U.S. housing reform takes baby step uphill 5 Mar 2013 A much-needed overhaul of mortgage giants Fannie Mae and Freddie Mac is proving to be a Sisyphean task. Regulator Edward DeMarco keeps pushing, though, and is set to streamline their duplicative securitization businesses. It’s time for lawmakers to get things seriously rolling.
Negative intellectual equity traps mortgage reform 26 Feb 2013 The latest plan to shake up U.S. housing finance, from a bipartisan think tank, offers nothing new. It rests on the usual received wisdom that the market cannot exist without a government backstop. The idea’s prevalent among lawmakers, bankers and investors. It’s wrongheaded.
UK bank steroids are working for the wrong reason 3 Dec 2012 Net lending by domestic banks rose only a bit in Q3. That’s a disappointment given the Bank of England is offering super-cheap funding to boost lending to the real economy. But the central bank support is probably having a benign side-effect - the softening of painful deleveraging.
U.S. student loan trouble discredits their value 28 Nov 2012 If pricey education provided the hoped-for labor market edge, then 11 percent of student loan balances shouldn’t be overdue. The proportion of delinquent education debt has surpassed even late credit card balances. Maybe students need better vetting.
Latest attempt to find Libor victim: Main Street 17 Oct 2012 U.S. homeowners are accusing big banks of making money out of nudging the benchmark interest rate higher. Bringing in Joe Public could add to political pressure for tougher regulation. Even so, it’s hard to see how more than a tiny amount of harm was done.
Brazil’s lending war leaves both sides looking bad 1 Oct 2012 Browbeating Bradesco and Itaú into slashing credit card rates is President Dilma Rousseff’s latest victory in making lending more affordable. But banks may raise other fees instead. And they want to lend more to riskier customers. It’s hardly a path to a stable banking system.
Inept Fannie/BofA deal highlights US mortgage mess 18 Sep 2012 A new report shows the agency paid too much to pull some loan servicing business from the mega-bank for doing a bad job. This double incompetence doesn’t just reflect badly on the two firms. It’s a reminder that the backbone of U.S. housing finance is in dire need of repair.
Brazil banks need better handle on consumer credit 18 Sep 2012 Banco Cruzeiro’s failure stems from fraud, but it specialized in loans to Brazil’s middle class - a group that grew by 40 mln in 10 years. That’s as short a record as U.S. subprime mortgages had in 2008. The comparison is extreme, but Brazil’s banks need both data and caution.
U.S. housing watchdog wise to go long on short sales 22 Aug 2012 The federal agency that oversees mortgage behemoths Fannie and Freddie is making it easier for underwater borrowers to sell homes at current prices. That’s better than cutting the amount owed as it should enhance housing market stability without introducing moral hazard.
Treasury’s Frannie fix puts Congress on the spot 17 Aug 2012 Team Geithner is forcing the two bailed-out home loan agencies to shrink their portfolios faster and hand all profit to taxpayers. These are excellent steps. But Fannie and Freddie remain too central to U.S. mortgage finance. It’s up to lawmakers to come up with the solution.
Uncle Sam may never divorce Aunt Frannie 10 Aug 2012 The two mortgage agencies earned $8 bln between them in the second quarter. Rather than speed up plans to reform them, though, funding-starved politicians may get too hooked on the revenue from their bailout dividend payments. That could make Fannie and Freddie untouchable.
China’s state-owned enterprises have cash to burn 30 Jul 2012 Oil producer CNOOC has enough cash on the balance sheet to pay $15 bln for Nexen without borrowing a penny. Such hoards are common among state-controlled companies. It’s a too cozy symbiosis with the state-controlled banks – which Beijing may now want to end.
U.S. student debt on scary trajectory 18 Jul 2012 New statistics from the New York Fed show education loans piling up at an unsustainable rate and delinquencies staying high even as the economy improves. The path to serious trouble is becoming more obvious. Rather than tackling it, though, policymakers are fueling the problem.
U.S. student loan fix robs the old to pay the young 16 Jul 2012 To keep borrowing rates low for education, Congress is using some devilish hocus-pocus. An accounting change will allow employers to kick in less to a pension guarantee fund. That could leave Uncle Sam owing more to retirees while also increasing taxpayer risk on student debts.
Wells Fargo’s mortgage strength is U.S. weakness 12 Jul 2012 The San Francisco-based bank accounts for a third of the country’s new home loans and is the largest servicer, too. That’s great for Wells’ bottom line. But such a dominant market share, if sustained, could be bad news for consumers and taxpayers. Rivals need to up their game.
Brazil’s lending hangover is red flag for banks 27 Jun 2012 Consumer defaults hit record levels in May, despite a decent economy. Lax lending in 2010 to customers not used to borrowing money caused the problem. With President Dilma Rousseff pushing to make credit cheaper, banks need to ensure they don’t make the same mistakes again.
China’s U.S. home loan risks being a subprime idea 26 Jun 2012 China Development Bank may lend Lennar $1.7 bln to build two housing projects - one on a polluted man-made island in an earthquake zone. It has all the hallmarks of globally distorted economic incentives forcing yield-starved investors to take risky bets they don’t understand.
BofA reject wins Fannie Mae booby prize 6 Jun 2012 No good deed goes unpunished. Tim Mayopoulos, fired as the mega-bank hid Merrill losses in 2008, is the mortgage zombie’s new boss. That won’t improve the firms’ tense relationship. And he’s taking a pay cut. But his integrity and background make him a decent fit for the job.
Pick-a-pay creator follows dodgy product to grave 4 Jun 2012 Golden West founder Marion Sandler has died aged 81. She and husband Herb built a supremely efficient mortgage lender, sold at the top and donated $1.3 bln to political and other causes. But they’ll be remembered as the architects of one of the more egregious mortgage offerings.
US housing recovery shows subsidies need trimming 17 May 2012 Recent strong data, including property prices, suggest the market is bottoming. It’s cheap to borrow, too. Mortgage interest tax deductions and above all loan guarantees look ripe for cutting. The cash saved could then be put to more productive uses.