Financial Crisis News Center

Assistant Secretary Barr Encourages Access to Affordable Mortgage Credit

By J. Preston Carter, J.D., LL.M., Editor, the CCH Federal Banking Law Reporter, CCH Financial Privacy Law Guide, CCH State Banking Law Reporter and Bank Digest.

In remarks before the National Council of State Housing Agencies on March 8, 2010, Treasury Assistant Secretary Michael S. Barr gave an update on the progress of the “Homeowner Affordability and Stability Plan,” a broad set of programs designed to stabilize the U.S. housing market and help keep millions of homeowners in their homes. He noted that programs partnering with the Housing Finance Agencies--the HFA Initiative and the HFA Hardest Hit Fund-- are key parts of the Administration's broad set of housing initiatives.

Obama Urges Banks to Make “Extraordinary Commitment” to Economy

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter.

President Obama said financial institutions must make an “extraordinary commitment” to help build the economy by reconsidering their lending practices to small- and medium-sized businesses.

“We expect some results,” said President Obama, after meeting with the heads of the nation’s 12 largest banks. “Given the exceptional assistance banks received to get them through a difficult time, we expect them to explore every responsible way to help get our economy moving again,” Obama stressed. He added that the situation banks faced a year ago was “a predicament largely of their own making.”

House Legislation Requires FASB to Study Securitization, Orders New Regulator to Weigh Standards Affecting Systemic Risk

This story appeared in Jim Hamilton's World of Securities Regulation

Two amendments added during mark-up to the Financial Stability Improvement Act (HR 3996) could impact FASB standard-setting. The Garrett Amendment would require FASB to conduct a study of its new securitization accounting standards, while the Perlmutter-Lucas Amendment would require the new systemic risk regulator to make recommendations to the SEC on FASB standards affecting market-wide financial stability. The legislation is expected to pass the House Financial Services Committee in early December.

Rep. Bachus: Time to End the Bailouts

This story appeared in Bank Digest.

During consideration of bailout authority legislation, House Financial Services Committee Ranking Member Spencer Bachus, R-Ala., stated, “The Committee Print of the ‘Financial Stability Improvement Act’ grants unprecedented authorities to the executive branch to expand the government's ‘too big to fail’ policies of the past few years. Regardless of the nomenclature used to camouflage this fact, the provisions of this proposed legislation will give the government practically unlimited power to continue to pour taxpayers’ money into failed businesses whose misguided schemes devastated our economy last year. This cannot continue. It is time, once and for all, to end the bailouts.”

COP Report: Asset Guarantees Had Calming Effect, But Other Concerns Remain

In its November 2009 monthly report, the Congressional Oversight Panel (COP) studied government-backed guarantees under the Troubled Asset Relief Program.  The COP stated in the report that the asset guarantees from the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corporation helped calm panic in financial markets, with minimal cost to taxpayers to date. The report raised concerns about moral hazard created by the guarantees and recommended greater disclosure by the Treasury Department with regard to government-guaranteed assets of Citigroup Inc. COP Chair Elizabeth Warren commented on these issues in an interview on CNBC.

New Efforts to Improve to Small Businesses Credit for Announced

This story appeared in Bank Digest.

The Obama Administration has announced new measures as part of an ongoing effort to help small businesses access credit and create jobs. These measures include:

• Taking further steps to provide small businesses with access to credit by supporting community bank lending through the Financial Stability Plan.
• Seeking legislation to increase maximum SBA loan sizes to allow more businesses to access the credit they need to expand and create new jobs.
• Convening a Treasury/SBA Small Business Lending Conference to work with regulators, lenders and congress to ensure credit is available to small business

House Speaker Nancy Pelosi, D-Calif, commended the plan, stating, "Providing incentives for community banks and community development financial institutions to lend in low- and moderate-income communities will help create jobs, fueling our economic recovery."

Dodd Calls for Extension of First Time Homebuyer Tax Credit

This story appeared in Bank Digest.

Sens. Christopher J. Dodd, D-Conn., and Johnny Isakson, R-Ga., have proposed extending the $8,000 first time homebuyer tax credit through the end of June 2010. Created by the economic stimulus package signed by President Obama in February 2009, the tax credit is set to expire on Nov. 30, 2009. “The credit is set to expire in five weeks,” said Dodd. “But the work of stabilizing the housing market won’t be done. We still need to use every tool at our disposal to try and fix this problem,” Dodd said.

http://banking.senate.gov/public/index.cfm?FuseAction=Newsroom.PressReleases&ContentRecord_id=7324eedc-d893-140b-efa0-4d73af6b4507

Housing Finance Agencies Gain Help under Administration Initiative

This story appeared in Bank Digest.

As part of its plan to stabilize the U.S. housing market, the Obama Administration announced a new initiative for state and local housing finance agencies (HFAs) intended to help support low mortgage rates and expand resources for low and middle income borrowers to purchase or rent homes that are affordable over the long term. “This initiative is critical to helping working families maintain access to affordable rental housing and homeownership in tough economic times,” said Treasury Secretary Tim Geithner.

The initiative has two parts—a new bond purchase program to support new lending by HFAs and a temporary credit and liquidity program to improve the access of HFAs to liquidity for outstanding HFA bonds. The initiative is expected to provide hundreds of thousands of affordable mortgages for working families and enable the development and rehabilitation of tens of thousands of affordable rental properties.

Longer Days, Fewer Weekends In Store for Fed’s Economic Policy

This story appeared in Bank Digest.

In remarks before the 12th Annual International Banking Conference in Chicago, Ill., Federal Reserve Board Governor Kevin Warsh discussed what lies ahead for the Fed as it begins to wind down the programs created in response to the financial crisis. Warsh noted that, “We are at a critical transition period, of still unknown duration, and we must prepare diligently for an uneven road race ahead. If policy is not implemented with skill and force and some sense of proportionality, the success of the overall endeavor could suffer.” He added, “For those of us at the Federal Reserve, the task ahead involves longer days, but in all likelihood, fewer weekends. While the undertaking is as challenging as any we faced in the preceding period, it is exceptionally well suited to the Federal Reserve’s comparative advantages of deliberation, dispassion, and a determination to make judgments based on the long-term  interests of the U.S. economy.”

http://www.federalreserve.gov/newsevents/speech/warsh20090925a.htm

OCC Identifies “Worst Mortgage Lenders”

This story appeared in Bank Digest.

The OCC has issued a list of the 10 metropolitan areas with the highest foreclosure rates in the first half of 2008 and another list of the 10 mortgage originators in each area with the highest foreclosure rates. Comparing the two lists, the agency noted that 21 originators occupied the top 10 places on both lists, only three of which were subject to OCC supervision during the times the loans generally were made.