Posts filed under “Think Tank”
Federal Agencies Propose Rule to Implement S.A.F.E. Act Mortgage Loan Originator Registration Requirements
The Federal financial institution regulatory agencies are together issuing for public comment proposed rules requiring mortgage loan originators who are employees of agency-regulated institutions to meet the registration requirements of the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (S.A.F.E. Act).
The S.A.F.E. Act requires the agencies to jointly develop and maintain a system for registering residential mortgage loan originators who are employees of agency-regulated institutions, including national and State banks, savings associations, credit unions, and Farm Credit System institutions, and certain of their subsidiaries. These mortgage loan originators must be registered with the Nationwide Mortgage Licensing System and Registry (Registry), a database established by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators to support the licensing of mortgage loan originators by the States. As part of this registration process, mortgage loan originators must furnish to the Registry background information and fingerprints for a background check. The S.A.F.E. Act generally prohibits employees of an agency-regulated institution from originating residential mortgage loans without first registering with the Registry.
The proposal, which is being issued jointly by the Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of Thrift Supervision, Farm Credit Administration, and National Credit Union Administration, establishes the registration requirements for mortgage loan originators employed by agency-regulated institutions as well as requirements for these institutions, including the adoption of policies and procedures to ensure compliance with the S.A.F.E Act and final rule. As required by the law, the proposal also requires these mortgage loan originators to obtain a unique identifier through the Registry that will remain with that originator, regardless of changes in employment. When the system is fully operational, consumers will be able to use the unique identifiers to access employment and other background information of registered mortgage loan originators. Pursuant to the S.A.F.E. Act, the proposal further requires these mortgage loan originators to provide their unique identifiers to consumers in certain circumstances and agency-regulated institutions to make them available to consumers.
Because modification of the Registry to accept federal registrations involves complex technical issues, the proposed rule provides for a delay in implementation of the registration requirements until 180 days after the Registry becomes operational and available for initial federal registrations.
The Federal Register notice and proposed rule are attached. The proposal will soon be published in the Federal Register and the comment period will end 30 days thereafter.
Continuing my point last week on REAL vs NOMINAL returns in stocks, the happy, go lucky days of the 2nd half of the 1990′s was best described with the famous buzzword ‘goldilocks,’ with the connotations of strong growth and low inflation with the Maestro running the show. The combination allowed P/E multiplies to rise at…Read More
In the context of the debate of whether banks are lending or not to businesses and/or is the demand for loans still falling, Friday’s data from the Fed for the week ended May 20th has commercial and industrial loans falling to the lowest level since June ’08 and is down for 9 of the past…Read More
April Personal Income rose .5%, much better than expectations of a drop of .2% while Spending fell .1%, .1% better than forecasts. The revisions to March were modest. The factor in the surprise gain in income was related to the Government’s stimulus plan where transfer payments rose smartly and there was also reduced personal current…Read More
Paul Brodsky & Lee Quaintance run QB Partners, a private macro-oriented investment fund based in New York.
QB ASSET MANAGEMENT
The New Yorker magazine has maintained long preeminence among literate types by wrapping usually good writing in an old-world sensibility. While one may agree or disagree with its varying points of view, there is no doubt that the cascade of usually well-chosen words merely seek to rise to the level of profundity its cartoons seem to express so easily.
We found the one below while visiting the “ON THE MONEY” exhibit at the Morgan Library and Museum (January 23 to May 24). It was drawn by Joe Mirachi and published in March 1980 during a period of massive price inflation and rising interest rates (brought about by years of massive government produced monetary inflation). Mr. Mirachi’s barflies knew that such highfalutin terms were only fancy expressions for dollar devaluation. “TO THE DOLLAR – AS WE KNEW IT!” Indeed.
Or consider Lee Lorenz’s depiction of the dubious nature of government statistics (on the following page). This cartoon appeared in the New Yorker in March 1976, almost two decades before the Bureau of Labor Statistics began playing with the consumer price index by subjectively substituting, re-weighting and placing a hedonic value on consumer goods and services. As the cartoon’s subjects imply, (and as our essay last month proclaimed), some things never change.
We were so inspired by the unthreatening manner in which these gadflies are able to expose economic elephants in the room that we felt obliged to give it a shot. Alas, our crayons failed us. Lacking the necessary talent (and imagination) to even attempt the creation of poignant cartoons, we instead sought to assassinate the high art of literary fiction. Mr. Updike, we are sorry you’re gone but happy you won’t see this:
The narrow hallway had been going on endlessly, curving gradually down and to the left like a giant underground corkscrew or one of those ramps we drive around in parking garages. At last we were coming to a door, another 100 yards or so down. My mysterious escorts and I had been walking at a pretty good clip for a long time, descending deeper and deeper. We hadn’t passed any doors since we entered the hallway and it occurred to me that the entire tunnel’s function was to arrive at the one we were now approaching. We must be, what, 100 feet below the basement of the White House by now?
The only sounds over the last ten minutes were our footsteps and the occasional soft sound of fresh air flowing through small vents in the floor. I had grown accustomed to mysterious people walking behind me, usually in some sort of security detail. But these were older, patrician men dressed in classic business suits and without the tell-tale earpieces of security guards. They had appeared in the room off the White House kitchen suddenly and, it seemed, from nowhere. Each gave me only a faint acknowledgment of my presence, which was unusual, though I must admit refreshing. These four men were the only ones with me. Even Johnny, my newly assigned “body man” was given the morning off until I went back to the transition team’s hotel.
Category: Think Tank
China is once again proving that it’s the most important country in the world right now both in terms of its own growth as the 3rd biggest economy in the world and also its impact on commodity prices and the subsequent benefit that it gives to a variety of emerging markets that produce them. Both…Read More
Source: CXO Advisory Group
In addition to the major stock market indices rising for a third consecutive month, some of the other milestones achieved during the past week were the following:
• The S&P 500 Index rose by 5.3% in May for a three-month performance of +25.0% – the biggest three-month gain since August 1938.
• The Dow Jones Industrial Index advanced by 4.1% and 20.4% for May and the three-month period respectively – its largest three-month return since November 1998. (The last straight three-month gain was from August to October 2007, when the Index reached its bull market peak).
• The US dollar declined to a five-month low against the euro, losing 6.6% during May. The buck’s declines was even more pronounced against high-yielding currencies such as the Australian dollar (-9.4%) and the New Zealand dollar (-11.3%).
• The yield spread between two- and ten-year Treasury Notes reached a record 275 basis points on Wednesday before narrowing to 254 basis points by the close of the week.
• The Reuters-Jeffries CRB Index increased by 13.8% during May – its best monthly gain since 1974.
• The Baltic Dry Index – measuring freight rates of iron ore and bulk commodities – climbed every day in May to post its biggest monthly advance (+95.6%) on record.
• The price of West Texas Intermediate Crude recorded its largest monthly increase (+29.7%) since March 1999.
• Silver surged by 26.8% for the month – its strongest performance for 22 years. (Gold bullion advanced by 10.2% during May, and platinum by 8.2%.)
Back to long-term bonds. According to the Financial Times, Mike Lenhoff, chief market strategist at Brewin Dolphin Securities, said: “Bond markets may be telling us to expect inflation but, more importantly, I think they are telling us that policy makers the world over will succeed with their efforts to reflate the global economy.
“The trend of yields on corporate debt has been down, and that on Treasuries up, implying diminishing risk premiums – which is just what you would expect if markets are banking on recovery.”
The week’s performance of the major asset classes is summarized by the chart below.
The MSCI World Index (+1.7%) and the MSCI Emerging Markets Index (+6.6%) last week added to the previous week’s gains to take the year-to-date returns to +5.4% and a massive +36.3% respectively.
Although the major US indices experienced declines on Monday and Wednesday, the weekly scoreboard ended in positive territory, as seen from the movements of the indices: S&P 500 Index (+3.6%, YTD +1.8%), Dow Jones Industrial Index (+2.7%, YTD -3.1%), Nasdaq Composite Index (+4.9%, YTD +12.5%) and Russell 2000 Index (+5.0%, YTD +0.4%).
This Way There Be Dragons
by John Mauldin
May 29, 2009
In this issue:
- This Way Be Dragons
- A Housing Update
- More Prime Foreclosures In Our Future
- Are We Paying Too Much for Health Care?
- Naples, London, and Home for June
In fantasy novels the intrepid heroes come across a sign saying “This Way Be Dragons.” Of course, they venture on, facing calamity and death, but such is the nature of fantasy novels. We live in a very real world, and if we don’t turn around there will be some very nasty dragons in our future. This week we look at three possible paths we can lead the world down. We then review a number of charts and data on the housing market.
If you just read the headlines on this week’s data, you could be forgiven for assuming the worst is over — not. And then finally we look at some rather stark comparative data on the health-care systems of the US, Canada, and Great Britain. Everyone knows the US pays way more in terms of GDP than the latter two countries. Are we getting our money’s worth? There is a lot to cover, and I hope to finish this on a flight to Naples, so let’s jump right in.
This Way Be Dragons
More and more we read about the growing concern over $1-trillion-dollar deficits. Stanford professor John Taylor (creator of the famous Taylor Rule) jumped into the debate with a rather
alarming op-ed in the Financial Times this week, echoing much of what I wrote last week, but with some real insights into what trillion-dollar deficits mean. Quoting:
“I believe the risk posed by this debt is systemic and could do more damage to the economy than the recent financial crisis. To understand the size of the risk, take a look at the
numbers that Standard and Poor’s considers. The deficit in 2019 is expected by the CBO [congressional Budget Office] to be $1,200bn (859bn euros, 754bn pounds). Income tax revenues are expected to be about $2,000bn that year, so a permanent 60 per cent across-the-board tax increase would be required to balance the budget. Clearly this will not and should not happen. So how else can debt service payments be brought down as a share of GDP?
“Inflation will do it. But how much? To bring the debt-to-GDP ratio down to the same level as at the end of 2008 would take a doubling of prices. That 100 per cent increase would make nominal GDP twice as high and thus cut the debt-to-GDP ratio in half, back to 41 from 82 per cent. A 100 per cent increase in the price level means about 10 per cent inflation for 10 years. But it would not be that smooth — probably more like the great inflation of the late 1960s and 1970s with boom followed by bust and recession every three or four years, and a successively higher inflation rate after each recession.”
You can read the rest at (http://www.ft.com/cms/s/0/71520770-4a2c-11de-8e7e-00144feabdc0.html)
While Obama gives lip service to cutting the deficit in half, his actual budget increases it over the next 10 years. As I have been writing for some time, this is a very dangerous path. And it is one that the bond market seems to be concerned about, as interest rates are rising, even on mortgages that the Federal Reserve is buying in massive quantities in its effort to hold down rates and stimulate the housing market.
“The good news,” Taylor concludes, “is that it is not too late. There is time to wake up, to make a mid-course correction, to get back on track. Many blame the rating agencies for not telling us about systemic risks in the private sector that lead to this crisis. Let us not ignore them when they try to tell us about the risks in the government sector that will lead to the next one.”
Category: Think Tank
This message says a lot about our need to stand up and be responsible.
This is one of the greatest responses to the requests for bailout money I have seen thus far.
As a supplier for the Big 3, this man received a letter from the President of GM North America requesting support for the bail out program. His response is well written, and has to make you proud of a local guy who tells it like it is.
According to Snopes (urban legend debunkers)This letter and Mr. Knox are real
This is GM’s letter:
Dear Employees & Suppliers,
Congress and the current Administration will soon determine whether to provide immediate support to the domestic20auto industry to help it through one of the most difficult economic times in our nation’s history. Your elected officials must hear from all of us now on why this support is critical to our continuing the progress we began prior to the global financial crisis.
As an employee or supplier, you have a lot at stake and continue to be one of our most effective and passionate voices. I know GM can count on you to have your voice heard.
Thank you for your urgent action and ongoing support.
General Motors North America
Gregory Knox, Pres.
Knox Machinery Company
In response to your request to contact legislators and ask for a bailout for the Big Three automakers please consider the following, and please pass my thoughts on to Troy Clarke, President of General Motors North America.
Politicians and Management of the Big 3 are both infected with the same entitlement mentality that has spread like cancerous germs in UAW halls for the last countless decades, and whose plague is now sweeping this nation, awaiting our new “messiah,” Pres-elect Obama, to wave his magic wand and make all our problems go away, while at the same time allowing our once great nation to keep “living the dream.” Believe me folks, The dream is over!
This dream where we can ignore the consumer for years while management myopically focuses on its personal rewards packages at the same time that our factories have been filled with the worlds most overpaid, arrogant, ignorant and laziest entitlement minded “laborers” without paying the price for these atrocities. This dream where you still think the masses will line up to buy our products for ever and ever.