4 replies to this topic

[Tor]

HSBC: COMMENT ON BERNANKE TESTIMONY Bernanke's Testimony to the House Financial Services Committee described an avalanche of initiatives that the Fed has or are planning to implement to help soften the blow to sub-prime borrowers in distress, as well as some ideas for Congress to consider - Bernanke rolling up his sleeves and being practical, not academic, and sounding more like a "can-do" politically-attuned micro-economist rather than a macro-economist. Key points: 1. Sub-prime ARM delinquency (90 days+) tripling to 15% now since mid-2005. 2. Alt-A (between prime and sub-prime) delinquency up to 3% now from 1% a year ago 3. The Fed has been and is encouraging lenders to identify and contact borrowers who may be at risk before they become distressed. Where necessary, loan modifications are encouraged to avoid foreclosures. 4. Recently, the Fed has encouraged mortgage servicers to do the same. 5. Fed is working with NeighborWorks America, who have a 24-hour hotline that is now taking 2000 calls a day from distressed borrowers (if that rate was sustained for a year that's 500,000 calls!). 6. The regional Fed banks, through their Community Affairs Office, are working with community groups to help distressed borrowers. 7. Fed recently proposed "principles-based guidance" to better protect consumers 8. Fed proposes more effective disclosure so consumers know what they are getting into ("Truth in Lending Act") 9. Fed proposes a nationwide licensing system for mortgage brokers and lenders. 10. Fed proposes increasing intra-agency cooperation between federal and state agencies. 11. Fed proposes modernizing the FHA program 12. Bernanke cautious about expanding GSE's role It is questionable how much impact these measures will have in the next few quarters. If anything, it will probably be modest. Foreclosures remain on track to hit 2.5 million this year from 1 million last year. Still, it's better than nothing, and Bernanke is seen as responding to the political and national anxiety. No new promises on interest rates. It simply repeats what the FOMC statement said, that the Fed "will act as needed to foster price stability and sustainable economic growth". Bernanke has an academic background, but no ivory tower here.

[arbman]

It is all good, only all these new regulations they are pushing for might depress the housing longer for this cycle...

Edited by kisacik, 20 September 2007 - 10:36 AM.

[dasein]

Dont they do this every time? propose a rash of new laws and regulations, instead of discussing (and firing those responsible) the way the existing laws were broken and unchecked by regulators? klh

[HiFiGuy]

Dont they do this every time? propose a rash of new laws and regulations, instead of discussing (and firing those responsible) the way the existing laws were broken and unchecked by regulators?

klh

Chief among those responsible is Wall Street's securitizing of mortgages and the rating agencies failure to adequately measure risks. All enabled by the FED's policy of sustained low interest rates and liquidity pumping, encouraging a frenzied housing market. Complicity is shown in Greenspan and Bernanke's claim of no prior knowledge of a housing bubble nor any responsibility for it.

Don't hold your breath for accountability.

[SandStorm]

It is all good, only all these new regulations they are pushing for might depress the housing longer for this cycle...

Yeah, it's like making the already dead a walking dead. Yikes!!

The key to heaven is to drop thy house and go on rental.

Put risk and responsiblity to the rich for a change.