America Needs a Single Bank Regulator

America Needs a Single Bank Regulator
Financial Times

In recent weeks our financial markets have shown signs of recovery thanks to unprecedented action to stabilize markets and stimulate the economy. Yet this crisis has many distressing qualities. Perhaps most dispiriting is the sense that we have seen this movie before, and it wasn’t very good the first time, either. When President Bill Clinton came into office in the early 1990s, the US faced, among other challenges, waves of thrift and bank failures, huge hits to its deposit insurance system, and enormous piles of “toxic assets” in need of taxpayer-financed liquidation. It was a colossal regulatory failure. Determined to identify the causes, Lloyd Bentsen, then Treasury secretary, proposed legislation to consolidate all four federal banking regulation and supervision agencies into a single body. That proposal went nowhere. The Federal Reserve opposed any reduction in its turf. Lobbyists fiercely asserted the benefits of “competition” among regulatory agencies. After months of struggle, the legislation died an ignominious death.

U.S. Considers Remaking Mortgage Giants
Washington Post

The Obama administration is considering an overhaul of Fannie Mae and Freddie Mac that would strip the mortgage finance giants of hundreds of billions of dollars in troubled loans and create a new structure to support the home-loan market, government officials said. The bad debts the firms own would be placed in new government-backed financial institutions — so-called bad banks — that would take responsibility for collecting as much of the outstanding balance as possible. What would be left would be two healthy financial companies with a clean slate.

Gov't Mortgage Partners Sued for Abuses
The Associated Press

Billions of dollars the government is spending to help financially pressed homeowners avert foreclosure are passing through — and enriching — companies accused of preying on the people they're supposed to help, an Associated Press investigation has found. The companies, known as mortgage servicers, are middlemen who collect monthly payments from homeowners and funnel the money to the banks or investors who hold the loans. As the only link between borrowers and lenders, they're in the best position to rework the terms of loans under the government's $50 billion mortgage-modification program. The servicers are paid by the government if the changes keep homeowners from falling behind on payments for at least three months.

U.S. Mortgage Rates Fall to 5.22%, Freddie Mac Says
Bloomberg News

Mortgage rates in the U.S. fell for the first time in three weeks, boosting the potential for further stabilization in the housing market. The average 30-year rate dropped to 5.22 percent from 5.25 percent, mortgage buyer Freddie Mac of McLean, Virginia, said today in a statement. The 15-year rate averaged 4.63 percent for the week ending today.