Loans

Fannie/Freddie buyout plan needs killing off

1 May 2013

A few big hedgies, including Paulson & Co and a Carlyle fund, want Uncle Sam to sell Fannie Mae and Freddie Mac into private hands. Getting the bailout twins off the government’s books is appealing. But the plan would privatize short-term gains and leave taxpayers on the hook.

Washington risks becoming new subprime promoter

3 Apr 2013

The White House wants banks to provide riskier taxpayer-backed mortgages. Fed policy has helped boost the number of borrowers with poor credit getting auto loans. It’s no 2007. But it smacks of policymakers ignoring potential bubbles to boost growth. That’s a losing proposition.

New UK mortgage help misses lesson of U.S. debacle

21 Mar 2013

British Chancellor George Osborne hopes to boost housing by guaranteeing home loans. It sounds like the beginnings of an approach that saddled taxpayers across the Atlantic with huge losses at Fannie Mae and Freddie Mac. Letting a Limey Muck take root would only build trouble.

U.S. housing reform takes baby step uphill

5 Mar 2013

A much-needed overhaul of mortgage giants Fannie Mae and Freddie Mac is proving to be a Sisyphean task. Regulator Edward DeMarco keeps pushing, though, and is set to streamline their duplicative securitization businesses. It’s time for lawmakers to get things seriously rolling.

Negative intellectual equity traps mortgage reform

26 Feb 2013

The latest plan to shake up U.S. housing finance, from a bipartisan think tank, offers nothing new. It rests on the usual received wisdom that the market cannot exist without a government backstop. The idea’s prevalent among lawmakers, bankers and investors. It’s wrongheaded.

UK bank steroids are working for the wrong reason

3 Dec 2012

Net lending by domestic banks rose only a bit in Q3. That’s a disappointment given the Bank of England is offering super-cheap funding to boost lending to the real economy. But the central bank support is probably having a benign side-effect - the softening of painful deleveraging.

U.S. student loan trouble discredits their value

28 Nov 2012

If pricey education provided the hoped-for labor market edge, then 11 percent of student loan balances shouldn’t be overdue. The proportion of delinquent education debt has surpassed even late credit card balances. Maybe students need better vetting.

Latest attempt to find Libor victim: Main Street

17 Oct 2012

U.S. homeowners are accusing big banks of making money out of nudging the benchmark interest rate higher. Bringing in Joe Public could add to political pressure for tougher regulation. Even so, it’s hard to see how more than a tiny amount of harm was done.

Brazil’s lending war leaves both sides looking bad

1 Oct 2012

Browbeating Bradesco and Itaú into slashing credit card rates is President Dilma Rousseff’s latest victory in making lending more affordable. But banks may raise other fees instead. And they want to lend more to riskier customers. It’s hardly a path to a stable banking system.

Inept Fannie/BofA deal highlights US mortgage mess

18 Sep 2012

A new report shows the agency paid too much to pull some loan servicing business from the mega-bank for doing a bad job. This double incompetence doesn’t just reflect badly on the two firms. It’s a reminder that the backbone of U.S. housing finance is in dire need of repair.

Brazil banks need better handle on consumer credit

18 Sep 2012

Banco Cruzeiro’s failure stems from fraud, but it specialized in loans to Brazil’s middle class - a group that grew by 40 mln in 10 years. That’s as short a record as U.S. subprime mortgages had in 2008. The comparison is extreme, but Brazil’s banks need both data and caution.

U.S. housing watchdog wise to go long on short sales

22 Aug 2012

The federal agency that oversees mortgage behemoths Fannie and Freddie is making it easier for underwater borrowers to sell homes at current prices. That’s better than cutting the amount owed as it should enhance housing market stability without introducing moral hazard.

Treasury’s Frannie fix puts Congress on the spot

17 Aug 2012

Team Geithner is forcing the two bailed-out home loan agencies to shrink their portfolios faster and hand all profit to taxpayers. These are excellent steps. But Fannie and Freddie remain too central to U.S. mortgage finance. It’s up to lawmakers to come up with the solution.

Uncle Sam may never divorce Aunt Frannie

10 Aug 2012

The two mortgage agencies earned $8 bln between them in the second quarter. Rather than speed up plans to reform them, though, funding-starved politicians may get too hooked on the revenue from their bailout dividend payments. That could make Fannie and Freddie untouchable.

China’s state-owned enterprises have cash to burn

30 Jul 2012

Oil producer CNOOC has enough cash on the balance sheet to pay $15 bln for Nexen without borrowing a penny. Such hoards are common among state-controlled companies. It’s a too cozy symbiosis with the state-controlled banks – which Beijing may now want to end.

U.S. student debt on scary trajectory

18 Jul 2012

New statistics from the New York Fed show education loans piling up at an unsustainable rate and delinquencies staying high even as the economy improves. The path to serious trouble is becoming more obvious. Rather than tackling it, though, policymakers are fueling the problem.

U.S. student loan fix robs the old to pay the young

16 Jul 2012

To keep borrowing rates low for education, Congress is using some devilish hocus-pocus. An accounting change will allow employers to kick in less to a pension guarantee fund. That could leave Uncle Sam owing more to retirees while also increasing taxpayer risk on student debts.

Wells Fargo’s mortgage strength is U.S. weakness

12 Jul 2012

The San Francisco-based bank accounts for a third of the country’s new home loans and is the largest servicer, too. That’s great for Wells’ bottom line. But such a dominant market share, if sustained, could be bad news for consumers and taxpayers. Rivals need to up their game.

Brazil’s lending hangover is red flag for banks

27 Jun 2012

Consumer defaults hit record levels in May, despite a decent economy. Lax lending in 2010 to customers not used to borrowing money caused the problem. With President Dilma Rousseff pushing to make credit cheaper, banks need to ensure they don’t make the same mistakes again.

China’s U.S. home loan risks being a subprime idea

26 Jun 2012

China Development Bank may lend Lennar $1.7 bln to build two housing projects - one on a polluted man-made island in an earthquake zone. It has all the hallmarks of globally distorted economic incentives forcing yield-starved investors to take risky bets they don’t understand.