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Wednesday, March 18, 2015 1:29:21 PM
https://timhoward717.files.wordpress.com/2015/03/rosner-2.pdf
I very much like the slide that says that the "1992 Act created a neutered safety & soundness standard with a weak primary regulator. ... While the 208 Act (HERA) addressed most of the problems embedded in the 1992 Act it was too late prevent the subprime market contagion, which began in 2006, from imperiling the GSEs solvency."
Jack Lew wants to ignore HERA of 2008 and asks Congress to do something.
http://www.c-span.org/video/?c4531574/capuano-questions-jack-lew
But, Congress doesn't really need to do anything. HERA does the job.
"What Washington seems not to understand is precisely what many private citizens understand, that these are not mutually exclusive explanations. In fact, it was the interplay between poorly considered government policies, weak regulatory oversight, the lobbying power of industry players, unrestrained profit seeking behaviors of issues of private label mortgage backed securities, structural changes in the business and oversight of the GSEs and a lack of prudent economic actitivies of borrower."
"Importantly, if we are to strike the proper balance in support of the secondary mortgage market, we should recognize taht they provide an essential public service (ongoing availability of secondary mortgage credit) much like the provisioning of water, gas electricity or sewers that utilities offer....As is true of these other utilities, incrdeasing the nubmer of competitng firms doesn't improve outcomes. In fact it drives excess liquidy and create disparate execution prices for all but the largest, leading to deterioration in standards."
What is needed is recapitalization.
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