Home >> Tag Archives: Subprime Loans (page 4)

Tag Archives: Subprime Loans

Witnesses Criticize, Call for Repeal of Volcker Rule

Witnesses testifying before the House Financial Services Committee Wednesday warned lawmakers that the controversial Volcker Rule could tighten bank liquidity and make U.S. financial institutions less competitive with banks overseas. Once finalized by regulators, the rule ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô unless modified or repealed by lawmakers ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô will enact a provision under the Dodd-Frank Act that prohibits U.S. banks from engaging in short-term proprietary trading practices. Douglas Elliott, a fellow with the Brookings Institution, called for an outright repeal of the Volcker Rule.

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Duke: Fed Wants to Work With Smaller Banks

Federal Reserve Gov. Elizabeth Duke offered to reassure bank executives Friday that the central bank wants to avoid a one-size-fits-all approach to regulation and work with smaller financial institutions to ensure that new mortgage banking rules work effectively. Speaking before the California Bankers Association in Santa Barbara, the official, a former banker-turned-regulator, said that the Fed will strive to prepare examiners and work with banks ahead of stress tests and final rules. She said regulators will include statements before every rule for bankers.

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SEC Investigation Puts Additional Heat on GSEs

The head of Fortress Investment Group has left his position with the company and has simultaneously stepped down from the company's board of directors. Daniel Mudd, who has previously served as the CEO of Fannie Mae, is currently one of six former GSE executives under investigation by the U.S. Securities and Exchange Commission for fraud-related charges. The SEC's accusations encompass fraudulent actions regarding the GSEs' exposure to subprime loans.

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SEC Files Suit Against Former GSE Execs

The Securities and Exchange Commission filed suit against former executives with Fannie Mae and Freddie Mac Friday over their alleged roles in securities fraud. The SEC suit purports that Fannie├â┬ó├óÔÇÜ┬¼├óÔÇ×┬ós executives underreported considerable exposure to forces in the market, with $4.8 billion in single-family loans on the books. For its part, the suit alleges, Freddie misled investors with claims that the GSE attached a different name to $43.3 billion in single-family loans in a report it filed publicly back in February 2007.

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Judge Throws Out Citigroup, SEC Settlement

A U.S. district court judge threw out a settlement Monday that Citigroup proposed as a way to compensate investors for losses related to $1 billion in collateralized mortgage debt. Citigroup wanted to settle with the Securities and Exchange Commission by covering the losses with $285 million. He cited the need for more information in lieu of a request for enforcement of relief by the court from the commission, a federal agency, and Citigroup, a private party.

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Frank Retires, Leaving Namesake Law With Uncertain Future

Rep. Barney Frank, a liberal icon on Capitol Hill and co-author of the financial reform law that bears his name, announced that he will not seek reelection Monday. A newly redistricted area of Massachusetts ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô which he represented for 40 years ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô adds less than half a million new constituents and straddles an area with which he is unfamiliar, according to Frank. He pledged to continue his public advocacy efforts from outside the Beltway and finish his term in office. Analysts say his departure makes repeal more likely for the Dodd-Frank Act.

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International RMBS, CMBS Sales Impacting Banks Globally

In international news, the sale of securitized bonds is causing concern for the secondary market. Analysts from Morgan Stanley released a recent report indicating that securities earmarked for sale by the European banks holding the bonds could reach as high as $470 billion. For struggling companies, rising costs for funding and capital have weakened their positions, leading to the sale of assets; the institutions seeking to liquidate securities holdings encompass lenders focused on deleveraging and distressed banks.

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Lawmaker Wants Dodd-Frank Financial, Regulatory Analyses

As pressure builds to repeal the Dodd-Frank Act, one lawmaker pushed back by formally requesting an analysis of the rulemaking effort and financial consequences under the financial legislative overhaul. Sen. Tim Johnson wrote two letters to public officials Thursday to make the request, with clear intentions to secure a formal, objective analysis that lends credibility to the financial law and overall rulemaking process. Included agencies in the requested analyses: the Consumer Financial Protection Bureau and Federal Housing Finance agency.

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Senator Proposes Bill to Wean GSEs Off Federal Funds

Fielding more pressure for housing finance reform, Sen. Bob Corker (R-Tennessee) introduced a bill Wednesday that aims to decouple government assistance from the GSEs and shore up private-sector involvement in mortgage markets. The bill, titled the Residential Mortgage Market and Privatization Act, proposes gradually reducing the percentage of principal in the GSEs├â┬ó├óÔÇÜ┬¼├óÔÇ×┬ó mortgage-backed securities, streamlining underwriting standards and origination databases, and removing federal guarantees to create a much-discussed to-be-announced market.

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Lawmakers Aim to Jumpstart U.S. Covered Bonds Market

If a new Senate bill becomes law, it could finally create a long-awaited covered bond market for the nation, effectively making mortgages easier to securitize and increasing their appeal for investors. Earlier Wednesday a bipartisan group of senators, led by Sens. Kay Hagan and Bob Corker, introduced the United States Covered Bond Act of 2011 in order to kick-start what some regard as necessary for a full-fledged housing recovery. European nations have long benefited from a covered bond market, with legal bodies in place for bonds.

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