t Matter

By CHRISTINA D. ROMER AND DAVID H. ROME 

01.04.13
Regulatory Round-Up (1/04/13)
01.04.13
BLS Job Numbers for December Are In…
01.04.13
Money for Nothin’ Writing Checks for Free
PIMCO, Investment Outlook, January, 2013 Bill Gross
01.03.13
Something Unusual May Be Occurring in Mortgagee Markets Today
 “Why Isn’t the Thirty-Year Fixed-Rate Mortgage at 2.6 Percent?’ asks NY Fed’s Andreas Fuster and David Lucca
01.02.13
Your fiscal cliff deal cheat sheet.
 The Washington Post
Posted by Suzy Khimm on December 31, 2012 at 11:26 pm


 
12.31.12
So that's what the Mayas had in mind...
12.31.12
No more delays!
12.31.12
Almost there!
12.31.12
When in doubt, repeal gravity...
12.31.12
A New Era of Fiscal Clifflets?
 In the December Economic Letter, Jason Saving, a senior research economist at the Federal Reserve Bank of Dallas wrote:
 
12.31.12
Kicking the can....
12.28.12
Regulatory Round-Up (12/28/12)
12.28.12
The Negative Feedback Loop of “House Lock”
House price depreciation leads to lower wages, ranging from 5% to 9%, according to an Atlanta Fed study.
12.27.12
Secretary Geithner Sends Debt Limit Letter to Congress
Dear Mr. Leader: 

I am writing to inform you that the statutory debt limit will be reached on December 31, 2012...
12.26.12
1000x Systemic Leverage: $600 Trillion In Gross Derivatives "Backed" By $600 Billion In Collateral
A bigger question is what is the actual collateral backing this gargantuan market?
12.24.12
Yes, Virginia there is a Fiscal Cliff.
Happy Holidays and Merry Christmas!
12.22.12
Regulatory Round-Up (12/21/12)
12.21.12
The Clock is Clicking on the Fiscal Cliff
 Fiscal cliff drag on GDP will be 1% to 2%, according to Goldman Sachs’ analysts.
12.21.12
Ryding: A last minute Fiscal Cliff Deal is Likely. Bloomberg News
 Dec. 21 (Bloomberg) -- RDQ Economics Chief Economist John Ryding and Bloomberg's Josh Barro discuss the Republican Party and the fiscal cliff negotiations. 
12.20.12
Fiscal Cliff and True Reform
We have a stark choice between the size of government and private sector growth and the long-run standard of living of our citizens.   
12.19.12
The Case Against a Proposed Retroactive Tax on Municipals
 A retroactive tax on muni would raise yields 40 to 60 basis points in higher – or approximately $200 billion.
 
12.19.12
QE4: The Fed’s New Monetary and Fiscal Policy
  ZeroHedge’s Tyler Durbin: 
12.19.12
A Closer Look at the Housing Recovery
 According to author Charles Hugh Smith, housing has recovered for two reasons:
12.18.12
Caught in the Trap of Quantitative Easing
Monetary policy has become a roach motel – easy enough to get into, but impossible to exit.
12.18.12
The New Normal
12.18.12
San Francisco Fed Projects Low Growth, High Unemployment and Moderate Inflation
“[T]he unemployment rate will be 7½% at the end of 2013 and 7% at the end of 2014, and that significant labor market slack will remain into 2016 and perhaps beyond.
 
 
12.18.12
The New Normal: Subpar Growth
Statistically, “debt overhangs” have lasted an average of 23 years and cut annual GDP growth by 1.2 percentage points.
 
12.17.12
What Will 2030 Look Like?
Ion the Global Trends Report, the National Intelligence Council identifies certain “megatrends” that are relative certainties and that we should prepare to deal with them.
 
12.14.12
Regulatory Round-Up (12/14/12)
12.13.12
Peering into the 2013 Housing Market
 The last few months have brought a spate of favorable news on the U.S. housing market with construction up, more home sales, and home-value growth turning positive,” said Frank Nothaft, Freddie Mac vice president and chief economist.
12.12.12
The Next American Crisis: $5 trillion in Unfunded State and City Pension Liabilities
If elected officials in other states don't take action on their unfunded pension liabilities, the U.S. faces an unprecedented wave of government bankruptcies
 
12.11.12
When Obamacare Fails

The Affordable Care Act (ACA) is too misguided to succeed, too dangerous to maintain, and far too flawed to fix piecemeal.

12.11.12
The Most Powerful Forces in All of Economics: Demographics
According to Citi's Global Head of Credit Strategy, Matt King.
12.11.12
America's Negative Real Wage Growth
Consumers cannot spend what they don’t have.
12.11.12
47.77 Million Americans Live in Poverty
 The just reported food stamp number for September was a doozy, with 607,544 new Americans becoming eligible for food stamps, as a record 47.7 million Americans are now living in poverty at least according to the USDA
12.11.12
The New Normal
12.11.12
The November Demographically-Adjusted Unemployment Rate: 9.7%
 AEI’s Jim Pethokoukis makes the following points about the November job numbers: 
12.10.12
The Fed: The Fourth Branch of Government
 In reality, central bank monetary policy (certainly in the U.S.) has now merged with, or become a substitute for, fiscal policy.
12.07.12
Regulatory Round-Up (12/07/12)
12.07.12
Housing Recovery Depends on Slashing Mortgage Debt.
 Rising home prices are the foundation of today's housing recovery. 
Diana Olick, CNBC Real Estate Reporter.
12.06.12
Barreling Off the Fiscal Cliff
12.05.12
Mortgage Deduction Is Popular,But Few Claim It
Tax deductions for mortgage interest could be scaled back as Congress tries to cut the deficit and avert the "fiscal cliff."

Source:
USA Today
Gregory Korte
December 5, 2012


12.04.12
Structural Headwinds and the New Normal
 The real cause of slower economic growth lies hidden in a number of structural headwinds.  PIMCO’s Bill Gross in the December Investment Outlook    
12.03.12
GSE Reform Needed to Restart the Securitzation Market
 CNNMoney Video interview of Wells Fargo CEO: John Stumpf
11.30.12
The Fed's Uncharted Waters of Interest Rate Risk
 Holding a mortgage investment portfolio bigger than Fannie Mae’s or Freddie Mac’s, along with a massively expanded government bond portfolio, puts the Federal Reserve into uncharted waters of interest rate risk.
 
11.29.12
The 1930s All Over Again?
Then, as today, societies were uncertain about which model of society to strive for and how to repair monetary systems. Societies bet on the wrong ideas; we may be committing similar mistakes now.
11.28.12
Roadmap to Dodd-Frank MORTGAGE Rulemakings.

 The attached Roadmap is a working draft that has been updated to reflect the recent flurry of proposed and final MORTGAGE rulemakings.  It includes the due dates for final rules.  Please click on the title hyperlink to access the full report.

 
11.28.12
Dodd-Frank Act Rulemakings, Studies, and Reports Update
 Attached please find an updated Roadmap to the Dodd-Frank Act Rulemakings, Studies, and Reports.
  • The President waived a rescission of discretionary appropriations under the American Recovery and Reinvestment Act of 2009 (the “stimulus bill” or “ARRA”).  ARRA § 1603 originally provided that appropriated funds, under Division A appropriations provisions of ARRA, are available until September 30, 2010.  Dodd-Frank § 1306 extended that date to December 31, 2012, and provided that discretionary appropriations that are not obligated by December 31, 2012 are rescinded and returned to the Treasury for deficit reduction.  Dodd-Frank also gave the President authority to waive that rescission if it is not in the best interests of the Nation, and that is what the President waived. 
  • The CFPB announced that in December it will propose revisions to its remittance transfers rule relating to (1) errors resulting from incorrect account numbers provided by senders of remittance transfers; (2) the disclosure of certain foreign taxes and third-party fees; and (3) the disclosure of sub-national, foreign taxes.  The rule, as amended, will become effective 90 days after the amendment is final, instead of February 7, 2013 as originally scheduled.
  • The Federal banking agencies released an Interagency Statement on Section 612 of the Dodd–Frank Act: Restrictions on Conversions of Troubled Banks.  It explains the restrictions on converting from a state to federal or national charter, or vice versa
  • FSOC released five questions on its recent proposed recommendations regarding money market mutual funds.
11.28.12
Fiscal battle over mortgage deduction
 [T]he housing industry is preparing to fight against any move to get rid of the mortgage interest tax break.
 
11.26.12
A 10 Point Plan to Fix the U.S. Fiscal Crisis
Gluskin Sheff chief economist David Rosenberg suggests the following 10 point plan on how to fix the United States’ fiscal mess:
11.25.12
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the November 25, 2012 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

  • Treasury announced results of auctions of CPP shares in the following institutions:
    • Alaska Pacific Bancshares, Inc. (Juneau, AK) for $4,267,568.  Treasury paid $4,781,000.
    • Bank of Commerce (Charlotte, NC) for $2,627,100.  Treasury paid $3 million.
    • Carolina Trust Bank (Lincolnton, NC) for $3,412,000.  Treasury paid $4 million.
    • CBB Bancorp (Cartersville, GA) for $4,232,613.  Treasury paid $4,937,000.
    • Clover Community Bankshares, Inc. (Clover, SC) for $2,757,721.  Treasury paid $3 million.
    • Community Bancshares of Mississippi, Inc. (Brandon, MS) for $1,052,750.  Treasury paid $1,050,000.
    • Community Business Bank (West Sacramento, CA) for $3,909,595.  Treasury paid $3,976,000.
    • Corning Savings and Loan Association (Corning, AR) for $577,640.  Treasury paid $638,000.
    • Country Bank Shares, Inc. (Milford, NE) for $7,283,197.  Treasury paid $7,525,000.
    • FFW Corporation (Wabash, IN) for $6,943,418.  Treasury paid $7,289,000.
    • Hometown Bancshares, Inc. (Corbin, KY) for $1,886,605.  Treasury paid $1,900,000.
    • KS Bancorp, Inc. (Smithfield, NC) for $3,473,400.  Treasury paid $4 million.
    • Layton Park Financial Group, Inc. (West Allis, WI) for $2,500,305.  Treasury paid $3 million.
    • Parke Bancorp, Inc. (Sewell, NJ) for $11,712,864.  Treasury paid $16,288,000.
    • TriSummit Bank (Kingsport, TN) for $5,377,425.  Treasury paid $7,002,000.

Prices paid are here.  

  • The European Commission approved an amended restructuring of Dutch Bank ING.  ING had failed to pay remuneration for its state support and could not divest Westland Utrecht Bank as planned.  In its amended restructuring plan, ING committed to repay the outstanding state capital to the Dutch State by 2015.  The Commission agreed to prolong the deadline for divesting ING’s insurance business in Europe.  The modalities of the divestment of ING Insurance US have also been modified.  To compensate for these changes, the acquisition ban and the price leadership ban will be prolonged.  The creation of NN Bank, through the divestment of ING’s mortgage bank WUB together with its Dutch insurance business by 2015, will ensure competition is enhanced.  To address the reasons of ING’s failure to divest WUB within the initial schedule, ING also committed to a series of constraints aiming to ensure the commercial success of NN Bank.  The price leadership ban in The Netherlands is not extended as it is made redundant by these new constraints.  By contrast, the price leadership ban of ING Direct Europe is both prolonged and strengthened.
11.23.12
Regulatory Round-Up (11/23/12)
11.21.12
HAPPY THANKSGIVING
Time to give thanks.
11.20.12
The Fiscal Cliff’s Slippery Slope
In the November 19 Market Commentary David R. Kotok, chairman and chief investment officer of Cumberland Advisors wrote:
11.19.12
Dodd-Frank Act Rulemakings, Studies, and Reports Update
 Attached please find an updated Roadmap to the Dodd-Frank Act Rulemakings, Studies, and Reports.
11.19.12
Roadmap to Financial and Housing Market Stabilization Plans Update

This is the November 18, 2012 update to the “Roadmap to Financial and Housing Market Stabilization Plans” document:

  • FHFA released its 2012 Performance and Accountability Report.  It notes:
    • At the end of August 2012, the GSEs owned or guaranteed nearly $5.2 trillion of mortgages consisting of approximately $1.2 trillion in mortgages and MBS held in the GSEs’ portfolios and nearly $4.0 trillion in MBS held by outside investors.
    • FHFA is building a new secondary market infrastructure involving:
      • A common securitization platform to replace the GSEs’ proprietary systems, which FHFA describes as “aging, inflexible and in need of substantial improvement.”
      • A robust and standardized pooling and servicing agreement that not only creates more efficiencies and best practices for the GSEs, but also provides an option for other investors and participants to enter the secondary market by using a functional contractual framework that could address many of the shortcomings in today’s private-label structures.
      • Continually increasing guarantee fees in anticipation of a future market where credit risk is borne principally or exclusively by private capital.  These increases may also encourage private firms to increase their participation in the mortgage market.
      • More private risk-sharing.  FHFA is considering
a number of alternatives, including expanded use of mortgage insurance and security structures that allow for private sharing of risk.  FHFA and the GSEs need to make operational changes and to develop proper risk metrics and controls.
    • Since their conservatorships through August 2012, the GSEs have helped nearly 2.5 million borrowers avoid foreclosure.  FHFA has consolidated and aligned short sale programs and will have the GSEs speed short sale approvals.  HARP has helped more than 618,000 borrowers refinance.  FHFA and the GSEs will continue to improve existing programs for loan modifications, refinances, and other foreclosure avoidance tools.
  • Treasury announced that it began auctions of its preferred shares in fifteen institutions:
    • Alaska Pacific Bancshares, Inc. (Juneau, AK);
    • Bank of Commerce (Charlotte, NC);
    • Carolina Trust Bank (Lincolnton, NC);
    • CBB Bancorp (Cartersville, GA);
    • Clover Community Bankshares, Inc. (Clover, SC);
    • Community Bancshares of Mississippi, Inc. (Brandon, MS);
    • Community Business Bank (West Sacramento, CA);
    • Corning Savings and Loan Association (Corning, AR);
    • Country Bank Shares, Inc. (Milford, NE);
    • FFW Corporation (Wabash, IN);
    • Hometown Bancshares, Inc. (Corbin, KY);
    • KS Bancorp, Inc. (Smithfield, NC);
    • Layton Park Financial Group, Inc. (West Allis, WI);
    • Parke Bancorp, Inc. (Sewell, NJ); and
    • TriSummit Bank (Kingsport, TN).
    11.19.12
    Pension Benefit Guaranty Corporation Reports Record $34 Billion Deficit for FY201
     According to the Pension Benefit Guaranty Corporation’s 2012 Annual Report:
     
    11.19.12
    The Fiscal Cliff's Impact on the States
    11.19.12
    The Uncertainties Surrounding the Fiscal Cliff
     The clock is ticking: The longer it takes to deal with the fiscal cliff the bigger are the risks to markets and the recovery. 
    11.19.12
    The Administration's Opening Bid on Taxes: $1.6 Trillion
     In a November 16 blog post, economist Donald Marron, director of the Urban-Brookings Tax Policy Center, wrote: 
    11.19.12
    CBO: “Fiscal Cliff Could Trigger Recession”
    If Congress fails to take actions, the fiscal cliff would drive the U.S. economy into a recession next year and increase the unemployment rate to 9.1%,
     
    11.19.12
    Fiscal Cliff Timeline
     In the opening days of 2013, a series of dramatic policy changes will occur automatically unless Congress acts.
    11.16.12
    Regulatory Round-Up (11/16/12)
    11.16.12
    The Eurozone Is in Recession in 'All Senses of the Word'
     On FT Alphaville, Masa Serdarevic wrote:    As expected, the Eurozone economy shrunk in the third quarter. 
    11.15.12
    How the fiscal cliff will affect taxpayers.
    A raft of tax and spending chnages scheduled to take effect in January will sharply reduce the federal budget deficit but could also send the economy back into recession if they happen all at one.
    11.14.12
    Wells Fargo Monthly Economic Forecast
    “As we transition into next year, we’re looking for weaker growth—maybe 1% or so in the first quarter,” said Wells Fargo Global Economist Jay Bryson.
     
     
    11.09.12
    Regulatory Round-Up (11/9/12)
    11.08.12
    No Fiscal Honeymoon for President Obama, According to Fitch
    11.07.12
    The Era of Kakistocracy
    “We are now five years into a crisis that just doesn’t want to go away. …[P]olicy makers continue to tamper with interest rates, foreign exchange rates and asset prices in general. They continue to permit deposit-taking banks to operate like casinos. They issue new debt to pay for expenditures when we are already drowning in debt. They just don’t seem to get it.”
    11.06.12
    The Story on how Congress has grown more partisan.

     The story of how Congress has grown more partisan — in one amazing chart

    11.06.12
    Is a U.S. Recession Already in Progress?
    “ I continue to maintain the view that a U.S. recession is already in progress."  In the November 5th Weekly Market Comment, John Hussman.
    11.05.12
    Watch the Fed, Not Who Wins the Election
    While it does matter who becomes our next president, “ there’s no significant relationship between the president’s party affiliation and the returns to either equity or fixed-income securities,” according a new study, What to Expect When You’re Electing.
    11.03.12
    Regulatory Round-Up (11/02/12)
    11.02.12
    WSJ "Chinese Banks Brace for Bad Loans"
    as the world watches , or I am operating in a "China Bubble".
    11.02.12
    Sandy's cost to economy: Up to $50 billion
    11.01.12
    The Euro Is Heading for a Permanent State of Depression
    “A year ago, monetary union looked as if it was heading for certain death, with the European banking system in apparent meltdown and extreme divergence in monetary conditions across the single currency area."
    10.31.12
    What Will Sandy's Cost to Economy, Insurance Total?
    Hurricane Sandy’s damage is projected to result in $5 billion to $10 billion in insured losses and $10 billion to $20 billion in economic losses, according to Eqecat President Bill Keough.
    10.30.12
    Hurricane Sandy!
    Hurricane Sandy’s economic toll is poised to exceed $20 billion after the biggest Atlantic storm slammed into the Eastern U.S., damaging homes and offices and flooding subways in America’s most populated city.
    10.29.12
    The Complex Federal Reserve System

     From the folks at Mint.com and WallStats.com

    10.26.12
    Regulatory Round-Up (10/26/12)
    10.26.12
    It’s Time for a New Era of Trust in the Financial Services Industry
    PIMCO. Douglas Hodge
    October 2012
    10.25.12
    The Fiscal Cliff: An Unstoppable Force Is Going to Meet an Immovable Object.
    More than 80 CEOs of major U.S. corporations urge Congress to address the fiscal cliff before it’s too late. Wall Street Journal. 10.25.12.
    10.24.12
    2% to 3% GDP Growth the New Normal?
    Many aspects of our future society depend on how high the sustainable growth rate of real (inflation-adjusted) GDP turns out to be.
    10.23.12
    Memo to Central Banks: You’re Debasing More than Our Currency

    10.23.12
    Let the Market Heal Itself
    Confounded Interest
    Anthony B. Sanders – George Mason University
    10.22.12
    No Open- Ended Bailouts From Germans without Strict Conditionality
    “Last week’s 2-day EU summit had two results,” wrote John Hussman.
    10.22.12
    Unintended Consequences of Quantitative Easing
    ....the Fed’s quantitative easing has devastated households and  provides little, if any, prospects for stimulating the economy through the wealth effect. Van R. Hoisington and Lacy H. Hunt wrote:
    10.22.12
    Reality Check: Is the U.S. Housing Market Really Recovering?
    One of the more amusing and even troubling developments in recent weeks is the general consensus that the housing market is recovering,” wrote Chris Whalen in The Institutional Risk Analyst. “Whether you are a consumer, a media maven or merely a lowly investor, the common view now seems to be that housing is getting ready to bounce back to 2005 levels. Would that it was true.”
     
    10.22.12
    Chuck Schumer: Democrats have tax reform all wrong
    Sen. Chuck Schumer (D-N.Y.) is the Senate Democrats’ third-in-command, and widely acknowledged as the party’s top political tactician in the Senate.
    10.19.12
    Why the big banks are a mess.
    All of [the big banks] banks are still grappling with the costs of the bad lending during the boom years before the crisis. Washington Post Business
    10.19.12
    Regulatory Round-Up (10/19/12)
    10.18.12
    Jamie Dimon on the Line.
    Is Jamie Dimon a straight-shooting managerial genius, who made JPMorgan Chase the only “port in the storm” during the financial meltdown- Vanity Fair.
    10.17.12
    Back to Wartime Debt Levels
    Christine Lagarde, managing director  of the IMF.
    10.16.12
    Fears Over US Mortgages Dominate
    ...Dominance of the mortgage market by a few big banks is undermining monetary policy...
    10.15.12
    The Systemic Debt Problems Faced by a Number of California Cities
    “[The]cities in California have a systemic [debt] problem, wrote David R. Kotok, chairman and chief investment officer for Cumberland Advisors. “This is not a ‘one-off.
    10.12.12
    Regulatory Round-Up (10/12/12)
    10.12.12
    Top German Economists Say Greece Is Lost
    Chancellor Angela Merkel had been hoping that her trip to Athens earlier this week would help demonstrate Germany's solidarity with Greece as it struggles to overcome its debt crisis
    10.11.12
    The Dodd-Frank Act versus the Rule of Law
    In response to the 2008 financial collapse, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act. Dodd-Frank increased regulation of banks, stockbrokers, insurers and other financial institutions that are “too big — or interconnected — to fail” and that could require a government bailout to prevent a banking system collapse.
    10.10.12
    Tail Risk and the Uncertainty Shock of the Fiscal Cliff
    We do not expect a sustained pickup in growth. ..Goldman Sachs.
    10.08.12
    We Must Cancel Our Economic Malaise By Robert Samuelson
    What we are witnessing in Europe - and what may loom for the United States - is the exhaustion of the modern social order.
    10.06.12
    Regulatory Round-Up (10/06/12)
     
      10.05.12
      CoreLogic® Reports 57,000 Completed Foreclosures in August
      10.04.12
      Drop in Unemployment Masks the Labor Market Malaise
      ...limited progress has been made in the labor market during the recovery .....
      10.03.12
      Home prices rising fast, but gains could slow. USA Today.
      "Inventories drive prices."
      10.02.12
      How Long Can U.S. Interest Rates Remain Low?
      10.02.12
      U.S. economy “will almost certainly go into a recession” in the first half of 2013.
      10.02.12
      Stormy Outlook with Slowing Global Economic Growth.
      The world’s economy faces five near-term headwinds.

      TheStreet.com
      Doug Kass

      10.01.12
      “Beautiful Deleveraging” and Moral Hazard
      "The Federal Reserve now holds $2 trillion more on its balance sheet than it did three years ago."
      10.01.12
      The EU’s Bond Buying Pitfalls

      “Actually, the more I think about the [ECB’s] new bond buying programme (OMT) and discuss it with clients, the less I like it,” wrote Morgan Stanley economist Joachim Fels.  “Why?”
       

      10.01.12
      Rising Home Prices Are Unlikely to Boost Economic Growth
                       
      “Could wealth effects support a struggling recovery?”
      10.01.12
      Regulatory Round-Up (9/28/12)
      10.01.12
      Housing Alert: Short Sales May Be in Big Trouble
      By: Diana Olick
      CNBC Real Estate Reporter
      09.28.12
      The IMF Principles on Fair Debt Restructuring
      09.27.12
      Fed Virtually Funding the Entire US Deficit: Lindsey
      09.26.12
      Economic Outlook and Monetary Policy.


       

      09.25.12
      Foreclosure Stuffing.


      ZeroHedge.com

      Back in November 2010, the robosigning scandal hit in which it was made clear that when it comes to keeping track of mortgage titles, nobody really knows what belongs to whom, except maybe for Linda Green.

      09.25.12
      July Case Shiller Beats And Misses At The Same Time
      Some time ago, before China's hard landing was virtually assured (see Iron Ore prices), there was a period when its data was a veritable cornucopia of Schrodingerian ambivalence, with various economic indicators representing either growth or contraction at the same time.


      09.24.12
      Regulatory Expansion Versus Economic Expansion in Two Recoveries...a blog by John B. Taylor

      Much can be learned by comparing the very weak recovery from the 2007-2009 recession with the very strong recovery from the 1981-82 recession. Both recessions were severe, and U.S. history shows that severe recessions tend to be followed by fast recoveries, even when the severe recession is due to a financial crisis. But growth has averaged only 2.2 percent in this recovery while it averaged 5.7 percent in the 1980s recovery as shown in this chart.

      09.24.12
      The Longest Yard
      • As the global slowdown progresses, we can expect central banks to deploy more policy tools – without limits – to stem the pace of deleveraging.
      • In Europe, quantitative easing using ESM bonds could prove to be another bridge that buys politicians more time, but does not solve the root problem.
      • We expect real economic growth in China to be muted. While some stabilization is possible later this year, it is hard to foresee a sustained recovery.
      09.24.12
      Regulatory Round-Up (9/21/12)
      09.24.12
      Down with the American Dream.
      It's time to retire the American Dream -- or at least give it a long vacation. We ought to drop it from our national conversation.  Real Clear Politics. Robert Samuelson. 9.24.2012
      09.21.12
      High Speed Trading at Exchanges.

      Finally Congress is looking at high speed trading and what it is doing to the marketplace. Like most things, this is a messy issue. It’s not necessarily electronic trading that is causing the problems. Mostly the roots of the problems are in the way the markets are regulated by the SEC, and in the way the exchanges administer them. 

      Points and Figures by Jeff Carter.

      09.20.12
      What Mitt Romney Also Said: A Glimpse Of The Endgame?
      It appears that Paul Krugman has promptly taken offense to the realization that Bernanke is "monetizing 75% of all debt." Zero Hedge. 9.19.2012
      09.19.12
      The Unintended Consequences of The Fed’s QE3
      The intended consequences of QE-MBS is to move mortgage rates lower in the hopes of stimulating mortgage refinancings and home purchases. Given tight credit standards from Fannie Mae and Freddie Mac (and the lack of bank lending for their portfolios), it is doubtful that mortgage purchase applications will rise significantly.
      09.19.12
      America's Vanishing Economic Freedom.
      We are on a slippery slope...Michael Tanner at the National Review Online.
      09.19.12
      Housing Expert Robert Shiller Isn’t Sure Housing Is Back
      When it comes to the housing market, there’s no one more authoritative than Robert Shiller, the Yale economist and co-namesake of the Case-Shiller index of home prices. In a 2005 article for Barron’s, Shiller described the housing market as being in “the throes of a bubble of unprecedented proportions that probably will end ugly.” Now, with many declaring that the housing market is starting to come back, Shiller is more cautious
      09.18.12
      QE3 “Magic”
      Since QE3 was announced, the spread between the 30 year mortgages and 10 year Treasuries has collapsed “from an already very tight (in anticipation of QE3) level to simply incredible levels.,” wrote by Tyler Durden on Zero Hedge.com (9:49. Am, September 17).
      09.18.12
      Bernanke on the Brink
      We are reaching — or may already have passed — the practical limits of “economic stimulus.”
      09.17.12
      The San Fran Fed Asks What People Think Of QE3: The People Respond
      "What effect do you think QE3 will have on the U.S. economy?"
      09.16.12
      Regualtory Round-Up (9/14/12)
      09.14.12
      Three Things Fed Did with QE3 That It’s Never Done Before
      The Federal Reserve took a really aggressive stance Thursday when it announced its new round of quantitative easing.
      09.13.12
      Middle Class falls to an on-line low.
      The vise on the middle class tightened last year, driving down its share of the income pie as the number of Americans in poverty leveled off and the most affluent households saw their portion grow, new census data released Wednesday showed.
      09.12.12
      Moody's Warns of U.S. Credit Rating Cut if Debt Problems Continue
      WASHINGTON -- Moody's Investor Services warned Tuesday that it likely would downgrade the U.S. AAA credit rating if government officials don't deal with the nation's debt problems. The credit rating firm said negotiations between Congress and the White House on the nation's 2013 budget, and whether they will reduce the high ratio of debt to gross domestic product, will be key to maintaining its top credit rating.
      09.11.12
      Is US Economic Growth Over?
      Faltering innovation confronts the six headwinds of demographic trends, education challenges, rising inequality, globalization and ICT, energy and environment, household and government debt.
      09.10.12
      Housing on Mend, but Full Recovery Is Far Off
      There are more buyers chasing fewer homes, and—critically—fewer distressed homes, such as foreclosures. Low inventory is one sign that housing markets may have reached a turning point because many want to buy at the bottom but few want to sell.
      09.08.12
      Regulatory Round-Up (9/7/12)
      09.07.12
      Markets No Longer Create Real Value
      The ECB has shown in practice that it has reversed the political economy with the market economy. No longer are markets allowed to set out monetary allocations, they can only operate so long as they achieve the targets set forth by the central planners. Investors buy bonds not because of credit and payment characteristics, but at what price they can be sold back to a central bank. To make the right number of pencils, however, requires real knowledge of value and risk, and even the occasional outbreak of brutal market discipline.
      09.06.12
      Don't Make Banks Too Small to Succeed
      In a global economy, there is a need for financial institutions with scale and global capacity. Large banks offer their customers products, services and infrastructure that smaller banks cannot match, from multicity branch networks to global coverage that lowers costs.
      09.05.12
      A Journey into the Deep Unknown—as Money Printing Hits All Time Highs
      “To help finance [the governments’] deficits many countries have embarked on money printing. This has clearly been seen numerous times before through economic history and in some individual cases has been far more aggressive than any country is currently embarking on (e.g. The Weimar Republic of the 1920s.)
      09.05.12
      Mission Impossible
      “Lately it seems the industrialized world’s central bankers are like the actors in the movie Mission Impossible. Officials are being unfairly asked to do the miraculous in covering up for governments’ lack of fiscal and regulatory common sense. Central bank balance sheets, quantitative easing, and zero interest rates have become the new policy tools of choice to try to fix the global economy. The mission may be impossible.”
      09.05.12
      Accommodation at the Zero Lower Bound
      After Federal Reserve Chairman Ben Bernanke's speech at Jackson Hole, Columbia University economist Michael Woodford delivered a white paper entitled Accommodation at the Zero Lower Bound, providing an exhaustive overview of which monetary stimulus techniques really work when the Fed's official interest rates have hit 0%.
      09.05.12
      Federal Reserve Poised to Implement QE3
      In this year’s Jackson Hole address, “Monetary Policy since the Onset of the Crisis,” Federal Reserve Chairman Ben Bernanke signaled that additional policy support from the central bank is on the table, but did not commit the FOMC to any particular action on any particular date.
      09.05.12
      Banks Face Suits as States Weigh Libor Losses
      “We think this [Libor litigation] could be as big as the mortgage crisis settlement, that this could be a really high impact situation and that we should be aggressive on this,” said Janet Cowell, North Carolina’s State Treasurer.
      09.04.12
      Basel III: A Regulatory Rubicon Has Been Crossed
      “To ask today’s regulators to save us from tomorrow’s crisis using yesterday’s toolbox is to ask a border collie to catch a Frisbee by first applying Newton’s Law of Gravity.”
      09.04.12
      CFPB Mortgage Reform Applies Wrong Fix to the Right Problem, Bankers Say.
      Sixteen years after Congress ordered other regulators to do it, the Consumer Financial Protection Bureau is poised to streamline disclosures of mortgage costs and require lenders to include all fees in the financing rate.
      09.01.12
      Regulatory Round-Up (8/31/12)
      08.31.12
      Getting Less Bang for Fed Bucks
      Even if Ben Bernanke hints Friday that the Federal Reserve may step yet again on the monetary-policy accelerator, there is no guarantee that consumers and businesses will rev up their economic engines.
      08.30.12
      The financial system rests on quicksand.
      Reform of money market funds should be an open-and-shut case.
      08.29.12
      The Future of the Euro, According to ECB President Mario Draghi.
      Across Europe, a fundamental debate is taking place about the future of the euro.
      08.29.12
      SEC filing in ResCap case indicates broad sweep in MBS probes
      Alison Frankel's ON THE CASE...
      08.28.12
      ECB Urging Weaker Basel Liquidity Rule on Crisis Concerns
      The European Central Bank is pushing global banking regulators to relax a draft liquidity rule so that lenders can use some asset-backed securities and loans to businesses in a buffer they must hold against a possible credit squeeze, according to three people familiar with the talks.
      08.27.12
      Has ‘Europe’ Failed?
      LAST week, European leaders met in Berlin amid new signs of an impending recession and an emerging consensus that Greece could leave the euro zone within a year — a move that would have dire consequences for the currency’s future.
      08.24.12
      In Effort to Curb Money Market Funds, a Plan B Is Considered
      After the failure of one effort to overhaul a major part of the mutual fund industry, top government officials worked on Thursday to find alternative ways to rein in what they see as a systemic threat to the financial system.
      08.23.12
      Quantitative Easing: The Ultimate Faustian Bargain
      In Goethe's 1831 drama Faust, the devil persuades a bankrupt emperor to print and spend vast quantities of paper money as a short-term fix for his country's fiscal problems. As a consequence, the empire ultimately unravels and descends into chaos. Today, governments that have relied upon quantitative easing (QE) instead of undertaking necessary structural reforms have arguably entered into the grandest Faustian bargain in financial history.
      08.22.12
      Student Loan Debt Growing at Compound Annual Rate of 13.9%
      8.8% of student loans are 120+ days or more delinquent, while 12.9% of younger workers, ages 20-24, are unemployed.
      08.22.12
      FHFA Announces New Standard Short Sale Guidelines for Fannie Mae and Freddie Mac
      The streamlined short sale program will provide expedited relief to underwater borrowers, effective November 1.
      08.21.12
      Massive Re-Engineering of Mortgage Finance System Underway
      Collectively, the federal regulators have nine pending proposed rules that may keep the mortgage industry in a perpetual state of turmoil.
      08.21.12
      Against big banks, state regulators flex their muscles.
      When a little-known New York regulator this month threatened to revoke the charter of a major international bank for allegedly laundering money for Iran, the shock waves were felt in Washington as much as on Wall Street.
      08.20.12
      Consumer Financial Protection Bureau Trots Out Mortgage Servicer Rules To Curb Abuses.
      NEW YORK -- In the latest effort by a federal regulator to force the mortgage industry to stop treating desperate homeowners like vagrants looking for a handout, the Consumer Financial Protection Bureau on Friday proposed new standards meant to force loan servicers to mend their ways. "The inadequate performance of many mortgage servicers has helped widen the misery for many Americans," said Richard Cordray, director of the consumer agency, in remarks to reporters announcing the proposed rules. The rules will take effect next year after a public comment period. "Right now, people have too little protection under federal law if their mortgage servicer surprises them with costly fees or gives them the runaround."
      08.20.12
      FHFA Seeks Comment on Use of Eminent Domain to Modify Underwater Mortgages
      08.20.12
      Financial Markets, Politics and the New Reality By George Friedman - August 20, 2012
      Louis M. Bacon is the head of Moore Capital Management, one of the largest and most influential hedge funds in the world. Last week, he announced that he was returning one quarter of his largest fund, about $2 billion, to his investors. The reason he gave to The New York Times was that he had found it difficult to invest given the impossibility of predicting the European situation.
      08.17.12
      Standard Chartered Fought the Lawsky and the Lawsky Won
      Benjamin Lawsky, New York’s top state banking regulator, shook up the financial world by squeezing a record settlement out of Standard Chartered Plc (STAN) over allegations that it laundered money for Iran. Let’s get this much straight about him, too: He’s no rogue cop. He’s a loyal soldier
      08.16.12
      CFPB recruits investigators to examine U.S. financial institutions. Washington Times by Daniel Purt
      The Consumer Financial Protection Bureau is seeking to recruit investigators to possibly pursue cases against America’s financial institutions.
      08.16.12
      Wonkbook: For 2 million illegal immigrants,change has come.
      Not too long ago, I sat down with a senior member of President Obama’s political team. Talk turned, as it often does, to the election, and the official said something that surprised me: If the president wins, this official thought that we would look back after the election and pinpoint the day the administration announced their new policy on deportations as the day the election was won. This week, that immigration policy, in which undocumented immigrants who meet certain requirements can apply for relief from the fear of deportation, becomes reality.
      08.15.12
      US Rating Update: Rising Risk From US Fiscal Situation?
      WASHINGTON (MNI) - While the Big Three rating agencies have recently affirmed their respective ratings for the U.S., their language has been reflecting a slowly rising sense of urgency and potential risk posed by the country's fiscal situation to its rating. Because the rating outlook remains negative, the risk of a downgrade remains real. And because the perspectives for the fiscal trend and the fiscal debate are not improving, the risk has no reason to recede. The trend in economic activity is not helping brighten the rating outlook either. "The U.S. fiscal profile has continued to gradually deteriorate since last summer, at a rate in-between our base-case scenario and our downside scenario of August 2011, keeping the U.S. at the high end of our indebtedness range," Standard & Poor's lead analyst for the United States Nikola Swann told MNI Monday.
      08.14.12
      Investors Prepare for Euro Collapse
      Banks, companies and investors are preparing themselves for a collapse of the euro. Cross-border bank lending is falling, asset managers are shunning Europe and money is flowing into German real estate and bonds. The euro remains stable against the dollar because America has debt problems too. But unlike the euro, the dollar's structure isn't in doubt.
      08.13.12
      High Frequency Trading Accounted for 70% of All Stock Trading Volume in 2011
      Average HFT trade holding period was 22 seconds in 2011
      08.13.12
      The Latest HFT Train Wreck—Knight Capital
      In 30 minutes, Knight Capital Group lost $440 million due to an HFT algorithm bug, bringing the firm to the brink of bankruptcy. Where are the SEC’s “circuit breakers”?
      08.13.12
      Loopholes in Marketplace Trading Creates Systemic Risk
      Inadequate regulation and enforcement cannot continue to occur if the U.S. markets are going to be protected from participants operating in ‘real-time’ to manipulate the financial system.
      08.13.12
      The Public’s Trust in the Stock Market is Waning
      According to the Chicago/Kellogg School Financial Trust Index, only 15% of respondents trust the stock markets.
      08.13.12
      Out-of-control high frequency trading
      "The stock market today is a war zone, where algobots fight each other over pennies, millions of times a second. The stock market today is a war zone, where algobots fight each other over pennies, millions of times a second. ...Inevitably, significant losses will end up being borne by investors with no direct connection to the HFT world, which is so complex that its potential systemic repercussions are literally unknowable."
      08.13.12
      The Outspoken Defender of the Truth: JPMorgan Chase CEO Jamie Dimon
      "Everyone is afraid of retaliation and retribution. We recently had an event with a hundred small bankers here, and 85% of them said they can’t challenge the regulation because of the potential retribution. ...This is not the Soviet Union. This is the United States of America."
      08.11.12
      Republicans Rally around Ryan Choice -
      Republicans on Saturday rallied around Wisconsin Rep. Paul Ryan as Mitt Romney’s pick for vice president, saying the House budget guru brings strong conservative credentials to the GOP ticket and reinforces the campaign’s message that big government is ruining America.
      08.10.12
      EXCLUSIVE-U.S.banks told to make plans for preventing collapse..Reuters.
      * Regulators asked five big banks to make "recovery plans". * Banks include BofA, JPMorgan and Goldman Sachs * Plans outline asset, business sales in times of distress * Plans differ from living wills, which plan for failure
      08.10.12
      Financial Institutions Must Expect the Unexpected.
      The sharp rise in sovereign yields in Southern Europe and its impact on Euro Area banks arguably represents one of the most important risk factors facing global financial markets today.
      08.09.12
      The Shadow
      August 2012 U.S. Economic & Housing Market Outlook... The ominously termed “shadow inventory” is casting a pall of uncertainty over recent signs that home values have bottomed out. What’s behind it, and is it as threatening as it sounds?
      08.09.12
      Less Strength but More Resilience
      Wells Fargo expect real GDP to rise at a 1.3 percent annual rate duringthe current quarter, with nearly one-third of the increase coming from inventory building. Trade will remain a drag on output, as imports modestly outpace exports. Both will slow,however, reflecting weakening global growth. Cutbacks in federal, state and local government will also subtract from growth in the current quarter and government is expected to remain a drag on overall growth throughout the forecast period, with federal spending cuts doing the most damage.
      08.06.12
      As Libor Fault-Finding Grows, It Is Now Every Bank for Itself
      Major banks, which often band together when facing government scrutiny, are now turning on one another as an international investigation into the manipulation of interest rates gains momentum. With billions of dollars and their reputations on the line, financial institutions have been spreading the blame in recent meetings with authorities, according to government and bank officials with knowledge of the matter. While acknowledging their own wrongdoing, institutions are pointing out actions at other banks that they believe are worse - and in some cases, extend to top executives.
      08.05.12
      Mario Draghi Cannot Save the Euro
      European Central Bank President Mario Draghi has been making pronouncements that many have interpreted as positive for the future of the euro. I think his words mean things are going to get ugly.
      08.03.12
      Stop Bashing DeMarco for Mortgage Aid Ruling
      The Obama administration was shocked this week when a federal regulator did his job. It began when Edward DeMarco, the acting director of the Federal Housing Finance Agency, said Fannie Mae and Freddie Mac couldn’t extend mortgage reductions to troubled homeowners who owe more than their property is worth. The administration had been pressuring DeMarco, whose agency oversees the taxpayer- supported mortgage giants while they are in conservatorship, to permit them to eliminate a portion of the loan amount owed to the lender or investor.
      08.03.12
      Loss Swamps Trading Firm Knight Capital Searches for Partner as Tab for Computer Glitch Hits $440 Million
      Knight Capital Group Inc. KCG +28.22% scrambled Thursday to shore itself up and reassure panicked customers after disclosing a stunning $440 million loss from a computer-trading glitch.
      08.03.12
      The $5 Trillion Question: What Should We Do with Fannie Mae and Freddie Mac?
      Center for American Progress provides details of 21 GSE reform plans
      08.02.12
      $500 billion reduction in U.S. government spending required to reach sustainable debt-to-GDP ratio
      [T]he average borrowing cost for the U.S. government is about 1% and nominal GDP has grown 4% over the past year. If borrowing costs and nominal GDP growth remain at these rates indefinitely, then ...the federal government would be able to incur a primary deficit of 3% of GDP and still stabilize debt at the current ratio around 100% of GDP.
      08.02.12
      Eminent domain plan gaining support
      Lt. Gov. Gavin Newsom, left, introduces Gov. Jerry Brown who gave the annual State of the State address before a joint session of the Legislature at the Capitol in Sacramento, Calif., Wednesday, Jan. 18, 2012. Brown urged lawmakers to help make California great again by taking on major initiatives and funding schools.
      08.02.12
      Where Are the Move-Up Home Buyers?
      Housing has never been more affordable, and yet home ownership is still falling and more Americans are renting. The supply of homes for sale is down 24 percent from a year ago, according to the National Association of Realtors, but that still doesn’t explain why so few buyers are jumping in. The answer lies in the immobile move-up buyer.
      08.02.12
      RBS: Underwater mortgages hold steady without eminent domain
      A higher percentage of underwater borrowers are still making payments, specifically in areas considering eminent domain to seize the loans and write down principal, according to research from the Royal Bank of Scotland ($6.67 0%).
      08.02.12
      Oregon Sen. Merkley Announces Plan to Assist Underwater Homeowners
      Oregon Sen. Jeff Merkley has offered a new plan to tackle underwater mortgages. In a white paper containing the proposal, called “The 4% Mortgage: Rebuilding American Homeownership,” Sen. Merkley lays out a plan to allow underwater homeowners who are current on their mortgages to refinance to a lower interest rate.
      08.01.12
      It's Time to Move on the FHFA: More DeMarco
      OK, I’ve slogged through the technical appendix (pdf) from the FHFA on the proposed debt relief, and while it’s eye-glazing reading, it makes DeMarco’s stonewalling even more outrageous.
      08.01.12
      Fannie Mae, Freddie Mac won’t be allowed to reduce loan balances for troubled borrowers
      The federal regulator for government-backed mortgage giants Fannie Mae and Freddie Mac said Tuesday that he will not allow the firms to reduce loan balances of struggling homeowners, frustrating the Obama administration as it looks for ways to boost a floundering economy. Edward J. DeMarco, acting director of the Federal Housing Finance Agency (FHFA), said the agency’s analysis showed no sure-fire financial benefit to letting some mortgage holders reduce their loan amounts. He also warned that such a move could cause some borrowers to default intentionally in hopes of getting taxpayer aid.
      08.01.12
      A Model Bureaucrat: FHFA's Ed DeMarco has the American taxpayer's back.
      It's not every day that a federal regulator worries about American taxpayers, so let's hear it for the Federal Housing Finance Agency's Edward DeMarco. On Tuesday the man who oversees Fannie Mae and Freddie Mac again refused to let the toxic twins forgive more housing debt.
      08.01.12
      Geithner Vows to Press for Writedowns for Underwater Home Loans
      U.S. Treasury Secretary Timothy F. Geithner, twice rebuffed, is vowing to try a third time to persuade the Federal Housing Finance Agency to allow principal forgiveness on mortgages backed by Fannie Mae (FNMA) (FNMA) and Freddie Mac. (FMCC) (FMCC)
      08.01.12
      Why “Firing Ed DeMarco” is No Solution to FHFA Refusal to Engage in Principal Modifications
      Today, Acting FHFA Director Ed DeMarco wrote to Congress, after due consideration, reaffirming his position that he will not permit Fannie and Freddie to lower principal balances of mortgages of borrowers that are delinquent. This is despite the fact that the top analyst in this space, Laurie Goodman, has determined that principal modifications are the most effective form of mortgage modification, resulting in much lower refault rates than interest rate mods or capitalization mods. And that makes sense. Why should a borrower struggle to hang on to a home when even if they make all the payments, when they sell they they are stuck with a big tax bill? And as we’ve stressed, private label investors are overwhelmingly in favor of deep principal mods for viable borrowers, and that’s because foreclosure is costly and leaves them worse off.
      08.01.12
      Heat Rises on Central Banks: Fed, ECB Officials Convene This Week as Markets Look for New Growth Measures
      The U.S. Federal Reserve and European Central Bank face critical tests this week amid heightened expectations that they are moving toward new actions to tackle fragility in the global economy. Markets have risen on hopes that two of the world's most influential central banks will make additional moves to spur growth if their economies don't perk up—if not this week, then in the weeks ahead.
      07.31.12
      Ten years after Sarbox, time for an audit of the auditors
      High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email to buy additional rights. http://www.ft.com/cms/s/0/fd8b1a10-d7e1-11e1-9980-00144feabdc0.html#ixzz22D2jVSD1 Today is the 10th anniversary of the Sarbanes-Oxley Act, which was enacted by Congress “to enhance corporate responsibility, enhance financial disclosures and combat corporate and accounting fraud”. It has failed. Most importantly, Sarbox has not restored investor confidence in audit companies after Arthur Andersen’s failure to mitigate fraud at Enron.
      07.30.12
      Scandals May Cost Banks Their Clout
      fter the financial crisis, nothing was more surprising than the speed with which the banks regained their self-confidence and their influence, not to mention their haughtiness. “They feel more powerful to me than they did before the crisis, when they were healthy,” one regulator told me recently. That sense of power may have peaked this spring, before JPMorgan Chase disclosed its $2 billion — now $5.8 billion and counting — “hedging” loss and before the public firestorm erupted, largely in Britain, over the Libor scandal. In trying to understand how it is that an industry whose excesses nearly brought down the world economy could recover so quickly, it may be helpful to remember the answer attributed — probably erroneously — to Willie Sutton, the Depression-era criminal, when asked why he robbed banks: “That’s where the money is.”
      07.27.12
      Barclays’ Profit Falls As New Regulatory Problems Emerge
      LONDON — The problems continue to mount at Barclays, as the British bank disclosed that it was facing a number of lawsuits related to the rate-rigging scandal and that regulators were investigating the company’s financial director on a different matter.
      07.26.12
      Facing Congress, Geithner Grilled on Rate-Rigging
      Timothy F. Geithner was questioned sharply on Wednesday about the rate-rigging scandal that has consumed the banking industry, as lawmakers at a House hearing asked why he had failed to thwart wrongdoing during the financial crisis. Republicans took aim at Mr. Geithner for, in their view, going easy on Wall Street despite knowing that some banks had been trying to manipulate a key interest rate. When he ran the Federal Reserve Bank of New York in 2008, Mr. Geithner advocated broad reforms to the rate-setting process rather than curbing the bad behavior at specific banks.
      07.25.12
      Wall Street Legend Sandy Weill: Break Up the Big Banks
      Former Citigroup Chairman & CEO Sanford I. Weill, the man who invented the financial supermarket, called for the breakup of big banks in an interview on CNBC Wednesday. “What we should probably do is go and split up investment banking from banking, have banks be deposit takers, have banks make commercial loans and real estate loans, have banks do something that’s not going to risk the taxpayer dollars, that’s not too big to fail,” Weill told CNBC’s “Squawk Box.”
      07.24.12
      Eurozone Countries Hit Back at Moody's
      Leaders of the eurozone’s strongest economies have hit back at Moody’s decision to lower its opinion of their creditworthiness, as fresh data suggested the region has sunk further into recession.
      07.23.12
      U.S. Stocks Join Global Selloff
      NEW YORK—U.S. stocks collapsed amid a global selloff, and the yield on 10-year Treasurys hit all-time lows, as fears intensified that Spain could need a bailout and aid for Greece might dry up. Stocks dropped as 10-year bond yields sank to new lows and fears intensified that Spain could need a full-fledged bailout and aid for Greece might dry up. Steven Russolillo reports on Markets Hub. Photo: Bloomberg. "The markets are realizing that it has been a fool's paradise lately," said Uri Landesman, president of Platinum Partners, a New York-based alternative asset management firm that oversees $1.1 billion. "There's really bad news out there."
      07.20.12
      Two Years of Dodd-Frank
      On July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act. A graphic asssessment of this act and its implementation by DavisPolk.
      07.20.12
      White House Backs Bankruptcy Option for Some Student Debt
      The Obama administration urged Congress to make it easier for people to discharge a portion of certain student debt by filing for bankruptcy protection. The recommendation, in a report by the Education Department and the Consumer Financial Protection Bureau, wouldn't affect the vast majority of student debt, which is issued by the federal government. It would apply only to the roughly $150 billion, or 15% of total outstanding student debt, issued by private lenders such as SLM Corp.'s Sallie Mae and Wells Fargo & Co.
      07.19.12
      Despite Stronger Financial System, Report Cites Threats to U.S. Market Stability
      WASHINGTON — The biggest threats to American financial markets’ stability include uncertainty about the euro zone nations, the “fiscal cliff” that the United States faces at year-end, and continued weakness in housing, a panel of federal regulators said Wednesday. The Financial Stability Oversight Council — created as part of the Dodd-Frank regulatory act and made up of regulatory chiefs from the Treasury Department, the Federal Reserve, the Securities and Exchange Commission and other agencies — included the assessment in its annual report to Congress.
      07.18.12
      US States Warned to Tackle 'Fiscal Threats'
      US state governments are in desperate need of reform to solve structural challenges that extend well beyond the cyclical woes of the financial crisis and the recession, including $4tn in unfunded pension and healthcare liabilities, according to a new report.
      07.18.12
      HSBC's Compliance Chief to Step Down
      WASHINGTON—The top executive in charge of HSBC Holdings PLC's anti-money-laundering programs told lawmakers he is stepping down in the wake of a Senate investigation into risky practices at the global banking giant. The Senate Permanent Subcommittee on Investigation on Tuesday aired findings of a yearlong investigation that alleged HSBC's U.S. bank became a conduit for money-launderers and potential terrorist financiers. A report released ahead of the hearing also found "systemic failures" at its main U.S. government regulator, the Treasury Department's Office of the Comptroller of the Currency.
      07.17.12
      Goldman Sachs suffers trading slump
      Goldman Sachs managed to beat much-diminished expectations when it reported an 11 per cent fall in second-quarter earnings following a slump in trading.
      07.16.12
      J.P. Morgan Restates First-Quarter Results
      NEW YORK—J.P. Morgan Chase JPM +5.63% & Co. cut its previously reported first-quarter earnings by $459 million, or 8.5%, after revising valuations of some positions in the Chief Investment Office's synthetic credit portfolio.
      07.13.12
      JPMorgan loss grew to $4.4B, more than double 1st estimate
      NEW YORK — JPMorgan Chase said Friday that a bad trade had cost the bank $5.8 billion this year, almost triple its original estimate, and raised the prospect that traders had improperly tried to conceal the blunder.
      07.13.12
      Seized by the Wrong Strategy
      Using eminent domain to fix bad mortgages would cause more problems than it would solve. What could go wrong? Lots. First, MRP’s eminent-domain plan relies on a top-down assessment of how much a house is worth, not on market signals…
      07.12.12
      Euro Slumps to Two-Year Low
      The euro fell below $1.22 for the first time in two years during European trading hours Thursday, while the yen was broadly stronger after the Bank of Japan held off from expanding its asset-purchase program.
      07.11.12
      Spanish imposes another round of austerity, aiming to shave $79 bln off budgets
      MADRID — Spain’s government imposed further austerity measures on the country Wednesday as it unveiled sales tax hikes and spending cuts aimed at shaving €65 billion ($79.85 billion) off the state budget over the next two and a half years.
      07.11.12
      Applications for U.S. home mortgages fell last week...
      www.CNBC.com
      07.11.12
      Fitch Ratings: Fiscal Indecision Threatens US ‘AAA’
      Under current law, tax increases and spending cuts equivalent to about 5% of GDP will take effect in 2013 – if permanent, such a “fiscal cliff” could derail the US economic recovery. The expiry of the Bush tax cuts and payroll taxes would increase revenues by around 2.5% of GDP while the sequester under the Budget Control Act (BCA 2011) is equivalent to 0.5% of GDP.
      07.10.12
      Egyptian Parliamentary Deputies Defy Court and Military
      CAIRO — In a raw contest between Egypt’s competing centers of power, legislators on Tuesday defied the country’s highest court and its most senior generals by holding a brief session of the dissolved Parliament, heeding an order by President Mohamed Morsi in the face of opposition from judges and the military.
      07.10.12
      Man Who Knew Too Much About Ratings Says They Aren’t Meaningful
      “Ratings are not God’s holy work,” said David Jacob, the former head of structured finance at Standard & Poor’s, who was fired from S&P in December.
      07.06.12
      Ratings Cut for Giant Banks-Wall Street Journal
      Moody's Downgrades Hit Five of Six Largest U.S. Banks, Add to Market Jitters. Moody's Investors Service dealt a fresh blow to the financial sector, downgrading more than a dozen global banks to reflect declining profitability in an industry being rocked by soft economic growth, tougher regulations and nervous investors. Moody's downgraded more than a dozen global banks to reflect the sector's declining profitability. But European bank struck out at the rating agency saying it was backward looking. Max Colchester reports.
      06.27.12
      Barclays Pays $450m to End Libor Probe
      Barclays has been fined more than $450m by US and UK authorities for misconduct and attempted manipulation of the London interbank offered rate, which serves as a benchmark for $360tn in contracts worldwide.
      06.25.12
      Market Gloom Prevails at Start of 'Decisive Week for Europe'
      Market gloom prevailed early Monday at the start of a crucial week for the euro, as Spain made a formal application for billions in aid for its sickly banks and European leaders prepare for talks over the creation of a European banking union to shore up the currency.
      06.24.12
      Texas bank challenges Dodd-Frank Act in court
      A Texas community bank and two advocacy groups are filing suit in U.S. District Court to challenge the constitutionality of the Dodd-Frank financial reform law. In particular, the suit will contend that the Consumer Financial Protection Bureau (CFPB), created by the law, lacks sufficient checks and balances and, in the words of the CEO of State National Bank, is "simply unconstitutional."
      06.21.12
      Supreme Court May Reveal Healthcare Ruling Thursday
      Television cameras will surround the Supreme Court on Thursday morning, as they did Monday, anticipating something that may, again, not happen.
      06.20.12
      Issa Plans to Move Forward With Holder Contempt Vote
      House Republicans plan to press on with consideration Wednesday by the Oversight and Government Reform Committee of a vote to hold Attorney General Eric Holder in contempt of Congress regarding a stand-off over documents tied to the botched Fast and Furious" sting operation.
      06.18.12
      Mitt Romney rallies with Gov. Scott Walker, Rep. Paul Ryan in Wisconsin
      JANESVILLE, Wis. – Visiting Wisconsin for the first time since Gov. Scott Walker survived a hotly-contested recall election, Mitt Romney discovered a fiery crowd of energized Republicans here Monday and declared that he would carry the Midwestern battleground that once was thought to be beyond his reach.
      06.18.12
      After Chorus of Protest, New Tune on Deportations
      President Obama decided last week on a major policy shift to stop deportations of young illegal immigrants after administration officials saw that he was losing the initiative to Republicans on an issue he had long championed and that he was alienating the Latino voters who may be pivotal to his re-election bid.
      06.10.12
      What the Wisconsin Recall means...Peggy Noonan in WSJ.
      "President Obama's problem now isn't what Wisconsin did, it's how he looks each day—careening around, always in flight, a superfluous figure. No one even looks to him for leadership now. He doesn't go to Wisconsin, where the fight is. He goes to Sarah Jessica Parker's place, where the money is". There is, now, a house-of-cards feel about this administration.
      05.20.12
      Speaker Alert - John Boehner
      Following is the full text, as prepared for delivery, of House Speaker John Boehner’s (R-OH) address to the Peter G. Peterson Foundation’s 2012 Fiscal Summit on efforts to put our nation back on a path to prosperity and economic growth by cutting government spending, preventing job-crushing tax hikes, and making long-term changes to entitlement programs. In the address, Boehner renews his commitment to the principle that any increase in the nation’s debt limit must be accompanied by spending cuts and reforms larger than the amount of the debt limit hike. Failing to again meet this standard – dubbed the “Boehner principle” by Stanford economist John B. Taylor – in conjunction with the next debt limit increase means pushing American prosperity and job growth farther away.
      04.08.12
      Washington Regulatory RoundUp
      What happened in Washington this past week. Delivered to you every Sunday.
      03.11.12
      To Follow or Not to Follow..
      This post originally appeared on the American Express OPEN Forum, where Mashable regularly contributes articles about leveraging social media and technology in small business. Marketers know that Twitter is a valuable tool used to reach out to thousands of customers. But it’s not just the output of content that’s valuable — the people and other businesses you follow on social media are of equal worth.
      12.09.11
      Most European Leaders Agree to Work on Fiscal Treaty
      BRUSSELS — European leaders, meeting until the early hours of Friday, agreed to sign an intergovernmental treaty that would require them to enforce stricter fiscal and financial discipline in their future budgets. But efforts to get unanimity among the 27 members of the European Union, as desired by Germany, failed as Britain and Hungary refused to go along for now.
      10.03.11
      One World Trade Center
      09.29.11
      A Short Article Title Can Go Right Here
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