Nervous About Nonbanks

As our in-depth report earlier today details, the Fed’s latest financial-stability report pulls a lot of punches because, as always, it’s afraid to frighten the children with frank discussion of what might actually threaten financial stability in the near term.  That said, the Fed is clearly worried about nonbank mortgage companies, laying some pipe to support systemic designation if FSOC winds its way there as augured at its last meeting.  And, when the Fed next designs its stress tests, housing finance will surely get still more conservative treatment along with exposures to nonbank mortgage firms.