The Vault2020-07-14T15:00:29+00:00

FedFin: Going Down?

Two recent studies add fuel to the fire we first spotted late last year: demands for ARMs that only go down.  Director Thompson’s latest scorecard combines with her equitable-finance mission to make this option a top political priority even if its market feasibility remains at best uncertain.

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

December 2nd, 2021|

FedFin: HFSC Throws Partisan Brickbats without Financial-Policy Impact

Continuing the partisan and often-acrimonious tone of the Senate Banking hearing (see Client Report FEDERALRESERVE64), HFSC today heard from Chairman Powell and Secretary Yellen.  Much of the session was preoccupied by differing views of whom or what is to blame for inflation, with Members also squaring off on the benefit of the BBB and infrastructure bills.  Many financial-policy priorities were sidelined by these big-picture battles, with the session omitting discussion of topics such as digital currency, bank consolidation, and even fair lending and diversity.

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

December 1st, 2021|

FedFin on Federal Crypto Powers

Although the OCC joined other agencies issuing a non-committal “roadmap” for future cryptography actions, the agency at the same time and far more decisively stated that crypto activities are permissible only if they are also safe and sound.  As a result, national banks and federal savings associations (FSAs) may no longer simply undertake approved crypto activities and now instead must receive prior OCC consent to do so.  This may prove challenging to banks now using or seeking to use national charters for their own businesses, for partnerships with state-chartered entities, or via their own fintech ventures.

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

December 1st, 2021|

FedFin: Setting the Limit

Unsurprisingly, FHFA today raised the GSEs’ conforming loan limit to about $647,000 and the high-cost limit to nearly $1 million.  More surprisingly, FHFA Director Thompson accompanied this politically-sensitive announcement with a statement that her agency is “actively evaluating the limit and its relationship to affordable housing across the U.S.”

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

November 30th, 2021|

Karen Petrou: Why Naming Powell was Hard, Confirming Him Will Be Harder and Being Him Will Be Hardest

According to the American Farm Bureau Federation, the cost of Thanksgiving dinner this year is up fourteen percent, not counting the sixty percent hike it costs to buy the gas to get to grandma’s.  This of course only compounds the political challenge facing the Biden Administration when it tries to confirm its choices for the next iteration of the Federal Reserve Board.  However, while inflation is indeed a lightning rod, the macroeconomic building below it is also strung with perilous wiring.   This is because the Fed – not Congress – is now a fiscal powerhouse, exacerbating inequality and the slow growth that goes with it no matter the trillions Democrats hope to throw around.

The Fed would have it that there is a pure monetary-policy realm premised on independent macroeconomic thinking while the fiscal hurly-burly is responsible for anything macroeconomic that the Fed does not or cannot achieve.  The purity derives, or so the Fed likes to say, from its ascetic “dual” mandate, which allows the Fed only to seek “maximum” employment and price “stability.”  But, as both my book and a new paper detail, the black-letter law of the Fed’s express mandate in fact includes a third injunction:  “moderate long-term interest rates.”

Further, The Federal Reserve Act is not the only provision of federal law stipulating the Federal Reserve’s goals.  The Fed is also covered by the overall statutory injunction to all federal agencies under the Full Employment Act to advance the “general welfare” in concert with an array of factors Congress believes define it.

Thus, the Fed’s dual-mandate defense against all assertions that it exacerbates inequality, powers up asset-price bubbles, or heightens inflation does not pass muster when compared to the Fed’s true mandate.  The Fed is in fact responsible under law for minimizing any adverse fiscal […]

November 22nd, 2021|
Go to Top