On Thursday, October 10, the Fed, in collaboration with the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation, voted to adjust capital, liquidity, and resolution plan requirements for domestic and foreign banks.
The policy of Fannie’s and Freddie’s move towards privatization is a major step in housing reform, but there are still questions about the long-term viability of the recent shift. The end of the “net worth sweep,” which required Fannie and Freddie to return all but $3 billion of its profits to the U.S. Treasury, improves their capital in the short term, but does little to plan for privatization in the long-term.
On Friday, October 4, SFA, jointly with BPI, served a joint amicus brief on the parties in Cohen v. Capital One, a case that was filed in the U.S. District Court for the Eastern District of New York on June 12, 2019.
On October 3, 2019, Commissioner Hester Peirce of the U.S. Securities and Exchange Commission joined the SFA Government Relations Committee at SFA’s offices for an off the record discussion on leveraged lending, the upcoming transition away from Libor, recent volatility in repo markets, and Regulation AB II.
This year, the U.S. government has reached a record in government-backed housing debt, with Fannie, Freddie and the FHA currently guaranteeing 33 percent more mortgage-related debt than before the housing crisis.
In a recent Housing Wire article, Kelsey Ramirez writes that while marginally riskier loans may be reappearing in the non-QM market, non-QM mortgages as a whole are much different from those that caused the financial crisis.
A rate being dubbed “synthetic Libor”, which would be calculated as a spread over an overnight risk-free rate, is one of the approaches being discussed as a possible mitigant to the legacy Libor issue by the “tough legacy” subcommittee of the sterling risk-free rate working group.