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20 03, 2023

FedFin on: The Collateral Damage of the Banking Crisis

2023-03-20T14:30:07-04:00March 20th, 2023|The Vault|

In this report, we build on FedFin’s in-depth reports about recent bank failures to detail new risks for all of the innocent bystanders in the U.S. mortgage market along with a not so-innocent bystander:  the Federal Home Loan Banks.  We note also some take-aways FHFA may draw from the crisis with regard to GSE regulation, resolution, and supervision.  In short, things will be different assuming they don’t get worse and then still more of a paradigm shift.

The full report is available to retainer clients. To find out how you can sign up for the service, click here and here.…

20 03, 2023

GSE-032023

2023-03-20T13:51:11-04:00March 20th, 2023|4- GSE Activity Report|

The Collateral Damage Of The Banking Crisis

In this report, we build on FedFin’s in-depth reports about recent bank failures to detail new risks for all of the innocent bystanders in the U.S. mortgage market along with a not so-innocent bystander:  the Federal Home Loan Banks.  We note also some take-aways FHFA may draw from the crisis with regard to GSE regulation, resolution, and supervision.  In short, things will be different assuming they don’t get worse and then still more of a paradigm shift.

GSE-032023.pdf

23 02, 2023

DAILY022323

2023-02-23T16:48:42-05:00February 23rd, 2023|2- Daily Briefing|

Agencies Strengthen Defenses vs. Crypto-Related Funding

As FedFin forecast when significant bank crypto-related deposit exposures came to light (see Client Report CRYPTO38), the banking agencies today issued guidance telling banks to monitor and mitigate risks related to resulting liquidity risk.

FSB Sets Out Key Cross-Border Payments Action Items

The Financial Stability Board today released a list of actions for implementing the G20’s Roadmap for Enhancing Cross-border Payments, including three priorities.  These are payment system interoperability and extension; legal, regulatory and supervisory finalizing frameworks; and cross-border data exchange and message standards.

IMF Presses CBDC, New “Unified Ledger”

A new IMF blog post advocates for public sector implementation of new payment technologies including tokenization, encryption, and programmability to improve cross-border payments, limit counterparty risk, and facilitate AML and other compliance.

FHFA Proposes GSE-Capital Revamp

FHFA today sought comment on several significant revisions to the regulatory-capital rules governing  Fannie and Freddie.  As we will detail in a forthcoming in-depth report, several of these changes concede to comments rejected as the current rules were finalized.

Daily022323.pdf

5 01, 2023

GSE-010523

2023-01-05T12:37:19-05:00January 5th, 2023|4- GSE Activity Report|

End-Game Standards in the End-Time

As we previously noted, the U.S. banking agencies will finally, finally, finally get around to proposing their version of the Basel IV capital rules more recently dubbed the “end-game” standards.  These will come with new, unique U.S. fillips due to the tough approach to big-bank capital announced by Fed Vice Chairman Barr strongly supported by Acting Comptroller Hsu and FDIC Chairman Gruenberg along with staff at all three agencies who have been doing this a long time and seen more than a financial crisis or two.  This report identifies key mortgage-finance issues with strategic impact along with what’s to become of them in the end-game.

GSE-010522.pdf

7 10, 2022

DAILY100722

2022-10-07T16:40:15-04:00October 7th, 2022|2- Daily Briefing|

FIO Notes Growing PE Insurance Role, Demurs on Action

Treasury’s Federal Insurance Office today issued an annual report replete with data and largely devoid of policy.  However, reflecting strong pressure from Sen. Brown (D-OH) (see Client Report INSURANCE61), the report addresses credit risk transfer and private-equity participation in the reinsurance industry.  FIO notes that the alternative risk-transfer market grew by $3 billion from 2020 to 2021, with both the property & casualty and life & health insurance sectors seeing over ten percent growth in reinsurance, which boosted total sector revenue growth.  It also finds that private equity-owned insurer cash and invested assets grew over 100% over the same period.

Daily100722.pdf

19 08, 2022

GSE-081922

2023-01-04T11:19:00-05:00August 19th, 2022|4- GSE Activity Report|

The Social-Impact Say-So

We look here at an interesting idea from three senior Fannie Mae officials: an index to measure a Single-Family MBS’s social impact.  The proposal seeks to enable socially conscious investors to support affordable housing for underserved communities while balancing the needs of mortgage borrowers, investors, and market function.  It also reflects the objectives laid out in Fannie Mae’s Equitable Housing Finance Plan such as providing social impact data and boosting low-income and minority homeownership.  The methodology thus lays out a way to measure performance that is no longer solely dependent on FHFA or comparisons to Freddie that Fannie might find unflattering.

GSE-081922.pdf

19 08, 2022

FedFin: The Social-Impact Say-So

2023-01-04T11:19:39-05:00August 19th, 2022|The Vault|

We look here at an interesting idea from three senior Fannie Mae officials: an index to measure a Single-Family MBS’s social impact.  The proposal seeks to enable socially conscious investors to support affordable housing for underserved communities while balancing the needs of mortgage borrowers, investors, and market function.  It also reflects the objectives laid out in Fannie Mae’s Equitable Housing Finance Plan such as providing social impact data and boosting low-income and minority homeownership. …

The full report is available to subscription clients. To find out how you can sign up for the service, click here.

 …

5 08, 2022

DAILY080522

2023-01-04T13:22:18-05:00August 5th, 2022|2- Daily Briefing|

Senate Dems Demand Answers from Equifax re Inaccurate Credit Scores

In a letter today to Equifax’s CEO, Sens. Warren (D-MA), Warner (D-VA), and Krishnamoorthi (D-IL) demanded answers about erroneous credit scores, asking why the company failed to notify affected borrowers and waited several weeks to notify lenders.  The Senators claim that Equifax’s response in an environment of rising interest rates forced some borrowers to pay higher rates or rejection and ask Equifax to explain the cause and scope of the error, compensation plans, and whether all affected parties or any relevant regulatory authorities have been notified.

Brown Targets Life-Insurance Systemic Risk

Senate Banking Chairman Brown (D-OH) today announced that he plans a hearing questioning the role of private-equity companies in the life-insurance sector.  In letters to FIO and the NAIC, he cites Federal Reserve statements regarding insurance-industry leverage (see Client Report SYSTEMIC93), indicating that he believes this poses systemic challenges akin to those in the banking sector before 2008.  FIO is asked to target analysis of offshore reinsurance sector risk-taking across the life-insurance sector; NAIC is asked to work with the FIO on issues raised in its prior letter to the chairman.

Daily080522.pdf

21 07, 2022

GSE-072122

2023-01-04T16:01:36-05:00July 21st, 2022|4- GSE Activity Report|

Two Things

We yesterday provided a complete assessment of Sandra Thompson’s sojourn on HFSC’s griddle, noting the lack of any insights into essential issues such as conservatorship’s end or the full scope of CRT’s new beginning.  More interesting to us are new battlelines on new products, including signs of renewed skirmishing over GSE self-insurance in lieu of MI.  Unlike FHFA under Calabria, Fannie and Freddie appear to have a friend in one critical high places for new ventures, especially those said to be good for equitable finance.

GSE-072122.pdf

20 07, 2022

GSE147

2023-01-06T14:35:08-05:00July 20th, 2022|5- Client Report|

Thompson Emphasizes CRT, Equitable Finance, Safety as Top FHFA Objectives

At her first hearing as confirmed FHFA Director, Sandra Thompson made it clear to House Financial Services that she is committed to expanding credit-risk transfer (CRT), encouraging equitable finance via new GSE activities, and recapitalizing Fannie and Freddie as quickly as possible. Pressed by Rep. Hill (R-AR) to finalize a 2020 proposal to make new Enterprise programs subject to public notice, Ms. Thompson promised to finalize a rule but demurred when asked to do so by year-end. Her written testimony includes a commitment for a ninety-day listening session to consider a new mission for the Federal Home Loan Banks, but members did not ask about this or other recent calls to reconsider the System.

GSE147.PDF

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