Tag Archives: Federal Reserve

The recently proposed Volcker Rule will sap nearly $1 billion in revenue from the nation's banks as lenders spend more time, resources, and manpower complying with regulations, according to a recent government study. The Office of the Comptroller of the Currency estimated that the rule as drafted by the FDIC, Federal Reserve, and other federal authorities will result in expenditures totaling $100 million for state, local, and other governments. The rule continues to stir controversy following its proposal earlier this month.

In a blow to MetLife, the Federal Reserve rejected a plan by the nation├â┬ó├óÔÇÜ┬¼├óÔÇ×┬ós biggest life insurer to move forward with stock repurchases and capital redistribution plans, likely accelerating the company├â┬ó├óÔÇÜ┬¼├óÔÇ×┬ós departure from the mortgage markets. The news arrives on the heels of an announcement by the company to sell off MetLife Home Loans, the division responsible for originating residential and reverse mortgages. In a statement, MetLife said that it had recently sent a capital redistribution proposal to the Fed in order to shore up annual dividends.

The Obama administration's latest appointment on Capitol Hill was announced recently, with the news that Thomas Hoenig would be nominated as vice chairman of the FDIC. The former chief of the Federal Reserve Bank of Kansas City would serve the FDIC until December 2015 if he is approved by the Senate.

A declaration by President Barack Obama to end the war in Iraq helped drown other news Friday, including apparent moves by the White House to float a housing finance stimulus plan in the next few weeks. Some of the initiatives currently under wraps include an expansion of the Home Affordable Refinance Program and a selloff in mortgage-backed bonds by Fannie Mae and Freddie Mac to invite private-sector investment back into the housing finance system. The Federal Housing Finance Agency plays a major role for either proposal.

A bill squeaked by the Senate Thursday that would reverse lower limits for conforming loans backed by the federal government and reinstate the $729,750 threshold until 2013. Lawmakers adopted the amendment to a federal spending measure by a count of 60 to 38, giving backers of the bill the supermajority needed to avoid wrangling over the issue. Multiple news outlets reported that Congress had allowed the higher limits for conforming loans to ease in October despite a massive lobbying effort by companies and trade groups.

Interest rates for mortgage loans hovered at around the same numbers this week seen last week, even while the construction sector celebrated with boons in starts and confidence. Freddie found the benchmark 30-year fixed-rate mortgage cresting at 4.11 percent, slightly down from 4.12 last week but not far from 4.21 percent seen during the same time last year. Bankrate.com disagreed with the mortgage giant by few turns, offering an increase from 4.21 percent to 4.37 percent this week.

Credit officers are weighing in on the current state of the markets, credit terms, securities financing, and over-the-counter derivatives, according to a recent Federal Reserve poll. The results were mixed, and a broad look at credit availability demonstrated no definitive direction in terms of easing versus tightening credit, which is a departure from June's findings that showed an overall loosening of credit across the board. Twenty-one financial institutions participated in the survey.

Governors sitting on the board of the Federal Reserve pressed their fellow central bankers for more bond purchases, an idea the institution ultimately rejected in favor of $400 billion in short-term Treasury purchases to offset worries about a new recession. The minutes portray the last meeting of the Federal Open Market Committee, held in early September, as one carefully assessing the current economic climate and an array of fiscal and monetary measures needed to sustain a national recovery.

Releasing the hotly anticipated Volcker Rule Tuesday, federal regulatory agencies proposed banning banks from deploying their own capital as collateral in bets on uncertain investments. Enacting Section 619 of the Dodd-Frank Act, the draft regulation vaguely proposes a two-month wait period for financial institutions trading in on investments, more managerial heft from executives, and guidelines that discourage institutions from risk-hedging, among other requirements.

A recently leaked memo outlining the proposed Volcker rule sent market watchers and industry insiders into a tizzy, according to multiple news outlets. The tentative rule itself ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô required by the Dodd-Frank Act and named after former Fed chief Paul Volcker ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô remains in development at federal regulatory agencies like the Federal Reserve, FDIC, and Office of the Comptroller of the Currency. The proposed rule defines short- and long-term proprietary trading and rules out third-party brokers, agents, and custodians.